Me: I’m moving out of my parent’s house into an apartment!
Katie (my boss): Hurray! You’re going to get renters insurance, right?
Me: Yessss . . . I guess so . . . if you think I have to . . . (mumble, mumble, mumble . . . )
Even though I am a super professional financial guru, my initial reaction to the idea of getting renters insurance was just like every other 20-something’s – I thought, “WHY? I don’t really have anything to insure.” Frankly, renters insurance seems like something I could probably (definitely) get by without. I won’t drown in medical bills like I would without health insurance or have my driver’s license taken away like I would without car insurance, so why bother? I thought I’d save a few bucks and skip it.
If you are like me, one main reason you might not care to pay for renters insurance is that you are not 100% sure what it is. The name seems self-explanatory, but honestly I couldn’t tell you what it covered or how it might help me out. Basically, renters insurance protects you and your possessions from unexpected situations like fire, theft, water damage, and other circumstances that your landlord’s policy doesn’t cover. Most renters insurance provides coverage for personal property (clothes, furniture, appliances, etc.), personal liability if someone is hurt in your home, and damage to your apartment or home caused by a covered loss.
Even once I knew what renters insurance was, I can’t say that I felt the urge to get it. It still seemed like an expense I could do without. Luckily for me, I have my own personal financial advisor right down the hall from my office (Katie to the rescue 🙂 ). The example of how renters insurance might work that started to convince me it was worthwhile? Katie asked me, “If you lost ALL of your clothes and shoes in a fire, how much money do you think it would take to replace them?” Dun dun DUNNNNNN . . . I own approximately 30+ pairs of shoes and a bajillion clothes. I might have gotten them all on the cheap at Forever 21, but it would still probably cost me almost $2,000 to start my wardrobe over from scratch. That’s a lot of cash that I definitely don’t have just lying around! If I had renters insurance, however, the policy would help me pay to replace my ruined possessions. So for the price of $103 a year, I could get my $2,000 worth of clothes back. Sounds like a pretty good deal to me.
Still not convinced? What if someone broke into your apartment and stole all your appliances and gadgets – your iPad, laptop, big screen TV, everything. Would you have enough money saved up to pay to replace them all? Or if your apartment was flooded, could you afford to stay in a hotel while it got fixed or would you find yourself sleeping on your best friend’s couch?
After that very convincing argument about losing my precious shoe collection, I decided to give in and get myself renters insurance. I went online to geico.com because that’s where I have my auto policy and they gave me a discount for addding additional coverage. Most major insurance companies offer some form of renters insurance, however, so if you want to shop around a litttle more you might find an even better deal. The best part part was the policy only costs $103 a year or $8.58 a month – so cheap! If I can jusitfy paying $14.98 a month for my Audible.com subscription, there’s no reason to say no to renters insurance (P.S. I love books on tape).
Here’s a quick overview of everything my renters policy covers for me:
– Personal Property Coverage: This covers personal possession such as clothes, furniture, appliances, linen, toiletries, cleaning supplies, computers, jewelry, and more. If this property were to be ruined, stolen, or damaged so it was no longer useable, my policy would give me funds to replace it. Typically, you have to specify the approximate total value of your possessions and the amount of coverage you have is based on that esitmation. I, for example, only have about $5,000 worth of property so I have the lowest level of Property Coverage offered. The more items you have, the more coverage you may want, and the higher the cost of your policy. Most insurance websites have calculators that help you list and guess the approxiomate value of your items if you are unsure. Check out www.knowyourstuff.org if you need more help. Also, decide whether you want a policy that offers replacement coverage (pays you the full cost of replacing an item) or actual-cash-value coverage (gives you the amount your item is worth now, after depriciation).
– Loss of Use Coverage: This protects me against losses sustained if my home becomes unfit to live in due to damage cause by a covered loss. So if I were unable to live in my apartment because of a fire or other emergency, it would help pay for expenses like hotel bills, restaurant charges, etc.
– Personal Liability Coverage: This protects me from expensive judgements if my actions were to casue injury or property damage to another. So if someone were to hurt themselves while visiting my apartment and I was deemed responsible for the accident, the insurance company would pay that person instead of the funds coming out of my personal assets. Additionally, it would help me pay any legal bills I incurred while dealing with the issue.
– Medical Payments Limit: This coverage would pay for up to $500 of medical expenses for bodily injury to a non-resident that occured in my apartment. So if some slipped and fell down my stairs, this part of the policy would allow me to help them pay for medical, surgical, x-ray, dental, ambulance, and other potential costs.
I think my favorite reason for being a new owner of a renters insurance policy is that it seems like a very adult thing to have. In reality, however, its probably people my age who need this sort of insurance the most. The fancy, middle-aged professionls with mortgages and 401Ks that I imagine having renters insurance might actually have $100,00 to pay if they were sued by someone who hurt themselves on their property. They definitely be able to spend $2,000 replacing my Forever 21 wardrobe. People on a budget, however, most definitely cannot afford these types of unexpected expenses. If someone sued me for $100,000, they better be prepared to wait 164 years to get in back in unbelievably small installments, because that is the only way they will ever see a penny. It turns out, I’m not too poor to have renters insurance, I’m too poor NOT to have it.
Lesson learned: if you live in a rental, look into getting renters insurance ASAP. I promise you won’t regret it!