A few weeks ago we had a nasty storm here in Minnesota. I honestly have never seen so much water and such high winds in such a short period of time. I was stranded in the Target parking lot and decided to try to make it home. I made it but honestly thought I was going to get stuck somewhere in the flash flood conditions.
We came home to quite a site. Apparently our city’s draining system were not even close to being able to handle the storm waters, and water had seeped into the basement. Thankfully the storm subsided quickly enough and we didn’t lose electricity so our sump pump was able to pump the water out and we were able to towel up the water, followed by running a couple fans. It made me think, though, what if it had been worse?
A couple years ago there was even worse flooding that left apartment basement’s flooded…we’re talking a foot or two flowing into their apartments. One thing that some renters did not realize is that they needed renters insurance to protect them in that situation.
I talked to my insurance agent after our recent storm about renters insurance. Since we have a renter, I wanted to make sure we knew exactly what their renters insurance covered and what our homeowner’s insurance covered. Below are some important facts about renters insurance:
- Protection – Without renters insurance a renter is leaving themselves exposed to a lot of potential losses. Fire, water damage, theft…the list goes on. Renters insurance is absolutely necessary to protect a renter’s possessions.
- Affordable – My wife and I had renters insurance at our last apartment and it was only about $10 a month for tens of thousands of dollars of coverage. For the most part, renters insurance will only be about $7-$13 per month. Considering the protection you are given from potentially large losses, this is a very affordable price.
- Unexpected Protection – Renters may not realize the full range of protection that renters insurance provides them. For example, if someone falls down and gets hurt in a rental unit, the renter may be liable for medical bills. Renters insurance protects this. Consider my example of a basement getting water in it. If a renter needs to stay in a hotel because the apartment is not in a habitable condition, there may be situations – such as a wet basement – where the renter needs to stay in a hotel for a night or two. This expense would only be covered by renters insurance.
One question you might be asking is: If you aren’t a renter, why should you care about renters insurance?
If you are a landlord or own rental property like I do, making sure your renter has renters insurance can really help avoid a bad situation. There may be situations where a renter thinks you, the landlord, are liable for damages when in reality the renter is. Someone slipping and falling on a rug in a rental unit is one example. Additionally, if there is water damage and the renter’s possessions get ruined, they may think homeowner’s insurance covers it. You will have to be the deliverer of bad news if the renter does not have renters insurance. Requiring your renter to have renters insurance helps fix this situation.
If you are a homeowner and do not rent out part of your house or own another rental property, renters insurance should still be something that you are aware of. You likely know many individuals who are renters and not homeowners. If you communicate to them the importance of renters insurance you may save them thousands of dollars if a situation arises where they need the protection that it offers.
____________
What are your thoughts on renters insurance? Do you think more people need to be made aware of the benefits of renters insurance?
____________
Photo by k.steudel
Check out some of our favorite personal finance resources:
Are you getting the best credit card rewards? Check out the top cash back credit card offers (updated daily)
Make extra money: 15 ways to make money from your computer
Get the First Chapter Free!
Join our online community and get the first chapter of the book Student Loan Solution absolutely FREE!
I think that renters insurance is a necessity to have. We had it when we rented and it cost us something like $10 per month. Ultimately, that really is not much at all to have the peace of mind that things would be covered if something bad happened.
FrugalRules Yep we paid about the same when we were renting a year ago. Well worth the $10/month.
We never had renters insurance when we were renting, and luckily nothing ever happened (it was only 1-2 years). I would definitely get it next time.
SenseofCents I didn’t have it when I was in college and renting. Knowing what I know now I would never go without it if I was renting.
Important topic that is often overlooked. The potential for material loss is big, but the liability protection is in my opinion the biggest value. It protects you from liability in and away from the apartment. And you’re absolutely right that it’s incredibly cheap. Well worth the tiny cost.
Matt @ Mom and Dad Money Definitely. I honestly had never even thought about the liability coverage until my insurance agent mentioned that aspect of it. It can help avoid a potentially ugly legal situation.
I wish that more people had renter’s insurance! It’s so cheap…when we had it years ago I think it was only around $100 per year.
Holly at ClubThriftyAnd it’s still only about $100 a year! We paid around $120 a year last year when we were still renting. Sure, you almost never will need it, but it covers you in those catastrophic unexpected scenarios.
When we were renters we let our renters insurance run out and didn’t renew it. Woops! Now that we have a tenant, we encourage him to have insurance but ours will cover his stuff if he doesn’t.
Suburban FinanceWe have a new tenant moving in soon and I sent her a LONG email about why she should get it and how it’s worth the money.
Renter’s insurance usually doesn’t automatically include flood coverage. From my understanding, that’s an extra cost on top of the premium. We don’t have flood coverage with ours but that’s because we’re not anywhere close to a flood zone according the latest FEMA flood maps of our area. After Hurricane Sandy, where the power didn’t even go out in our apartment and we had no fears of flooding for our area (so long as you weren’t in a basement), I knew we wouldn’t need the flood insurance for our current apartment.
tzoltekWhen I mention “flooding” in the post I sometimes use it incorrectly; our basement “flooded” because we had water flowing into it because the storm drain couldn’t drain because the main city drain it connected to was so full it couldn’t take on any more water. A flood according to insurance terms is when it’s basically a natural disaster like the flooding you referenced in Sandy. If it’s water flowing into your basement for a short period of time because of city drainage failing (i.e. a flash “flood”), it should be covered by your renter’s insurance.
DC @ Young Adult Money tzoltek ohhhh gotcha. so that’s good to know as a renter that if flooding occurs in your area but your basement apartment floods as a result of not mother nature per se, but the fault of the city, that a person’s insurance will cover it!
tzoltek Yeah there is a fine line between simple “water damage” and flooding….I think I understand after talking to our insurance agent, but it still seems like there is some gray areas.
I totally agree that every renter should get renters insurance. For the longest time, I didn’t think I needed renters insurance since I didn’t have that much stuff. Then one day, I got a knock on my door from some maintenance guys asking if my apartment was flooded. It wasn’t, but there was an apartment flooded in our apartment and they were frantically trying to find it. Apparently, some resident tried to take a shower and because the building had shut off the water, the resident never turned their faucet off. When the water came back on, water flooded their apartment and I’m sure many others as well. So, long story short, I have renters insurance to protect me from the unpredictable (from the elements and my neighbors).
Roger@lifelaidout Yikes, I’m glad it wasn’t your apartment!
DC @ Young Adult Money Roger@lifelaidout Yeah, that definitely scared me into taking some action. I got the renters insurance the next week!
It’s something I’ve had in the past but don’t currently have…but have been sitting on the decision for site some time. I don’t have a ton of valuable items in my house, but what I do have that is valuable is detrimental to my job and livelihood, like my computers, which I need for work. Thanks for the reminder!
Beachbudget Yeah that would not be a good situation if you had a break-in, hopefully you can find something affordable that works for you.
I know two friends in NYC whose apartments have been robbed in the past year! No renters insurance. I need to get on it myself. You would think I’d have learned by now!
brokeandbeau It’s just like anything else – you don’t really think about it until you need it. Thanks for stopping by and commenting!
I was looking into renter’s insurance when we first moved in last month, and then other things took priority. I definitely think it’s worth having. I might need to get another quote, as it would be costing me $17 a month. I’d much rather pay $10 and split it with my boyfriend. That’s nothing compared to what you’d risk losing. Sadly, I didn’t know about it until I got my car insurance quote – they knew I was moving so they offered it to me. People need to be more aware of it.
JourneytoSaving I definitely was not aware of it during college and did not have it. Looking back I’m kicking myself because if my stuff had been stolen I’d be in big trouble.
Many people do skip this figuring they will never need it. We are renting a house right now and one of the things I made sure to have was liability insurance in case we accidentally burn down the house. Do you make sure your tenant has that as well? We are covered up to a million dollars.
With the huge flooding our city had 2 weeks ago the insurance companies are going crazy trying to handle the requests from owners and renters.
A lot of people (owners and renters) are being denied coverage for their home and their things. One thing many people do not know is that your insurance may cover you for water damage in the home, depending on how that water got there. In our city, in many cases the water was consider “overflow” from the river, and apparently insurance in Canada does not cover that. The story has become quite tragic in regard to the homes and possessions people have lost.
TacklingOurDebt From my understanding flood insurance and “water damage” are two separate things. That’s great that you have coverage up to a million! We do require our renter to have insurance but didn’t followup with her. With our next renter I am really pushing her to get it – not sure if I can legally require her to, but I am really hoping she gets it.
DC @ Young Adult Money TacklingOurDebt So if she doesn’t have insurance and she accidentally burns down the house, who pays for that? Would you have to sue her for damages? (sorry, but this is a hot topic for me too). And our million liability isn’t for our personal contents. That is only at $20K.
The million is if we burn down the house andor injure or kill people in the process (accidentally of course).
There isn’t much in my apartment to rob but after being here for both Hurricane Sandy and Hurricane Irene I’m starting to think it’s a good idea…
My bank nudges me about it anytime I call them to discuss something.
BrokeMillennial Yeah I’d recommend it, especially since it’s relatively affordable in my opinion.
It is so cheap and can save you so much money in the long run if something were to happen.
OneSmartDollar Yep, that’s the thing; we got $50k coverage in our apartment for only $10/month. You can’t beat it.
While it’s been awhile since we rented, it is definitely a must-have. It’s cheap and when something happens – you’ll be so glad you have it. Many apartments in LA require you to have coverage which I think is a good thing. Many people overlook the liability coverage but it’s incredibly important.
TheHeavyPurse So true! We require our tenant to have it and when our new tenant moves into the apartment in August we will followup and make sure she purchased it.
Renter’s insurance is definitely essential. When I lived on campus our apartment got broken into and thousands of dollars of stuff was stolen. Luckily, we all had renter’s insurance so it was all covered (besides the deductible). It’s nice to have that piece of mind for relatively cheap.
CommonCentsWealth You guys are lucky! I honestly don’t know many college students who do have it. I would say it’s a fairly small percentage. We need more awareness on this topic.
I know it’s “bad” but we never had renter’s insurance when we were renting. Now we have homeowner’s insurance of course, but if we’d had a bad storm and lost everything (like many people did here during hurricane sandy) we would have been totally screwed.
I don’t think any of my tenants has it. But for major damage (structural) I do have insurance. It won’t cover their belongings if they get flooded. I have them sign a contract to say I am not responsible if they don’t take it.
RFIndependence That’s a great idea to have them sign the form. Structural damage is also covered for our house but none of our renter’s possessions.
We insist that our tenants get tenant insurance. It’s for their own good! Our insurance only covers the structural aspects of the condo – not their possessions. If there was ever a fire or theft, they’d be out of luck without insurance.
When there was a fire in our apartment a few years ago, Brian and I didn’t have insurance. It was a huge, painful ordeal. Never again!
Great post! I just moved cross country to New Orleans and I am getting my renters insurance set up right away. It protects a tenant from so many issues.
There are so many benefits to having renters insurance that it surprises me most how many people don’t take advantage of it. Even when I was in college, the first thing I did after renting a place was get insurance. I just took for granted that everyone did.
I rented my condo a few years ago and insisted my tenants had renters insurance and didn’t rest until they showed me proof of insurance … I was THAT paranoid :)
That storm was a doozy, wasn’t it, DC? Yes, I would highly recommend that all renters get renters insurance. It’s SO cheap, and well worth the money when you think about how much stuff you have in your apartment/house. Great post.