Q: My partner and I recently moved into an apartment together. I think we should have renters insurance, but she doesn’t think it’s necessary. What advice would you give to renters?
A: I would have to agree with you on this one! As more and more people seem to be renting today, it’s especially important to make sure you’re protected from unexpected events at your apartment. Here are some basics to get you started.
If you’re renting an apartment, home, or condo, you might assume you don’t need insurance. Should anything structural happen to the building, the property owner is responsible for repairing the damage under their policy.
But they aren’t responsible for your belongings. Should you lose your rental to a fire or robbery, the owner of the property will not be responsible for replacing them. If you’re a renter, it’s paramount that you have renters insurance to replace your personal property. Relying on government services to cover them may leave you out in the cold. Some landlords may require you to have rental insurance as part of your agreement, while others may leave it up to the tenant’s discretion.1,2
Overview of Renters Insurance
Renters insurance works much like a homeowners insurance policy. Renters insurance won’t cover dwelling or structural damage but instead covers the cost to replace your belongings, loss-of-use coverage to your living space, and personal liability damages should someone get injured in your apartment. When one of these unexpected events occurs, you would file a claim with your renters insurance company and, depending on whether you have a deductible, be eligible to receive benefits after that is taken care of.1,2
What Renters Insurance Covers
There are specific types of damage that renters insurance covers. You’ll want to read your policy carefully to ensure that your belongings are properly insured. Typical renters policies cover events like:
- Fire
- Smoke damage
- Falling objects
- Explosions
- Theft
- Riots
- Lightning and electrical damage
- Snow, sleet, and ice1,2
What Renters Insurance Does Not Cover
There are specific events that your renters policy probably does NOT cover. However, if you live in an area affected by floods or earthquakes, for example, you should be able to add an endorsement at an extra cost that covers these events. Renters insurance typically does not cover:
- Flood
- Earthquake
- Damage from pets
- Personal injuries
- Damage from pests
- Car damage
- Sinkholes
- Terrorism1,2
Why Do You Need Renters Insurance?
There are many unexpected scenarios in which renters insurance will make your life easier. For example, if you accidentally leave your bathtub running and flood your downstairs neighbor’s apartment, your landlord probably will not cover the damages. Paying for the repairs out of pocket can become quite costly and could be an additional financial burden to you.2
You also likely own more possessions than you think you do. If you take an inventory of everything you own and the price you paid for it, you’ll quickly discover that you own quite a lot. Replacing electronics can become costly, and you don’t want to have to pay out of pocket to replace everything. Your renters insurance will also cover more than a stolen TV. Should you have your laptop stolen while you’re traveling, your renters insurance policy will also pay to replace it.2
Cost of Renters Insurance
One of the misconceptions about renter’s insurance is that it’s too expensive to set up a policy. That couldn’t be further from the truth. The average cost of renter’s insurance is $168/year. If you can bundle your renters insurance with your auto insurance policy, you may receive a discount. Additional discounts may be provided if your apartment has smoke detectors, built-in sprinklers, and other safety measures.3
Regardless of whether your landlord requires renters insurance, it’s important to protect your valuables. For an average of just $14/month, you can get peace of mind should a disaster strike.
Sources:
1https://www.marketwatch.com/picks/guides/insurance/what-is-renters-insurance/
2https://www.nerdwallet.com/article/insurance/do-you-need-renters-insurance
3https://www.bobvila.com/articles/renters-insurance-cost/
Jeremy R. Gussick is a Certified Financial Planner™ professional affiliated with LPL Financial, the nation’s largest independent broker-dealer.* Jeremy specializes in the financial planning and retirement income needs of the LGBTQ+ community and was recently named a 2022 FIVE STAR Wealth Manager as mentioned in Philadelphia Magazine.** He is active with several LGBTQ+ organizations in the Philadelphia region, including DVLF (Delaware Valley Legacy Fund) and the Independence Business Alliance (IBA), the Philadelphia Region’s LGBT Chamber of Commerce. OutMoney appears monthly. If you have a question for Jeremy, you can contact him via email at [email protected].
This content is developed from sources believed to be providing accurate information and provided with the assistance of Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
Jeremy R. Gussick is a Registered Representative with, and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
*As reported by Financial Planning magazine, June 1996-2022, based on total revenues.
**Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2022 Five Star Wealth Managers.