Don’t pay the price for believing a common misconception

Buying a home makes picking up homeowners insurance second nature, as lenders require them in exchange for a mortgage. In contrast, many renters presume their landlord covers them in a similar way. But in almost all situations, that’s not the case. Only the structure tends to be protected by the owner, not the tenant or their belongings … much less other unique things often covered by a policy. Renters insurance is a wise investment.

You’ll be in the minority when you do get it. Most homeowners (95 percent) have home insurance, but only 41 percent of tenants have renters insurance. Passing on it may slightly cut expenses, but doing this is the classic “save now, pay later” mistake. It often sets you up for risk and expense down the line.

The hot housing market means fewer homes than ever are available to buy affordably, making rentals the likelier option for many people, such as younger people leaving home or couples just starting out. While today’s housing shortage also means unpleasantly high rent in some quarters, renting at least beats the cost of homeownership in one respect – insurance policies are usually significantly less expensive.

When do I need to get renters insurance?

The ideal time to consider any insurance policy is before you need it. If you find yourself debating signing a new lease or if you are currently renting, ask yourself “What are the benefits of renters insurance?”

Renters insurance is very affordable

The average cost of renters insurance is about $187 a year across the country (less than $16 a month) and $211 per year in New York. Homeowners, on the other hand, are paying an average $1,083 a year for their policies nationwide and $1,256 in New York; five to six times that of renters.

Consider what rental insurance does and doesn’t cover

A break-in, fire, or water damage can all devastate a property. Maybe you or your pet caused the damage or even a guest. Perhaps someone was injured. Your landlord’s insurance will buy new doors, repaint walls, or repair pipes, but you’ll be left high and dry when it comes to repairing and replacing objects or dealing with medical fees.

Renters insurance (also referred to as an HO-4 policy) will protect what’s yours and may go further than your residence. Some policies protect your possessions if they’re stolen off-premises; for example, a parked car while on vacation. Liability costs should also be covered in your rental insurance. This will help pay expenses if someone is hurt in your home.

Renters insurance covers the above disasters and more. For example, if internal or external elements render your rental unlivable for a time, a policy could pay for temporary accommodation elsewhere or travel expenses. Make sure to look for ALE (Additional Living Expenses) in a policy before you sign.

More things to consider before purchasing renters insurance

  • Actual value vs replacement cost. Most possessions lose financial value over time. Actual value on your renter’s insurance will pay what the damaged item is worth in today’s market, minus depreciation. Replacement cost will cover today’s cost without the deduction, but it is more expensive.
  • Have you inventoried your possessions? Doing so before you choose a policy will make it easier to value what you own and deal with your insurer. Photograph (or better yet, film) every room to clearly show what you own. Be sure to open closets and document the contents of drawers. Having an idea of the worth of your possessions prevents taking out too much (or too little) insurance. These free software options will help you get started.
  • Do you own anything of marked value? This worth may be cash or sentimental. Any items which stand out as special for you may require a little extra insurance of their own.
  • Is there any way to lower my renter’s insurance premiums? You may be able to lower your costs by adding security measures to your rented accommodation such as locks on windows and doors, smoke detectors, or other alarms. Having more than one policy with the same insurer may also qualify you for a reduction.

Having insurance is always better than not

What have you got to lose by taking out renters insurance? The answer is “very little.” The cost is low, the risk mitigation is high, and it’s one less thing to worry over. At NICRIS Insurance, we want to help our clients achieve that kind of security and peace of mind. Whatever point you’re at in your housing journey, we can help you decide your next move.

NICRIS Insurance focuses on providing clients with the appropriate suite of products to protect them, their interests and their loved ones. If you need some advice or would like a free, one-hour personalized insurance review, we’d be happy to help online or at 516-544-0006.