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If you are not ready for a mortgage for your own place and still renting, but you are very fond of your stuff and would be devastated if you lost it, the following riddle is for you. What costs less than a cup of good coffee per week, but could potentially save you thousands of dollars when tragedy occurs? Renter’s insurance is a peace of mind product that helps you get the actual value of your things or replace them.
A study reveals that in 2016, while 95% of homeowners had an insurance policy, just 41% of renters got a tenant’s insurance. The average cost for a renter’s policy is about $250 per year. Most landlords can ask you right up front to get such insurance, making it clear that the one they have only covers the structure (bare walls). Your room-mate’s insurance is also null in your case, as it only covers their personal belongings. It you are thinking it is too much trouble for nothing, think again.
1. Items’ Value
Renter’s insurance covers the value of all your items, with some limits for jewelry and electronics. If you prefer to rent, but carry your diamonds with you, get a customized quote. Don’t be a fool to think that your items are not worth the hassle. Just take a pen and paper and make a list of your most valuable 5-10 items in each room, recording the buying value and the actual value (use eBay when in doubt).
Include both high value items like TV, laptop and of course, your smartphone, as well as daily necessary items like pillows, dinnerware and clothes. Just think of the costs of starting a new life if your current place would burn to the ground. The value you will get should be at least $25.000, which is the minimum required.
2. Personal Liability Trials
You would never think that your friends would get you to court if they were clumsy during a party and slipped on the floor, resulting in an injury. However, you could be charged of negligence and put to trial for this, especially if a child is involved and was harmed. Missing work due to injuries can also constitute serious reason for a trial.
Most renters’ insurance policies cover this situation and reimburse medical costs, including ambulance and hospital stay to the damaged party. You could even get coverage for accidents occurring in your back yard or even caused by pets, such as dog bites.
3. Natural or Man-Made Hazards
Most landlords protect their homes against natural disasters, even getting additional coverage for earthquakes and floods. As a tenant, you should do the same for the items you keep inside the house. Think about the effects a sudden fire, smoke, storms or even lightning could have on your belongings.
Accidents can happen either to you or one of your neighbors. Someone could leave something on the stove, forget about the water filling the bath-tub or just have some home remodeling gone wrong. Be ready to fight back each of these problems with appropriate protection.
4. Renter’s Insurance against Theft
This is the most common reason for getting a renter’s insurance. Robberies and house break-ins are common and sometimes a result of neglect. Considering that a third of thieves go in through unlocked doors or windows, it makes sense to have such a protective measure. Take into consideration the average loss of over $2200, and the insurance already sounds like a bargain.
If you have a careless room-mate or live in a less than safe neighborhood, getting a personal belongings policy is a wise measure. A policy can save you a lot of trouble and waiting. Police never catches most thieves as it doesn’t consider the damage to be worth the bother of further investigations.
Note that the policy extends to your belongings if they are stolen from your car or your gym locker.
5. Traveling and Storage
A renter’s insurance is also called”belongings insurance”, as it works for off-site property. You can use it for items placed in a storage unit or even your luggage when traveling. The company will reimburse you if your bag doesn’t arrive with you or is damaged.
You can claim up to 10% coverage costs for items that are not stored in your rented home. Bikes, skies and other seasonal gear fall under this type of coverage. If you want to use this for recreational vehicles such as ATV or motorboat, check this with your provider to find a customized solution.
6. Loss of Use
Also known as “additional living expenses”, this feature comes into play after a hazard. It covers the temporary lodging costs at an inexpensive hotel until you find a more suitable living solution. The insurance policy will cover your room expenses and even meals if you are unable to use the premises due to disasters. The policy covering can extend to reimburse commuting costs to work. Terms and limits might apply, but this is a life saving solution in the case of a natural disaster or human fault.
7. Cheaper Auto Insurance
Most insurance companies offer a wide variety of products and the ability of creating product bundles. If you get your car and renter’s insurance from the same provider you are eligible for a promotion. Depending on your situation, this could get your renter’s policy as low as $0.5 a day or even free. All you have to do is ask and negotiate.
Before saying “This will never happen to me.” try assessing your risks and losses. Think about the value or replacement costs of your belongings and the impact on your financial situation. To have a comparison degree, just think about the burden to pay off your student loans. When considering that your stuff is worth approximately the same amount, a renter’s insurance sounds like a good deal.
Would you give up a pizza or two packs of cigarettes per month for your peace of mind?