If you rent the space you live in, you should have renters insurance. There are very few situations an individual that could have renters insurance for their home is better off not carrying it. But why is that? And how did we get here where renters insurance is looked on so unfavorably?
Did you know the renters insurance product is a version of homeowners insurance?
Both the insurance industry and the insurance customer have fallen prey to viewing indemnification from the physical structure as the primary function of homeowners insurance. From this perspective, you don’t need to repair an apartment if there is a big loss, so there is no need for renters insurance. But we need to ask the bigger question, why have we become so focused on protecting the structure? The answer is simple: traditionally, home ownership represented such a sizable portion of the average American’s financial liabilities that insurance became laser-focused on it.
However, this understanding has not evolved enough with the cultural shifts in the United States over the past 20-30 years. Renters today are different. And the group is so varied that quite often the only thing renters now share in common is, well, that they’re renters!
Consider the differences in livelihood of the 55 year old remote professional who chooses where to live vs. the 19 year old college student that is leasing their first apartment.
Both should absolutely have renters policies, though the inner details are likely to diverge.
The coverage that one gets in exchange for the premium on renters insurance is a worthwile investment. Most Americans don’t have an appropriate amount saved to handle an emergency. Consider the difference between individuals who have to find a place to stay after their living is upended by a fire. Those without renters insurance are at the mercy of their own networks and emergency funds. Even for financially well-of individuals, this process is going to be costly and untidy. And this is where renters insurance is even more important for folks who are not as financially well-off. So many of the questions surrounding, “what’s next?” after a catastrophe can be answered by that simple renters policy.
The renters policy changes the calculation. Instead of a coin flip on a large amount of damage over a 30-year span, the renter exists in a far more all-or-nothing usage base. And that “all” is typically a whole lot less than fixing a roof or re-building a home after a fire. Because of that, far fewer renters claims are filed for far fewer sums of money, hence the premium is much lower.
Because of this, though, the renters conversation is far too often rushed and not done properly. My biggest plea to folks is to not ignore this conversation and that goes for agents and insureds! Minor differences in premium can mean gigantic differences if a claim is made. Even something small like a $4/mo additional premium is potentially able to insure one for a lot more damages and ensure that the assets one owns are properly protected.
If you have any questions about renters insurance or have felt that this product was brushed aside in the past, reach out. Let’s make sure that you’re properly taken care of in case you actually need this policy to do what it’s supposed to do.
Disclaimer: None of this is a discussion of a reader’s specific policy and should not be considered insurance advise about your coverages, it is for educational purposes only.