Renters Insurance: Cheap, and Not Mainly About Your Stuff
It is one of the least expensive policies available and the most commonly skipped. The part that makes it worth having is not the contents cover.
Three Things, Not One
Most people think renters insurance replaces their belongings. It does, and that is the least valuable of the three things it does.
Personal property covers your belongings against theft, fire, water damage and similar, and it covers them away from home too, which surprises people. A laptop stolen from a car or a bag taken on holiday is generally covered.
Liability covers you if someone is injured in your home, or if you cause damage. This is the part that matters. An accidental fire or a bath left running can produce a claim from the building owner and other tenants that runs to tens of thousands, and that exposure has nothing to do with how much your furniture is worth.
Additional living expenses pays for somewhere to stay if the place becomes uninhabitable. Without it, a fire means paying rent you cannot use plus a hotel.
Their policy covers the structure. It covers nothing you own and does not cover you being sued. This is the single most common misunderstanding about renting, and it is why the liability half is the real argument.
Replacement Cost, Not Actual Cash Value
This choice matters more than the coverage amount.
Actual cash value pays what your six-year-old television was worth the day before it burned, which is very little. Replacement cost pays what it costs to buy a comparable new one.
The premium difference is usually small and the payout difference is enormous. Check which you have, because the cheaper quote is frequently the first one.
What Is Not Covered
- Flood. Never included as standard, anywhere, and rising water from outside is what counts as flood.
- Earthquake, also separate.
- High-value items above a sub-limit. Jewellery, instruments, cameras and collections usually have a low internal cap. Scheduling them individually costs little.
- Your roommate. Unless they are named, their belongings are not covered, and a shared policy can complicate a claim.
- Business equipment, often limited if you work from home.
Do the Inventory Now
After a fire or a burglary, nobody can list what they owned. Ten minutes of video on your phone, walking through each room and opening drawers, is the entire task. Store it somewhere that is not in the house, which in practice means a cloud account.
Keep receipts for anything expensive. Claims are paid faster and more fully when there is evidence.
Adding renters cover to an existing auto policy frequently discounts the auto premium by enough to offset much of the cost. Ask for both quoted together before buying either separately.