If you're a renter and think your landlord's insurance policy will cover you after a fire or robbery, you're mistaken – but not alone.
"Many renters can be under the false impression that their landlord's insurance is providing them with some level of coverage in the event a loss occurs, and this is not the case," says Mario Morales, manager of corporate underwriting for MetLife Auto & Home.
However, you can protect the contents of your home – and the people who enter it – by purchasing renters insurance. This affordable insurance costs just a couple of hundred dollars a year, Morales says.
"This is a minimal investment for the peace of mind of being protected for liability and personal property losses," he says.
Here are four reasons to consider purchasing renters insurance:
Many landlords lay down the law and require tenants to purchase renters insurance. If you plan to rent, you simply might have to buy insurance, like it or not.
"This is becoming a common requirement in lease agreements since landlords are looking for more protection against losses caused by the tenant which would have been covered by the tenant if they had a renters policy," says Morales.
Your landlord's insurance only covers the structure itself. "The landlord's policy protects their insurable interest: the building. Anything within your four walls is your financial responsibility," says Jim Quade, director of field sales operations for Liberty Mutual Insurance.
The most obvious reason to purchase renters insurance is "to cover your belongings should they be stolen, lost in a fire or damaged by another covered loss, whether at home or elsewhere," Quade says.
A renters insurance policy reimburses the value of damaged or stolen items subject to the policy deductible and policy provisions. Don't make the mistake of deciding not to buy insurance simply because you don't own expensive jewelry or art.
Renters insurance can benefit all renters – even those who are just starting out.
"Many young people don't think they have much worth insuring," Quade says. "However … one might be surprised by how much 'stuff' they actually have."
Clothing, shoes, a mountain bike, a laptop, a flat-screen TV, musical instruments, furniture – it all adds up, Quade says.
If a houseguest accidentally slips in your shower, you're liable. If a dinner guest comes down with food poisoning, you can be held accountable.
"Although you may only be renting an apartment or home, you can still be liable for injuries sustained by a visitor to the property," Morales says.
Renters insurance can help protect you against such potentially costly claims.
Liability coverage protects you from claims made against you for accidental damage to another person or another person's property "whether sustained at or away from your home," Quade says.
Don't make the mistake of thinking the risk of a liability claim is far-fetched. As Quade says, "many perfectly innocent accidents happen every day."
"Without proper financial protection, that accident could jeopardize your current and future savings or wages," he says.
Renters insurance can help cover your temporary living expenses if you are displaced due to property damage, such as a fire or a flood.
"This is a key component of coverage," says Morales.
For example, if you buy insurance, you can avoid the fate of individuals and families who end up on the evening news after being displaced by fires.
"In many cases they are relocated to a shelter," he says. "If they had a renters policy, a percentage of the coverage will cover the cost of a hotel or other temporary residence until they are able to find a new place to live."
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