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Why you need renter’s insurance
The share of all households in the United States that rent rather than own is on the rise, yet many people have either never heard of renter’s insurance or ignore it. According to a 2014 survey by the Insurance Information Institute, 95 percent of homeowners had homeowner’s insurance but only 37 percent of renters had renter’s insurance. In other words, over 60 percent of renters had no basic protection for their possessions.
That’s a sobering statistic. It’s easy to be blasé when most rental leases make the renter responsible only for what happens “from the paint in.” After all, you may think, building problems may make your life uncomfortable but the repair bill ultimately goes to the landlord. In fact, while your landlord’s insurance covers damage to the building, it doesn’t cover your belongings.
If you own your home, read our homeowner’s insurance buying guide.
Consider the costs of water damage caused by a neighbor’s leaky bathtub or the smoke from a grease fire. Even if you don’t think your possessions are valuable, imagine the implications of losing and having to replace everything you own. “You try to replace your bed, mattress, comforter, sheets, pillow—we’re talking a lot of money here,” says Jeanne Salvatore, senior vice president of the Insurance Information Institute. “If you have to re-buy everything, it’s going to cost thousands, even for the most bare-bones apartment.”
Renter’s insurance provides financial protection against the loss or destruction of possessions from fire or smoke, vandalism, theft, explosion, windstorm and water damage (not including floods). If the individual is unable to live in his or her apartment, the policy also covers the cost of living in a comparable apartment for a certain amount of time. Because in most cases, renter’s insurance covers only the value of someone’s belongings, not the building they’re housed in, the cost is relatively inexpensive: The average annual premium is less than $200.
Most major companies offer renter’s insurance policies. You may even get a discount by bundling it with your auto insurance policy.
Renter’s insurance is a given for millenials: 72% of householders under age 30 live in rental housing, according to the National Multihousing Council. But it also provides a safety net for the increasing number of older people who are moving from the suburbs into the city or selling the house they raised their family in and testing out a new lifestyle elsewhere. Moreover, all of the 18- to 24-year-old renters and those 65 and older who had insurance needed to use it at some point, according to Rent.com.
For most Americans, buying auto and health insurance is a no-brainer. Renter’s insurance should be, too. “Absolutely, positively, purchase renter’s’ insurance,” says Salvatore. “It’s an essential.”
— Catherine Fredman
Consumer Reports has no relationship with any advertisers on this website. Copyright © 2006-2015 Consumers Union of U.S.
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