Graduated Learning: Life after College

I got my degree, I got a job…now what?

Renter’s insurance: Worth the expense? September 27, 2011

Filed under: Personal Finance — Stephanie @ 10:25 pm
Tags: , , ,

The last 5 years, I was living on the edge.  I was living in an apartment, but I didn’t have renter’s insurance.  Of course our landlord had homeowner’s insurance.  But if our home was ever broken into, or caught on fire, we’d be out of luck.

I never really thought of renter’s insurance as being very important.  I figured I didn’t own enough “stuff” to make it worth it.  Insurance is always a gamble (it’s something you hope you never have to use). But renter’s insurance covers more than “getting your stuff back”.  Yes, most plans help you buy replacement clothes, furniture, and other items lost due to theft or fire.  And that’s definitely important, if all your work clothes are suddenly gone!  But this past winter, a good friend of mine was living in his condo, and one of the other condo owners had a fire that spread to his place.  Between the fire, smoke, and water damage, his place was unlivable.  He had homeowner’s insurance (I’m pretty sure it’s required if you have a mortgage…the bank wants to protect their investment!)  This meant that his place could be repaired.  But it also meant that in the interim, the insurance company would help pay for living expenses.

So, I bought renter’s insurance.  I figured it was better safe than sorry.  If something happened to our place, I’d want to be able to replace things and find a place to stay.  Plus it sounds like they also provide some legal assistance.  I bought it with the company I already have my auto insurance with, so there was a multi-policy discount.  Woo!  The total cost for the year of insurance is $171/year.  Also during that phone call, I negotiated a better car insurance rate.  I switched from a $500 deductible to a $1000 deductible.  Not sure if that was the best choice, but I wanted to bring down my premium.

So, what do you think of renter’s insurance?  A good decision?  Or a bit of a scam?  Is it better to just have an emergency fund for replacing your stuff than paying an insurance company?  Do you have renter’s insurance?  Why or why not?

And do you think I made the right choice in increasing my auto deductible so I could lower my premium?  It could end up being penny-wise pound foolish if I end up filing a claim, since the extra cost would outweigh the discount in premium.  But I guess in this case, I could use emergency fund money to pay for small issues.

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13 Responses to “Renter’s insurance: Worth the expense?”

  1. eemusings Says:

    Yes, yes, yes!

    I’ve been burgled too many times and after the first time I went out and got some (had been contemplating it but didn’t get around to buying it in time).

    Here it’s just contents insurance (and if you own a house, there’s separate house insurance, too).

    Again, don’t know about the US but contents insurance also protects renters in the sense that there is a maximum liability should you accidentally burn down half the house after leaving the stove on. That will be covered by the LL’s house insurance, but they can still come after YOU for money.

    My one question is whether I should fork out for the full cover or stick with the lower tier, which only pays out the depreciated cost of items rather than full original value. So far sticking with the latter has served me fine.

    • Stephanie Says:

      Oh yeah, I remember reading about all those times you’ve been burgled! No fun!
      I did read about the difference between the “full cost” and “depreciated cost” plans. I guess it depends on the kind of stuff you have, and how much you’ll want to replace all those items.

  2. GoldenBoy Says:

    I would definitely say it’s worth the money. I got renter’s insurance back in April for less than $15/mo. My apartment got broken into 4 months later and they sent me a check for $3,000. Doing the math on it, it will take 200 months, which is 16 years and 8 months, before they make their $3,000 back.

  3. Yup. It seems like a good idea. Mine also covers if things get stolen from my car or while they’re not actually in my apartment. It also covers personal liability, like if someone tripped down your stairs or something. Hopefully no one you would have over would sue you for this, but you never know.

  4. Definitely important to have renter’s insurance. You never know when disaster will strike!

    We have a really low car insurance premium ($100) which I have been considering raising. I need to sit down and find out how much we would save per month raising it to $500 because we have a decent enough emergency fund now that we could cover that if we needed to.

    • Stephanie Says:

      I’m assuming you mean insurance deductible for the $100. Yeah, that’s pretty low. I think the recommendation is usually to up your deductible to lower your premium if you’ve got money in savings to cover the difference.
      By the way, your picture here is ADORABLE. Your babies are the cutest!

  5. cestarr Says:

    Renter’s insurance is definitely worth it. We are landlords and had a fire a several years ago. More recently, we had a flood. We felt terrible that our tenants had no way to recover the value of their personal property. We had encouraged them to get renters insurance, but they didn’t take our advice. You never know what can happen! It’s a small price to pay to insure your valuables.

  6. Mariel Says:

    Jeff and I didn’t have renter’s insurance when our apartment fire decimated our belongings. The cost of replacing things in the apartment was really pretty low (we live in a studio, so we don’t have much stuff and that stuff isn’t all that valuable). We had to spend time figuring out living arrangement plans, which was a hassle, but our apartment didn’t charge us rent after the fire, so we could use that money for housing. Overall, things weren’t horrible for us, even though we didn’t have renters insurance. However, in retrospect, renter’s insurance is very cheap, and probably worth the convenience of just having a clear avenue to deal with things after a fire or break-in, so now we have it. Also, when I got my wedding ring, the insurance for that was tagged onto our apartment insurance, and that was pretty important.

  7. Kristin Says:

    I didn’t have renters’ insurance for my last apartment, but I do now. It’s only about ~$10/mo when I bundled it with my car insurance, for more coverage than I think I’d need when I made a rough estimate of my higher-end goods. Especially living in an apartment complex, other people’s stupid mistakes could become a big problem for me. I heard about one too many apartment fires in Boston! It also helps limit your liability if you do something and it affects your neighbors. Bottom line for me: small amount of $$ to cover large potential risks = worth the cash.

  8. Sofia Says:

    That is such a coincidence, I called my insurance co. (Allstate for my car) and signed up for renter’s insurance just this morning. It cost me $116 year and allowed me to save $54 per year on my car insurance. The premium is $500 instead of $250, but I am alright with that. I feel much more secure now with renter’s insurance-overall Good Call.

  9. Julia Says:

    Since everyone else has posted pro-renters’ insurance, I thought I’d pipe up to say that I don’t have any. In the seven years I’ve lived in Boston, I’ve never had a fire or other mishap in my apartment (knock on wood!). So I guess I’ve saved myself $840 (if the rate is $10/month). One of the reasons is that I don’t own much – no expensive tv, dvd player, etc. That said, if my apartment did burn down, I would hardly be able to afford to replace everything at once. It would take time to rebuild. So let’s hope that doesn’t happen 🙂

    Also, I read awhile ago that Americans are more insured than anyone else in the world. As a nation, we’re great at supporting all those insurance companies out there. That’s not to say that everyone here didn’t make the right decision for themselves. From the stories, it sounds like they did. But I think it’s worth thinking about – good blog post!

    • Stephanie Says:

      Very good point! If you don’t have insurance, you’re saving that money every month! I agree, it depends on what you’d need to replace, and how much it would cost. If I didn’t have insurance (or even now that I do), I probably would try to look at the loss of the items as an opportunity to pare down my wardrobe! The ultimate decluttering (though I don’t want that to happen!).

      Yeah, I guess a lot of people decide to be “better safe than sorry”. At least for people who can afford it. Seeing as there are quite a few uninsured people (in healthcare) it’s unfortunate that it’s such a confusing and expensive industry!

  10. Penny Says:

    Every apartment I’ve ever lived in has required renters insurance, so I’ve always had it. (Many students can also be covered under their parents’ home owners insurance for no additional charge if you just inform the insurance company.) Even though I’ve never had a problem, I’ve lived in a complex where a different building burned down shortly after I moved in, so I was glad to have the insurance for the peace of mind. It also isn’t just about the cost of your possessions but also the financial liability if someone gets hurt in your apartment and sues, so that needs to be considered as well.

    The best deal I ever saw for renters insurance was when a friend of mine called his car insurance company to add it onto his policy. The multi-policy discount was more than the cost of the renters insurance, so they actually cut him a refund check.


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