Why Renters Insurance is So Important
Quite a bit of lip service is given to having renters insurance. In fact most leases have a requirement that a tenant obtain and maintain a renter’s policy or at the very least, a strong word of caution about not having it. Why?
Example 1: Tenant catches kitchen on fire when a frypan is left on and unattended.
In this case, the house was completely uninhabitable, all of the tenants belongings were damaged by smoke and pets were lost to the fire. Most people assume a homeowners policy will cover the tenants belongings and lodging while the property is not able to be occupied. This is not the case. The owners policy covers the owners home, and belongings. In the case of the fire, the tenants had renters insurance. Their furniture and belongings were professionally cleaned or replaced. Their insurance company covered temporary lodging for them while they looked for a new place to rent. Had they opted for no insurance, they would have lost all of their belongings, and been on their own finding suitable lodging until they could find a new rental.
Example 2: Pipe bursts in the wall or ceiling of a condominium.
This is something that occurs more frequently than you think. Depending on the type of leak this could be catastrophic for your belongings, and displacement could be a month or more. The owner’s policy again does not cover your displacement cost, the cost of repairing or replacing your personal belongings, nor the cost of moving. Without a good renters insurance policy these unexpected expenses could really take you by surprise.
Example 3: Theft or burglary.
If you have a computer, you know how valuable it is for storing data, running applications, etc. The documents, data, photos and videos you keep on your computer are irreplaceable. The heirloom china that was your great grandmothers, also irreplaceable. Jewelry, gaming systems, small electronics, firearms, all these things are not covered by your landlords insurance policy. Without a renter’s policy, you would have replace them out of pocket in case of burglary or theft.
Example 4: Liability for injuries or damage caused by/to your guests/invitees:
You are having a housewarming party at your new rental home. One of your guests goes right through the sliding glass door, not noticing it was closed. The glass is shattered, your guest has injuries. Your renters insurance would pick up the cost of repairing the door, (minus any deductibles), and also cover anywhere from $50,000.00-$500,000.00 of personal liability depending on the policy you choose. We would like to think our friends, family and guests would not sue for an accident. It is better in the long run have coverage, just in case.
No one wins when the unexpected happens. If the property is uninhabitable, the owner may suspend rent during the clean-up and reconstruction process. Depending on the damage to the property, rehabilitation could be weeks, or even months. A tenant would be displaced and have no idea where to live, what will happen, or how they will replace their belongings. If this happened during the high rate rental season, finding a furnished rental or even a hotel would be more troublesome and extremely more costly. Rental insurance is relatively inexpensive depending on the coverage levels you are looking for. Even with the maximum coverage the cost would still be a lot less than the cost of even a small catastrophe. These are just a FEW examples of what can occur, and by no means exclusive. Speak with your insurance agent for the coverage options best suited for you.