Picture this: A college student—we’ll call him Larry—of meager means rents his first studio apartment. It is the typical young person’s starter home: cheap TV and cheaper sofa, packing box for coffee table, futon cushion for bed. Does this kid need renter’s insurance ? Most people think the coverage is in place to protect the holder’s property in case of theft. Since Larry has nothing, why insure it? What is often missed is that the coverage also protects the holder’s assets in case of mishap.
Say the person living downstairs from Larry has lots of very expensive stuff. Now imagine Larry gets drunk, comes home, runs a bath and passes out. Water overflows from the bathtub and drains into the apartment below. Lots of very expensive stuff is ruined. Renter’s insurance covers the costs and saves Larry from a life of indentured servitude.
What if a pipe bursts in the apartment above Larry and not only is Larry’s stuff totaled, but he needs to find some place to crash until the landlord can fix the mess. Having insurance can mean the difference between couch surfing and staying at a nice hotel with a real bed.
What if Larry wants to impress a girl and has some friends over to help him paint the pad before the big date. Then one of his pals falls off the ladder while painting the ceiling and breaks an arm. Renter’s insurance will usually have liability protection, which means that if someone in the apartment slips and falls, the policy holder is covered for any costs, up to the liability limit. And if Larry’s friend sues him, he’s covered for what they win in a court judgment up to your policy’s limit, along with legal expenses.
So, how much does this cost? Just like any other insurance, the premium depends on a number of factors: location, deductible, insurance company and the need for additional coverage. If you shop around, you’ll probably find a policy for $150 and $300 per year, which will get you about $30,000 to $35,000 worth of coverage for your personal possessions and somewhere between $100,000 and $300,000 worth of liability protection.
Come on, admit it, even if you don’t have much, it’s still worth it to cover yourself with some renter’s insurance, ‘cause you never know, right?