Why Renters Should Have Their Own Insurance
A recent survey found that 35% of Gen Z adults pay for a cell phone protection plan, but only 21% have renters insurance.1 Young renters who are just striking out on their own may not realize that a landlord’s insurance policy typically will not provide financial protection against the destruction or loss of the tenants’ possessions.
Renters insurance provides protection for loss of personal possessions resulting from fire, smoke, windstorm, lightning, vandalism, theft, an explosion, or a water problem. (Damage from flooding, however, is not covered.) A renters policy also provides liability protection in the event someone is injured in the home; and if the home becomes unlivable due to a covered peril, renters coverage may pay for the renters’ living expenses while the property is being repaired.
There are two basic types of renters insurance:
- Actual cash value pays to replace possessions minus depreciation — a reduction in value due to age and use — up to the coverage limits of the policy.
- Replacement cost pays the actual cost of replacing possessions with no reduction for depreciation (up to the policy limits), but premiums are typically higher.
The average cost of a renters policy nationwide is less than $200 per year.2 If you rent your home, you may want to consult an insurance professional to explore your coverage options.