If you’re a renter, you might think that tenant insurance is too expensive or that you don’t need it. In fact, according to a 2015 survey, 52% of millennials don’t have tenant insurance because they think that their landlord’s policy will cover any damage to their personal property. In addition, the survey found that young adults seem to overestimate the cost of renter’s insurance, believing that it is too expensive for them to afford.
Unfortunately, your landlord’s insurance typically only covers the building and does not protect the contents of each tenant’s unit or suite. Tenant insurance also tends to be very affordable, regardless of which state you’re purchasing it in.
Here’s a brief overview of the top three reasons why you should have renter’s insurance.
1. Tenant Insurance May Be Required by Your Landlord
It’s common for landlords to include a clause in their Residential Lease that requires their tenants to purchase renter’s insurance. The landlord should have their own policy to cover their rental property. However, the tenant would need their own insurance to cover potential loss or damage to their personal property.
In addition, the landlord’s insurance policy for the rental property may also require a copy of each tenant’s insurance policy as proof that each tenant has their own insurance.
2. Damage to Personal Property is Covered with Tenant Insurance
Most (if not all) insurance companies in the United States offer the standard HO4 tenant insurance policy, which is usually what renters choose. There are also more comprehensive packages available that will cover more situations where damages or loss could occur than a standard policy.
The HO4 policy typically covers common perils that may result in loss or damage of property, including but not limited to:
- Lightning or fire damage
- Smoke damage
- Wind damage
- Water damage
- Loss or damage of property from theft or vandalism
- Damage from falling objects, such as snow or ice
It’s also important to note is that HO4 policies typically also cover things like liability (e.g. if someone injures themselves in your home and requires medical attention) or hotel costs if your home becomes unlivable for a period of time (e.g. due to excessive damage, mold, or infestation).
3. Tenant Insurance is Inexpensive
Although some millennials think that tenant insurance is expensive, research suggests that the average cost of tenant insurance is typically between $12-17 per month, depending on the state and insurance company.
As an example, esurance.com reports that the average renter owns about $20,000 worth of personal property. Even if you own half that amount, the cost of insurance is minimal compared to what you would have to pay to replace your items.
Getting a Tenant Insurance Policy
Tenant insurance is an essential investment for renters to protect themselves and their personal property. Without tenant insurance, an unavoidable accident or natural disaster can leave you in a tough financial situation. Considering its low cost, it’s understandable why most landlords require their tenants to get insurance before they move into their rental property.