The majority of homeowners purchase insurance for their homes. This is often a requirement that comes with a mortgage so it is not surprising that percentages would be high. Landlords can require renter’s insurance as part of a lease agreement, but this is not so common, which may account for the fact only about 35 percent of renters have renter’s insurance, according to a poll conducted for the Insurance Information Institute.
Here in Jefferson County, Washington the 2010 census found we had 3,616 renter-occupied places – about 24% of county dwelling places – and at that we are below the state average of 36%. If you do the math that means it is likely there could be about 2750 uninsured renters here. Young renters are even less likely to be covered than older renters and if they have little savings may be at great risk for loss; seniors who rent more frequently have renter’s insurance but they may also have a lifetime of accumulated assets they need to protect. Still, the rate of insurance for seniors barely tops 50%.
When asked why they do not purchase renter’s insurance, there are a number of common responses that reflect a real lack of understanding of the costs and benefits. Over half of renters without insurance reported they didn’t think they could afford it. In fact, while prices fluctuate according to the coverage selected, a National Association of Insurance Commissioners study found the average cost of a renter’s insurance policy was only about $15 per month. Nearly 20% of renters without coverage said they didn’t believe renter’s insurance was important. Catastrophes are always those things that happen to other people, but if you look at the risk, there are 374,000 or so house fires every year in the US and while property crime has been declining, there are still 9 million property crimes a year. Clearly these events are happening to someone. Another 15% or so of renters assume they are covered by their landlord’s insurance and don’t believe they need renter’s insurance. The fact is, a landlord’s insurance generally covers damage to the building, not a renter’s belongings. If your rented home goes up in smoke, your goods are not protected. A renter’s insurance policy covers personal items that are lost due to fire, smoke, wind, hail, theft, vandalism and, in some instances, even water damage. You may also be able to obtain liability insurance that would cover you for any guest injured in your home or for damages to the building that you may cause.
There are decisions to make. How much coverage to purchase and the size of the deductible you choose will have an impact on premiums. There are online tools you can use to assess the value of your stuff that will help you determine the amount of personal-property coverage you need. If you are just starting out and buying your furniture at Goodwill you can consider a limited coverage; if you are a high end shopper buy more coverage and if you own particularly valuable items like jewelry, electronics of video equipment consider supplemental insurance in the form of a rider or floater to cover value beyond the policy limits.
A renter’s insurance policy does not cover everything and it is important to read your policy carefully or seek good advice before purchasing. Insurance policies in general will not cover flood damage and if you are living in a college dormitory, hotel or executive housing, you should be aware that temporary living situations are not covered by renters insurance. Finally, in your planning, remember your deductible. If you have a $250 deductible and have your $500 laptop stolen, you can expect only a $250 check.
If you need help with a renter’s insurance policy – whether it is advice on coverage, deductible questions or a quote – call us here at Homer Smith Insurance. We have the experience to help you make informed choices.