Most homeowners wouldn’t think twice about getting home insurance – not only can it protect you from financial ruin, most mortgage lenders require it – but when you’re a renter, does it make sense to purchase tenant insurance? The simple answer is an emphatic yes. Even though you’re living on someone else’s property, you can still be held personally liable. About half of all renters don’t take out any type of tenants insurance – this can leave you open to being sued and paying thousands out of pocket.
Good Reasons to Get Renters Insurances
When most people hear the term “insurance,” they think it’s going to cost them an arm and a leg. The good news is you can get renters insurance at a fraction of the price you’d pay for auto insurance. For the small cost of your insurance premiums, all your worldly possessions at home are most likely covered in the event of a fire or flood.
Did you know you can be held personally liable if you do any damage – even if it’s unintentional – to your apartment or other areas of the rental property? For example, if your toilet overflows and does water damage to the possessions of the tenants living below you, you could be stuck footing the bill if you don’t have tenants insurance. You’re also personally responsible if you have guests over and they do damage to the property.
Although renters usually don’t have as many possessions as homeowners, it can still cause financial devastation if you lose all your possessions at once due to a fire. Replacing all your furniture, electronics and clothing could cost you thousands of dollars.
Similar to home insurance, renters insurance doesn’t just protect your possessions; it provides liability coverage as well. We’ve all had those Saturday night parties when you lose count of how many glasses of wine you’ve had to drink. If a guest trips, falls and gets hurt, you could be stuck paying their medical bills if you don’t have tenant insurance.
Types of Tenant Insurance
Although tenant insurances can go by many names, but there are two basic types available for renters.
Basic liability coverage protects you if your family or any guests damage your unit or the building as a whole. Not having this type of coverage is reckless and leaves you open to being sued into the Stone Age. This type of insurance is similar to the liability coverage homeowners have on their policies.
The second type for renters is content coverage. If you’re living pay cheque to pay cheque, a flood or fire could put you in financial ruin. The last thing you want to do is max out your credit card to replace your clothing and furniture. Imagine if you had to replace your belongs at once – the price tag can be quite shocking. It’s also a good idea to ensure your policy has replacement cost – it will let you buy similar items if you lose them in a fire.