Because of student loan debt, far fewer college graduates are buying homes after they leave school and are renting in droves. According to MSN Money, more than 73% of people under age 35 do not own a home. This means they’re either crashing with their parents or, more likely, renting. Yet more than half of these renters (56%) do not have renters insurance and 75% of those surveyed by Nationwide had no idea how affordable this very important coverage is.
Nationwide’s VP of Marketing, Mark Hara, says, “It’s clear there’s a misconception among millennials about the importance of renters insurance and how much it really costs.” Let’s look at 5 reasons you likely should run out and get yourself some of this and a couple of circumstances where you may want to slow your roll.
#1 Renters Insurance Is Dirt Cheap
In most major metropolitan markets, renters insurance will cost you less than 50¢ per day. You heard it right – most quality insurance policies that will replace your possessions in case of damage or loss due to fire, storm, smoke damage, theft, or other covered circumstances. For an annual fee of $150, up to $30,000 in personal property will be covered and if you own more costly gadgets, you can get that covered for around $200 per year.
#2 Renters Insurance Also Covers Negligence
This may sound like no big deal, but suppose one of your friends is hanging out at your place, trips over your strand of fairy lights and takes a header into your coffee table. They need 60 stitches, have no insurance and decide to sue you for negligently stringing Christmas lights out of season (no matter how festive they are). That’s not what a true friend would do, but it happens. If you’ve got renters insurance, your insurer will deal with the suit and it won’t ruin your finances.
#3 Renters Insurance Will Help You Replace Your Stuff
You may think you don’t have a lot of assets, but imagine if a fire swept through your place and it was ALL gone – all of it! That’s no TV, laptop, tablet, clothing, cell phone, furniture, etc. Without renters insurance, you’d be out of luck. Be sure to opt for a policy that guarantees “replacement cost coverage,” otherwise the amount you get could be just the fair market value of your lost, stolen or destroyed items. And used stuff is worth surprisingly little.
#4 Renters Insurance Helps You Out When Disaster Strikes
If a fire does hit your building and your apartment is fire or smoke damaged, you’ll have to move out while repairs are made. Where will you go? Where will you live while repairs are made? Renters insurance will cover the costs for you to stay in a hotel (if it’s short term) or a replacement rental (if it’s a longer term repair). Be sure to look for this rider in your policy to make sure you have this protection. Some policies will also cover storm and natural disaster – be sure to check.
#5 Renters Insurance Protects You from Theft
Not only does renters insurance reimburse you if your apartment or rental home is pilfered, but it also covers you if stuff is stolen out of your car. What’s more, if the thieves damage your property while carrying out the crime, that will be covered as well. If your door is broken, your landlord should pay that expense (their insurance will cover it), but your stolen TV, laptop and other items should be filed on your renters insurance. Be sure to file a police report promptly.
When You Don’t Need Renters Insurance
If you’re renting in a typical situation, renters insurance is likely a good investment. There are just a couple of circumstances that spring to mind when you may not want to bother. If you’re still living with your parents and aren’t formally “renting” from them, renters insurance may be a waste of money. You’ll be covered under your parents homeowners or renters policy in this instance.
Also, if you really, truly don’t own anything, it’s a waste of money. For instance, if you’re renting a furnished apartment and you just have the clothes on your back, it may be a waste of money. Or, if your roommate owns everything and you’re just enjoying their stuff, you may want to think twice about whether you want this coverage.
A Last Few Words on Renters Insurance…
If you’re still in college and living in the dorm, know that renters insurance will cover you there as well. Fires break out, stuff gets broken and stolen and storms strike colleges too. The loss or theft of even one textbook would more than repay the cost of the policy, so consider this carefully before you pack off to the dorm this fall. And, when you do buy renters insurance, buying coverage from the same insurer you’ve got your car insurance through should earn you a multi-product discount.
Another great way to keep an eye on your money is to sign up for Tuition.io’s free student loan tool. You can see all your debts in one easy dashboard, keep track of your payments and chart your progress toward payoff so you get off to a good start.