What Do I Need to Know About Renters’ Insurance?

Posted on 26th Sep, 2017 by Barbara Davidson

Although 35 percent of the U.S. population rents, a whopping 7 in 10 renters don’t have a renters insurance policy. PolicyGenius co-founder Francois de Lame says that renters are usually hesitant to purchase a policy even though it’s often in their best interest to do so.

Do you rent? Should you purchase a renters insurance policy? Read on as we break down the essential facts about renters insurance with Francois de Lame.


What Is Renters Insurance?

De Lame explains, “Renters insurance is designed to protect people who rent an apartment or house. It is a cost-effective way to insure your belongings against unforeseen events. Renters policies can protect against weather events (such as wind, rain, heavy snow and lightning) and losses related to fire, theft, smoke and vandalism. It’s worth noting that renters insurance typically does not cover against naturally caused floods. A renters insurance policy can also cover living expenses if you’re temporarily displaced, and third-party medical expenses if an accident occurs in your home.”

Simply put, renters insurance is designed to protect renters. So why do so few renters actually have it? De Lame says there are two main myths at work that discourage renters from purchasing it.

Myth 1: It’s too expensive!

Consumers generally overestimate the cost of most types of insurance, including renters insurance. De Lame explains, “Renters insurance is some of the best value insurance you can buy. A typical policy will cost between $15 – $20 per month.” That’s basically the cost of a meal out!

Myth 2: My landlord has insurance in place to protect my belongings.

De Lame explains, “Your landlord’s policy generally protects against any structural damages that occur to the building as a result of unforeseen events and disasters. It won’t cover your belongings against these same events. So if your apartment floods, a landlord’s insurance would cover repairs. However, any damages you incur, including having to move out, will likely not be covered.”


How to Choose the Right Renters Insurance for You

If renters insurance is a brand new purchase for you, it can seem like an intimidating process to take on. So, if you’re in the market for a policy, what steps should you take to make the search less intimidating?


Step 1: Value your possessions.

“To start, you’ll need to calculate the amount of personal property coverage you need,” de Lame explains. “The Insurance Information Institute provides a great tool to help you estimate the value of your possessions. It is always a good idea to take photos of the expensive items you own. This can come in handy if you ever need to make a claim.”


Step 2: Understand important features.

According to de Lame, there are four main features you’ll want to look for in every policy.


Step 3: Shop for a policy.

If you have car insurance already, de Lame recommends starting your search there. “Your existing car insurer may offer you a discount. Otherwise we recommend looking at TopTenReviews to understand how policies differ between insurers. Financial strength and security is also essential when looking for an insurer, and something you should always check. A.M. Best is the industry leader in evaluating how financially sound an insurer is. A good rule of thumb is to pick an insurer with at least an A- rating. Most meet this criterion, but some are better than others.”


Care for Your Policy

Once you’ve purchased a policy, don’t forget about it. Make sure to review your coverage yearly and update your policy if any big changes occur to your possessions (e.g. jewelry purchases). Set up a calendar reminder every six months so you won’t forget to re-evaluate and stay up-to-date in case of an unfortunate occurrence.

About Barbara Davidson

Babs is Lead Content Strategist and financial guru. She loves exploring fresh ways to save more and enjoy life on a budget! When she’s not writing, you’ll find her binge-watching musicals, reading in the (sporadic) Chicago sunshine and discovering great new places to eat. Accio, tacos!