Why you should have renters insurance – Part 4

“Renter’s insurance? No, I don’t need that. I don’t really have that much stuff’ and anyway, won’t my landlord’s policy cover what I do have?”

These are probably two of the biggest misconceptions regarding renter’s insurance. In today’s challenging economic environment, the financial burden of replacing personal belongings damaged by fire, wind, certain types of water damage, vandalism or theft can be significant, even in a one person household. And the landlord’s policy generally covers only the building and will not provide any coverage for personal property belonging to the individual tenants.

And for college students living either in dorms or in off-campus apartments; do you think you’re safe because you’re covered under your parents’ homeowner’s policy? Even here the answer is “maybe”. While it is true that most homeowner’s policies do provide some coverage for students away at school, the coverage is often for a very limited amount, such as 10% or less of the personal property limit that exists on the homeowner’s policy. So, if Mom and Dad have $50,000 in personal property coverage for their home, Junior will only have $5000 in coverage at college. In a dorm room, $5000 might be sufficient. But if Junior has an off-campus apartment, $5000 probably won’t go very far in the event of a total loss.

According to the Insurance Information Institute, about 57% of individuals renting apartments or homes are uninsured. When you take into consideration the fact that apartment buildings and rental homes may be older and not as well maintained as single family homes that are occupied by the owner, these uninsured tenants may well be in a very precarious situation. Electrical problems, older or faulty appliances and the smoking habits of neighboring tenants may increase the risk of fire. Outdated plumbing or poorly maintained basement apartments present prime opportunities for water damage. And certain areas of the country may be more prone to natural disasters such as tornados or hurricanes which almost always result in significant damage to property.

Most people have far greater amounts of personal property than they may realize. Don’t believe it? Consider doing a room-by-room inventory of everything you would have to replace if your apartment were destroyed by a fire or tornado for example.

Starting in the living room furniture, even the most Spartan apartment will have at least one sofa, table, chair, and lamp as well as rugs,