Why Should I Have Renters Insurance?
Some folks think that they only need a homeowners policy if they have a home, but guess what: renters insurance is homeowners insurance.
Technically, this is the truth. The HO-4 policy, colloquially known as renters insurance, protects someone who rents rather than owns. If you have an apartment or other living space that you rent/lease, you might wonder why you need this at all.
Here are a few things to consider when weighing whether or not to buy one of these policies.
Renters Insurance: Hey, You Still Need Personal Liability and Property
All homeowners policies, whether you’re a homeowner, condo owner, or renter, provides personal liability coverage. If someone were to suffer bodily injury on your premises, if you have this policy, you’re theoretically protected. Your landlord may have General Liability coverage if it’s a commercial building, but don’t assume that. Even if they do, if you get sued for that bodily injury, you’re not covered under it.
Why is that? Check out their “lessor’s risk only” policy sometime. (This is the commercial policy for their leasing of the building.) You will see their name on it, and if they have a mortgage, you may see the bank listed as a mortgagee. One name you’re probably not going to see: yours. Unless somehow tenants are named as “additional insureds,” there’s no help for you there.
Personal property insurance is also important. The contents you own, like furniture, minor appliances, and televisions, can be covered by renters insurance. Whatever insurance your landlord has definitely will not cover this risk. Of the reasons to get a renters insurance policy, this is the one that clients find the most compelling.
Your Lease May Require Renters Insurance
So, you have a new apartment; that’s all well and good. You signed the lease and cut a deposit check to the landlord. (It may have been a huge check if you live in a city, not that you needed a reminder.) However, did you read the lease that you signed?
But it was ten pages long, you said, and contained a lot of “legalese.” I have too much to do and just had to drop off the check and leave, you said. Nobody ever reads those damn things, you say.
One thing you learn in insurance is that the lease requirements matter. When it comes to insurance, there may be a clause that compels you to get a renters insurance policy.
From the above, you already know the landlord’s insurance won’t cover your property or personal liability. It’s common for landlords to enshrine a renters insurance requirement in the lease to nail this down. In so doing, they’re making it clear that they cannot and will not cover your stuff, so don’t even think about asking. It is your responsibility to insure your personal property and liability, anyway, but this protects them as well.
If your landlord is particularly persnickety, they may even ask you to furnish them with a copy of the policy. So, you might wanna have one just in case, anyway. You do not want to default on your lease.
Renters Insurance Policies Are Cheap
Depending on the rates in your state, you can probably get a basic HO-4 policy for under $200 per year. This may include a $500,000 personal liability limit and $20,000 in personal property coverage. For peace of mind and lease compliance, it’s well worth the expense.
The cost of your monthly rent does not factor into the premium. Just because you pay $600 a month to the landlord does not necessarily mean you’ll pay less than someone with $2,500 in rent. What are factors: the amount of coverage you carry and your deductibles, among other things.