Insurance doesn’t exactly have a reputation for being cheap. From car insurance to health insurance, costly premiums can hinder the best laid budget plans. Nonetheless, there is at least one type of coverage that could save you thousands of dollars if the unfortunate happens.
With the home ownership rate at its lowest level in about 20 years, more people should familiarize themselves with renters insurance, which still remains a mystery to many Americans. According to a new survey from InsuranceQuotes.com, six in 10 renters do not have renters insurance. Why? 45% say they lack coverage because it’s too expensive, but 84% admit they don’t know how much it costs or hold misconceived beliefs about policy prices.
Renters insurance is probably cheaper than you think. The survey finds that 71% of Americans estimate that renters insurance costs more than $250 per year, with 22% of respondents believing coverage costs at least $1,000 per year. In reality, the National Association of Insurance Commissioners reports that the average price is just $187 per year. Considering the value of typical items found inside an apartment or rental house, renters insurance may be quite appealing at less than $200 per year.
Millennials are the most likely of all age groups to say they don’t understand how renters insurance works, and they don’t know where to get insured. Furthermore, half of millennials incorrectly believe they don’t need renters insurance because their landlord’s insurance will cover their personal belongings. “The landlord’s policy (only) will cover the structure, walls, and fixtures,” explains Chris Hackett, director of personal lines policy for the Property Casualty Insurers Association of America.
A renters insurance policy provides coverage in three main areas: personal belongings, liability, and living expenses after a claim. A policy typically covers your personal items such as electronics, furniture, and clothes. Even if these items are stolen away from the rental home, they may still be covered. Liability coverage applies in an incident where a visitor to your rental home becomes injured. If you are sued, renters insurance can help with legal costs and medical bills. If you have to move out of your home due to a covered catastrophe, your renters insurance will also pay a certain amount for meals and a hotel or other living space.
Purchasing renters insurance is much like other types of insurance. Start with obtaining a quote from the insurer you already use for other types of coverage, but make sure to shop around as prices vary. TopTenReviews ranks State Farm, GEICO, and Travelers as the top three renters insurance providers in 2015. In most cases, you should consider a policy with replacement cost coverage, where the insurer covers the amount it would cost to buy a similar item today, without deducting for depreciation. Make sure you choose a deductible you can afford if you ever need to file a claim, and always read the fine print. If you live in an area prone to earthquakes or floods, you may want to get extra coverage for catastrophes, since a standard policy won’t cover you for those disasters.
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