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Do You Need Renters Insurance for Your Apartment? Pros & Cons

It’s increasingly common for property owners to require tenants to carry renters insurance coverage. That’s understandable, as renters insurance limits a property owner’s liability for potentially costly mishaps, like an injured visitor landing in the hospital or a tenant’s possessions going up in smoke.

But is renters insurance a good deal for tenants? The short answer is yes. It’s much less expensive to replace an apartment’s worth of stuff with insurance than without it. 

That said, renters insurance isn’t free. A starter policy with high deductibles and relatively low coverage limits costs in the neighborhood of $150 to $200 per year. Higher-end coverage costs $300 to $500 or more per year. So if you’re not required to carry it, you’d be forgiven for asking whether it’s worth it — but that doesn’t mean you shouldn’t.

Reasons You Should Get Renters Insurance 

Even if your property owner doesn’t require it, it’s relatively cheap, so it’s not an undue burden for many renters. And it’s surprisingly versatile, providing coverage you may not know you need until the worst happens. That’s why these benefits of renters insurance often outweigh the drawbacks. 

1. It May Be Required

Many property owners require proof of renters insurance from would-be tenants. It’s more common among professional renters and property managers, but plenty of independent property owners also demand renters insurance. 

If you’re against carrying renters insurance, you can find a suitable place to live. But you won’t have as much choice, and you might have to compromise on unit size, amenities, or location. 

Given the relatively low cost, it’s worth the trouble to commit to getting renters insurance to keep your options open.

2. Your Possessions Are Valuable

Even if you don’t live lavishly, your rental unit’s contents are more valuable than you realize. Setting aside stuff like your major kitchen appliances and bathroom fixtures, which the owner probably provided and therefore covers, you might have:

  • A TV and possibly a streaming device
  • A laptop or desktop computer
  • Small appliances, such as a toaster oven and coffee maker 
  • Other electronic devices, such as a tablet, smartphone, and smart speakers
  • Furniture, which has value even if you picked it up at a yard sale
  • Clothing
  • Jewelry and personal accessories
  • Books
  • Decorations and other personal property, such as framed pictures

Individually, these items might not be worth much. Together, they’re prohibitively expensive to replace — thousands, maybe tens of thousands of dollars for a lifetime’s worth of possessions.

3. The Landlord Insurance Doesn’t Cover You

Your property owner’s landlord insurance covers the unit’s structural components and any provided appliances and furniture, but it doesn’t extend to anything you own. 

That’s true even if the property owner bears responsibility for some unfortunate event that wrecks your apartment. If an electrical fire torches your place and damages everything inside beyond repair, the property owner can make a claim on their policy for the damage to the structure, but you’re on the hook for replacing your stuff.

Unless you have renters insurance, of course. Then your insurance company is on the hook, assuming your policy covers the specific type of property damage.

4. It Could Cover Possessions Stored in Your Vehicle

One little-known fact about renters insurance is that its personal property coverage extends to personal belongings stored in your vehicle. 

You shouldn’t leave valuables in your car overnight, but we’ve all done it. And as anyone who’s been the victim of vehicle vandalism knows, standard auto insurance policies don’t cover theft from vehicles, even with comprehensive coverage.

That’s the job of home insurance: renters insurance for renters and homeowners insurance for homeowners.

5. It Covers Your Possessions When You’re Away From Home

There are two ways renters insurance covers your possessions when you’re away from home.

First, it covers personal possessions left in your rental unit when you’re not there. So if a fire or burst pipe occurs when you’re at work, it counts as a covered loss, just as it would if it happened while you were sleeping. Your policy’s liability insurance might also cover liability claims that originate when you’re away, such as a contractor who burns themselves while fixing your water heater.

Second, your personal possessions coverage may follow you when you travel. That’s true whether you’re running errands in your neighborhood or on vacation a thousand miles away. If your policy covers theft from your apartment, it also covers theft from your hotel room or gym locker.

Renters insurance policies aren’t as generous overseas, and some might not cross national borders at all. It’s common for international theft claims to be limited to 10% of the coverage amount, for example. If you’re unsure what your policy covers or how much coverage you can expect abroad, check your insurer’s website or ask your insurance agent.

6. It Often Covers Your Living Expenses if You’re Displaced

Many renters insurance policies cover temporary relocation and living expenses you may incur if your apartment becomes unlivable due to fire, flood, or structural damage. It’s known as “loss-of-use” or “additional living expenses” coverage.

Comprehensive policies almost always offer loss-of-use coverage. Bare-bones policies might not. If you worry your apartment could become uninhabitable for any covered reason, it’s worth looking into.

7. It Protects You From Lawsuits

Renters insurance protects you from liability issues that may arise during your tenancy. If a guest sustains an injury during a fall or as a result of an accident, your renters insurance policy’s liability coverage may cover the cost of a potential lawsuit, associated legal fees, and the guest’s medical bills.

Likewise, your policy may cover the cost of fire or water damage sustained by other tenants in your building due to hazards that originate in your unit, such as an electrical fire caused by a faulty hair dryer you left plugged in.  

8. It Doesn’t Cost That Much

Renters insurance doesn’t cost as much as health insurance or homeowners insurance. If you have a newer car, it’ll probably cost you less than your auto insurance policy too. Unless you have really valuable possessions that require special add-on coverage, a few hundred dollars per year is all you’ll need to shell out for full renters insurance coverage.

Plus, a renters insurance policy is easy to bundle with other insurance types at a significant discount. Virtually every major insurer offers a multi-policy discount or premium break for carrying more than one insurance policy with the same company. Since many renters also own cars, bundling rental and car insurance policies is common.

Reasons You Shouldn’t Get Renter’s Insurance

The average renter needs renters insurance, but that doesn’t mean there aren’t legitimate reasons to think twice about getting a policy. Both come down to the relative costs versus benefits of coverage.

1. It Has an Unavoidable Cost That Could Impact Your Budget

Yes, renters insurance protects you from personal liability for bad things that happen inside your apartment and reduces the cost of replacing your stuff after a covered loss. But like all good things in life, it’s not free.

It’s not particularly expensive either, but if you’re on a tight budget, any additional spending might be too much to bear. Taking your chances and saving the $200 or $300 you’re likely to spend for a basic policy could keep your cash flow positive.

At least, until bad luck comes knocking.

2. It Might Not Be Worth It if You Don’t Own Much Stuff

Your personal possessions quickly add up in value, even if you’re more of an “experiences over things” person. 

That said, if you really don’t own much stuff and have a healthy emergency fund you can tap if someone decides to rob you blind, you might be in a position to replace what you own without affecting your budget.

If that’s the case, every year that goes by without a claim on your renters insurance policy increases the net financial benefit of going without coverage. But you should be prepared to reassess your coverage needs if your lifestyle changes.

Verdict: Do You Need Renters Insurance?

All else being equal, it’s better to have renters insurance than not to. Renters insurance doesn’t cost very much. It protects your possessions from a lot of things that can go wrong inside and outside your home, including theft and vandalism. It also insulates you from lawsuits.

With some exceptions, it even follows you when you travel.

Final Word

In the grand scheme of things, peace of mind is relatively inexpensive. But renters insurance still carries a cost. And because protecting your finances from the unexpected should be a top financial priority, it’s worth cutting back in other areas if money is too tight to afford renters insurance premiums.

There are several ways to make room in your budget. Perhaps you can buy generic groceries instead of name-brand products. You can also limit the number of meals you eat outside your home or drop subscriptions you rarely use.

You could even move to a more affordable city for renters, where both rent and renters insurance premiums are likely to be lower.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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