Why You Need Renters Insurance, Right Now

Here’s a suuper easy Tiny Step to Adulthood to kick off the New Year: get yourself set up with renters’ insurance. You should do this because it comes with a number of advantages, but also because it’s a total springboard to self-satisfaction. If you already have it, it’ll make you feel good about yourself because you’ve gone ahead and accomplished this like the important adult you are. And if you don’t, I promise that for most of us, you’ll be able to start and finish the procurement process within a day. (Unlike the time we all tackled our wills.) Look at you, making good decisions that require minimal effort and have big payoffs! After the holiday season I just lived through, that’s the bar I want to set for us all in 2015.

I’ve been renting apartments up and down the Eastern Seaboard for fifteen years now. (When you graduated from college, did you also think that turning thirty magically brought career, love, and long-term permanent housing success? Ha.) But I’ve only had renters’ insurance for maybe half of them. I’d always mean to get it, but then I would decide that a savvy consumer would surely get a bunch of quotes from different places and then make a well-informed decision, and then, whistle whistle, looks like I better binge watch The Hills while decoupaging maps onto coasters.

My turning point was when I mentioned to a friend that I wasn’t sure I really needed renters insurance anyway, given that my apartment was mostly secondhand Ikea furniture. She promptly pointed out that I had amassed thousands of dollars in camping equipment in the past decade, and I’d be PISSED if something happened to it. And she also had a ready suggestion for a company that she’d been using for years. These two points finally pushed me over the renters insurance edge. I’m about ninety percent more successful if someone says to me, “This worked for me. Do it!”

What Renters Insurance Does

So that we all start from a place of common understanding: renters’ insurance protects the stuff you own, even when you don’t own the place. Your landlord probably has insurance for the building in which you’re living (god, I hope so!), but that insurance won’t cover your possessions. According to Jay Northway, my patient insurance agent friend, your typical rental insurance policy will offer a few different types of protection: coverage for your belongings, for loss of use, for liability coverage in case of accidents, and some optional add-ons. (And of course, I will caveat all of this by saying that these are either general examples, anecdotes from friends, or ones I pulled from my own renters’ insurance. So you should check your own policy, or talk to your own agent so you know exactly what coverage you’re signing up for.)

Personal Property Coverage

My smart friend Ann, a self-described “renters insurance devotee,” has this to say: “During my first semester of law school, about a week before finals, someone broke into my house in the middle of the night and stole my laptop, wallet with about $60 in it, camera, and iPod. My renters insurance agents were absolutely wonderful. I had a check for the full amount of my loss, minus my $250 deductible, within thirty-six hours. Pretty amazing, because I was then able to take my finals a week later on my new laptop.” Then Ann eventually went on to graduate from law school and become a bad-ass abortion access attorney, and I think we can thank renters insurance for at least a portion of her success, don’t you?

Ann’s story is pretty common. It’s easy to rack up assets without really realizing it. Maybe, like my household, you have a flat screen TV, two smartphones, a laptop, an iPad, and precious technical backpacking gear (my god, how I love technical clothing). Or maybe you’ve collected 20K in really nice business clothes. Or maybe you were permitted to put in your own washer and dryer. At any rate, if your stuff gets stolen, or damaged due to an event like a robbery, a fire, or a landlord’s renovation gone awry, and you are smart enough to have renters’ insurance, all you need to do is file a claim. Some companies may require police reports, some might send a representative out to meet with you, and some might require nothing at all, so when you’re shopping around, ask what you’d need for the claims process. At the end of it, you’ll be reimbursed for much of what you paid.

Furthermore, your coverage may extend to your stuff when it’s out in the wide wireless world. Someone told me that after her phone was snatched out of her hands on the subway, her renters’ insurance covered the full retail cost of a new phone, less her deductible. And oh, how this makes me wish I could turn back time and go back to 2008, when I stood at the West 4^th stop looking down at my cracked phone forlornly sitting on the B train subway tracks! At the time, to make myself feel better, I decided the Universe was telling me to get over it already and stop scrolling back through texts and photos from my ex. Which, fine, maybe it was. But some quick cash for a new monochrome Blackberry Pearl would have softened the blow.

Loss of use

If a fire or landlord’s renovation gone awry is bad enough that you can’t live in your home, your insurance policy may cover your housing costs while you’re bunking elsewhere. And if you’ve signed a lease, you still may be required to pay your rent while you can’t live in the place, and your policy may cover that, too. This still seems unfair to me, but at least now I know that my renters’ insurance will cover my rent while I can’t live in my home.

Liability

The other major protection that renters’ insurance will offer you is your liability in case of accidents. That means that if a lit candle falls in your bedroom and you are not there to see it, and it accidentally sets the curtains ablaze, you can be held liable and be required to pay damages. Same thing goes if someone accidentally skewers themselves on the vintage spiky porcupine sculpture you proudly display in your living room. And it might even cover your over-enthusiastic Frisbee throw through the living room window when you’re at a picnic at someone else’s house. If it’s determined that you were negligent, and you have to pay for their medical expenses, or lost wages, your policy can cover you.

Read the fine print: Actual cash value versus reimbursement costs, and personal property riders

Keep in mind that your belongings will be covered at their value, minus depreciation costs. That means if you had a banging TV from 2002 and it gets stolen in 2015, you’re going to get much, much less what you paid for it. You may want to go with a policy that spells out reimbursement costs, versus actual cash value. You’ll likely pay a higher premium for this coverage, but you’ll be able to cover the purchase of replacement items at their current costs. A college friend of mine upgraded to a fancy laptop a few years ago, and decided to add an annual $50-ish rider to her policy to cover about $1600 in reimbursement costs for the laptop. After taking it to India for two months, she sublet a friend’s apartment in another state, and came home one night to find the door open and the laptop gone. Because she had the rider, after filing a claim with her insurance agent, she received a reimbursement for the full amount, and did not even have to pay down the deductible. “Having my (temporary) home broken into was unsettling and scary, but was ultimately not that big a deal, thanks in large part to renters’ insurance! (And my backed up computer!)”

Tangent: let’s please add backing up our computers to the Getting Things Done list, okay?

If you own something that is truly one of a kind, you may want to get a personal property rider. When I inherited a sparkly family heirloom ring, I had it appraised at the store where we bought our wedding rings, and once I submitted the appraisal to our insurance company, a special add-on rider was added to our policy (for less than ten bucks a month). It is still irreplaceable, and I would still be devastated if something happened to it. But now I feel a little more secure wearing it on the subway, knowing that we would get back the full appraised value of it. Consider doing the same for the Van Gogh in your living room, rather than just including “painting” in a general inventory of your stuff.

What Renters Insurance Doesn’t Do

Yes, renters’ insurance will probably cover you in the case of accidentally setting fire to the curtains. But if you fall asleep while smoking a cigarette, when your lease very clearly states that smoking is prohibited, your insurance is likely not going to cover that. So don’t smoke. Or at least, don’t smoke where you’re not allowed to. Your basic insurance plan is also unlikely to cover damages from water (think floods or sewer back-ups) or earthquakes, so if you live in an area where either of those might be an issue, consider adding it onto your policy. And you will likely have a deductible on most basic polices, meaning that you may be able to get back replacement costs for your stolen phone or bike, but you will still will have to front $250 before seeing that check. So renters’ insurance, like anything else, won’t magically solve all your problems, but at least it will help.

How much do you need?

This really depends on you and your household possessions. A sample policy of $30K coverage for your personal property, $9K for loss of use, and $300K for personal liability might set you back $40–$50 per month. If you have opted for reimbursement cost coverage, or personal property riders, you might add a few bucks a month.

Your next steps!

1. Create a home inventory of your stuff. This will help you organize your thoughts before you talk with an insurance agent to get a quote, and it can make the claims process much easier since you’ll start the paper trail of proof of ownership. I think it’s useful even if you already have renters insurance, too. K and I haven’t updated our policy since we got married eighteen months ago, and we now have a couple more valuable items than we did a few years ago. So we might want to up our personal property coverage (as K put it this morning over the breakfast table, “We don’t want to debate whether we had two—or was it three—Le Creuset Dutch ovens when we’re traumatized after a break-in.”)

Jay suggests using one of those aforementioned devices on a quick photo tour through your rooms: “Here’s our rather shitty Ikea table; here’s the couch we bought in 2012 from Macy’s; here’s my grandfather’s irreplaceable rocking chair,” and so on. Once you’ve got your photos, jot down a quick inventory of your furniture, electronics, clothes, and other valuables. You can do this right in your phone, or there are any number of templates you can find online.

This is maybe fifteen minutes of your time, right? Maybe an hour if you want advanced credit and set up a google drive file with receipts or warranties or appraisals all in one place.

2. Ask around for suggestions. Which companies do your friends use? If you have car or life insurance already, your agent may be able to bundle renters’ insurance along with it, giving you a nice discount.

3. Get renters’ insurance! I will leave you with one last story to top off these two thousand words about renters’ insurance, which is approximately fifteen hundred more than I thought I had in me: my friend’s renters’ insurance reimbursed him for the full fridge of fresh groceries he had just purchased which had spoiled during a power outage. I would not even think to check on this in case of a power outage. I would just forlornly go back to the overpriced Whole Foods and drop another hundred bucks in produce, so I am so glad I asked around for good renters insurance stories. Reimbursement for slimy lettuce and fermented ground beef, guys! We are living in a magical age.