Renting has a lot of advantages. Combine these with a sharp rise in housing prices and you get a rising renter demographic. It’s more important than ever that these individuals protect themselves with renters insurance.
As we highlighted in an earlier blog, 65% of NYC citizens are renting, along with 46% of the overall state. Despite those big numbers, less than half of renters have insurance in place. This is a shame, because rent payers may end up losing the financial savings gained from renting if disaster strikes – and any loss could have been prevented with one of the most affordable types of insurance out there.
Why renting is trending
The national number of renters is at its highest since 1965; the result of a post-housing market crisis that’s seen a slow climb back to expensive real estate prices, stricter lending standards, and harder-to-obtain mortgages. Home prices are higher than before the financial crash of 2008 and there are fewer available homes on the market now than in the past.
Millennials are the generation poised to be today’s and tomorrow’s homeowners. Sadly, they’re also a demographic crippled by student debt and other repayments which are barriers to mortgage down payments and the ongoing costs of homeownership.
CNBC’s Realty Check reported in July 2018 that if mortgage rates escalated by even a single percentage point, then 24% of homeowners wouldn’t move and 36% probably wouldn’t. Recent forecasts predict as much as a 10% rise in mortgage rates by July 2019; ten times the rate that concerned homeowners only a year earlier. Renting an apartment is increasingly the way to go for many people. And if you opt to go this route, remember to make renters insurance a part of your move.
Why renters insurance is affordable and saves more long-term
The average cost of renters insurance in New York ($211) may be above the national yearly average of $187, but this still works out to less than $18 a month. This is a good investment when you consider that even the most basic policy can pay out $50,000 of property protection. With the average American spending over $1,000 annually on coffee, $211 for New York renter’s insurance looks like a pretty good deal.
Renters insurance is an important protection, given that a landlord’s insurance only covers the structure, not the renter, their property, or any visitors they have. Read our earlier blog to learn more about exactly how it protects you and how costly a lack of insurance can really be.
Let’s summarize some of those risks. There’s a fire every 24 seconds in the United States. Anything from a candle to a cooking stove can quickly spark a disaster. Fire is a covered peril under renters insurance, and it’s usually covered well. Your property and your health will be covered. To what degree will depend on the policy.
The latest figures from the FBI show well over a million burglaries a year in America. People lost $3.4 billion in property with an average cost of $2,416 per household. Renters insurance will cover you here as well after you’ve paid your deductible. It will also extend to cover any possessions which may be stolen from your car, even while you’re traveling away from home.
And should disaster strike at home – say, a fire occurs that’s serious enough to force you to move out for a while – renters insurance can provide reimbursement for temporary accommodations. Your policy could help pay for a hotel or other place to stay while your residence is fixed up.
Flood insurance is something you will have to purchase separately but should seriously consider adding in with renters insurance. Like most premiums, the cost will vary depending on extenuating factors like location of the building (being in a flood zone increases premiums), the nature of your living space (upper floor apartments are in less danger from a ground floor), and past claims activity on the residence.
Ultimately, the main question about renters insurance is one which applies to nearly every type of coverage. It’s an extra expense, but can you afford not to have it? We think it’s almost always the right choice, given how comprehensive and relatively cheap most renters policies are.
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 insurance advice or would like a free, one-hour personalized insurance review, call 516-544-0006 for more details or drop us a line.