Why Is it Good to Have Renters Insurance?

Insurance protects apartment renters from loss.

Apartment renters often think they don't need to have insurance since they don't own the property where they live. That can be a mistake, however, since the building owner's insurance covers the structure, but not the contents of the renter's apartment. Renter's insurance offers protection against loss after a deductible for a premium.

Fire Damage

The most basic benefit of renter's insurance is protection in case your belongings are destroyed in a fire or damaged by smoke from a fire, whether or not the fire was your fault. The risk is real, and most people own more stuff than they think they do. If your entire apartment were burned to ash, it would probably be quite costly to replace all of your clothing, furniture and personal possessions. Add it up, and you might be surprised at the cost.

Liability Claims

Property owners need to have insurance in case someone is injured on their property. But if someone is injured in your apartment, you'll need personal liability insurance, which usually is part of a renter's insurance policy. Even if the injury isn't your fault, you could be liable for whatever happened. Renter's insurance also usually covers medical costs, up to a limit, if someone is injured in your apartment. (Renter's insurance is not a substitute for medical/health insurance, however.)

Theft

Renter's insurance also protects you from loss if your apartment or car is burglarized and your personal belongings are stolen or vandalized. Again, add up the cost to replace your laptop, personal electronics, jewelry, musical instruments and other valuables that are small enough to be easily stolen and you might be surprised at the amount. A "replacement cost" policy will let you buy brand-new replacements of stolen items.

Living Expenses Paid

Suppose your apartment was uninhabitable due to a fire or smoke damage. Where would you live until the premises were restored? That's another benefit of renter's insurance: most policies include some temporary living expenses if you're forced to move out due to a covered risk. Temporary living expenses are usually paid as a per diem (per day) amount.

College Students

Renters insurance can be a good idea for college students as well as apartment renters, because thefts and injuries and other covered losses can occur on college campuses and in dormitories as well as apartments. Some homeowners insurance policies will include students who live elsewhere. But other policies don't include this protection. Either way, a separate policy for the student can be an extra protection against loss.

References

• GMAC Insurance: Renters Insurance Features and Benefits