It comes as a bit of a shock to us how few renters actually purchase renters insurance. Some folks haven't even heard of it, actually, and if they have, they're not quite sure what it's for. A study a few years ago showed that while 95% of homeowners have homeowners insurance, only about 37% of renters have policies for their rentals. That's a stark contrast. But what is renters insurance and why do you even need it? We'll get into what renters insurance does and cover five great reasons why you should always have it when you rent.

1. You Need to Protect Your Possessions

Do you have any idea how much your possessions are actually worth? We tend to accumulate things without knowing how much we've actually spent over time. If you tallied up the value of your furniture, electronics, jewelry, appliances, and clothing, it would probably shock you. Most renters really have no idea of the replacement value of what they own, and if items are damaged due to a water leak, stolen by a burglar, or destroyed in a fire, you really need renters insurance to replace them all.

If you don't have renters insurance, all the damaged or lost items won't be covered by your landlord's insurance, and you'll be out thousands of dollars. Renters insurance will replace your lost or damaged items based on their replacement value, meaning if your laptop cost you $1,500 new, renters insurance would compensate you to replace the same laptop or one that's equivalent. It's peace of mind, really, and you don't have to stress about having to pony up the funds all over again.


2. It Covers Your Possession Even It's Off-Site

I once had my mountain bike stolen when I was renting an apartment at college, and my bike was locked up outside a coffee shop. I found out my renters insurance would cover the cost of my stolen bicycle, and I received the cost of replacement. I actually upgraded my bicycle, which was a nice benefit of having my original bike covered in full.

That's one of the huge benefits of renters insurance in that it covers the cost of stolen items that aren't even in your rental at the time of the theft/loss. This means you can rest assured that you don't have to both lose your possession and dig into your own pocket to do so. Just make sure you file a police reports the time of the incident, and make sure you keep documentation of your possessions. Most renters insurance providers require you to keep an itemized list of your possessions, and it's always smart to keep all of your receipts and credit card statements for those purchases.


3. When You Cause Damage to Another Rental

What if you left the tub faucet running too long because you got a phone call and the water flooded the apartment below you? Aside from the massive relationship mending that would be required, you can't afford to pay for the damages out of your own pocket. This is where renters insurance can save your hide (and your bank account). While it's wise to pay attention to the fact that you don't live in a single-family home where damages don't affect others, accidents happen all the time.

A standard renters insurance policy will typically have liability coverage at a minimum of $100,000, which should help cover damages, injury, or legal expenses incurred during an incident. It can range from you putting a hole in the adjoining wall with overly aggressive picture frame hanging, or worse, you may have dropped a 70-pound dumbbell through your bedroom floor into the ceiling of the tenants below. You can always opt for more coverage, of course, but the minimum is better than nothing.


4. It Can Save You if You Lose Your Place

If there's a fire, and your apartment is destroyed as a result, renters insurance will help you cover the cost of finding another place, even if it's just a temporary situation. The clause is called "loss of use" or "additional living expense" that applies in situations when the landlord says you cannot live there anymore due to physical conditions like flood, fire, pest infestation, mold, etc. Many of these circumstances are out of your control, so it's good to have that insurance safety net in

This means if you need to move to a hotel until you find another place, your policy will cover those costs. In addition to this, most policies will even cover the cost of meals or other living expenses required (within reason, of course, so don't try getting steak every night). until you can return to your rental after it's repaired.



5. It Covers Accidents and Negligence

What if an accident happens in your rental, and it involves someone else, someone who doesn't live there? There's something called Personal Liability Renters Insurance, and it's surprisingly awesome. That's because it covers you if you cause harm to someone else in an accident or through negligence. This means if your cat scratches someone's eye when they're visiting you in your apartment or if a piece of art falls off your living room wall on your guest's head, your personal liability renters policy will pay legal costs if they sue you. That means the thousands it might cost (including court costs) to pay for damage/injury could be covered by your policy.

Of course, personal liability renters insurance won't mend your relationship with that person, but it will help patch things up from a financial and legal perspective. The extra provision won't cost you much more for your monthly coverage, and it just might save your finances when things go bad.