Lack of Renter’s Insurance Coverage Invites Risk

If you currently rent the place you live in, you are in increasingly good company. More and more individuals are responding to today’s uncertain economic climate by renting rather than owning real estate.

The number of high-income renters continues to climb, a sharp reversal of trend from the early 2000s when low-income households drove 93 percent of renter growth. In addition, renting has become more common among age groups and family types such households headed by those 35 to 64 and those with children, which in the past were more likely to own their homes.1

Still a surprisingly small number of renters choose to secure coverage for their rental. In fact, more than half of adults, ages 23 to 29 years old, who rent their homes haven’t bothered to take out renter’s insurance,2 while The Insurance Information Institute estimates that as many as 95 percent of homeowners secure their property with a homeowner’s policy.3

Many renters wrongly assume that their landlord’s insurance policy protects the contents of their condo or apartment. They often learn the truth only after it’s too late to save their lost belongings, none of which are protected by typical landlord policies that cover damage to the building alone.

Today’s marketplace is making insurance coverage a necessity rather than an option for an increasingly large number of renters. In many tight rental markets, good apartments are getting harder to find. As a result, more landlords are requiring renter’s insurance coverage as a condition of signing a lease.

Coverage is fairly inexpensive and is a fraction of the price of an average homeowner’s policy. It can even be inexpensively configured to cover most of the major risks a renter may experience.

Here are some important coverage options to consider:

• Theft coverage: This is essential coverage; it provides protection if your personal property is stolen.
• Replacement cost coverage: Replacement cost coverage pays to completely replace lost items, regardless of the current value. You need this as a safeguard against appreciation in the value of your personal property.
• Cash settlement option: Choose to receive a cash settlement, with no requirement to repair or replace the item.
• Water backup option: Protect yourself against damage caused by backups from sewers and drains.
• Valuable articles coverage: Your family heirlooms, expensive jewelry and collectibles can also be protected by an additional rider at a modest extra cost.
• Personal liability coverage: Protect yourself and your finances if you are sued for causing accidental bodily injury or damage to the property of others.

Some landlords make things easier by adding a rental insurance option to their leasing packages. When calling for quotes, ask about lower rates for units with security systems, smoke detectors, deadbolt locks and other safety devices. Multi-policy discounts may also be available if you insure your car and home with the same company. If you’re a renter 55+, there may be a possibility for senior savings. And if you are sharing a rental with a roommate, ask whether the insurer will allow you to split the cost of the premium