Have you ever raced out of your burning third-floor apartment at 2 a.m., clutching the confused cat that you swaddled in the sheet hastily snatched from your bed—the first thing you could think to grab to contain his claws—stubbing your toe as you race down three flights of stairs, and then watching helplessly on the street as flames shoot out of your apartment window? Yep, no fun. (Take it from a Jointly team member, who actually lived this experience.) Want to know what makes this even worse? The dawning realization that, as you watch your things burn, you never thought to buy renters insurance.
Want to know what would make this experience slightly less horrific? Heading off that renter’s insurance thing before you happily decorated that apartment with your partner—in fact, actually having that renters insurance conversation before you ever moved in together, so that you would both know, in the event of a fire, break-in, or a catastrophic accident, that both your possessions and your liability are covered.
According to the Pew Research Center, more Americans are renters than at any point in the last 50 years (36.6% of US households to be exact). And renters are feeling pretty optimistic about avoiding future disaster – only 41% of renters have renters insurance compared to 95% of homeowners with homeowner insurance.
We love a rosy outlook, but those colored glasses pair best with an insurance policy, just in case you hit a blind spot. Here’s our take on renters insurance for cohabitating couples (spoiler: you may need separate policies!), so that you can find your best coverage option.
Why buy renters insurance?
Renters insurance covers your stuff! It protects your possessions from damage or theft. Should a pipe burst or a burglar strike, you can submit a claim to get reimbursed for your stolen or damaged possessions. You won’t have to pay out of pocket to replace your things. Many policies protect your belongings both at home and elsewhere, so if your bike is stolen off the street (you knew you should have bought the U-lock rather than the chain!) or your computer is stolen at work, you may be covered.
Renters insurance can also provide liability protection. This comes in handy if, say, your dog mistakes a guest for a chew toy, or your friend slips on a banana peel in your apartment and sues you. (This may be especially valuable if you rent out your spare room via Airbnb or a similar service.) Your insurance may help pay legal bills and any damage settlement, which could amount to thousands or even hundreds of thousands of dollars.
Finally, renters insurance may cover additional living expenses, like hotels and food bills, if you can’t stay at your apartment as a result of peril (i.e. a fire).
Doesn’t my landlord’s homeowners insurance cover all this?
No, your landlord’s insurance protects the building and covers structural damage to your apartment. It’s up to you to protect the contents of your apartment.
The cons of buying renters insurance:
- The Cost – you have to pay premiums for renters insurance, and if you never file a claim, that’s money you’ll never get back.
- The Deductible – the deductible is the amount of money you have to pay before your insurance policy kicks in. If your deductible is higher than the total value of your possessions, then you lose a major benefit of having renters insurance. For instance, if your possessions are valued at $1000, and your deductible is $1000, your insurance is of no use.
The limits of renters insurance:
All plans have coverage limits. There is an overall limit to the total amount your policy will cover and individual limits for expensive items (like jewelry, collectibles, furs, musical equipment, firearms, art, gift cards, checks, and electronics). You can purchase riders to bump up these limits, if you need extra coverage.
Luckily, renters insurance is fairly inexpensive!
Most basic policies cost less than $20/month. Renters insurance is usually well worth the cost.
“We love a rosy outlook, but those colored glasses pair best with an insurance policy, just in case you hit a blind spot.”
There are two types of renters insurance:
- An Actual Cash Value Policy: your insurer will cover the cost of an item as it would be valuated today. You will not be covered for the original price of the item. Depreciation is a concern under this policy.
- A Replacement Cost Value Policy: your insurer will cover the cost of replacing or repairing an item at its current price.
You get more money back with a replacement cost value policy, but this policy has higher premiums, so it’s more expensive up front. To determine which policy you need, it’s best to evaluate the worth of your possessions. If you own many expensive items, you may want to spring for more coverage.
What incidents does renters insurance cover?
Renters insurance covers incidents that pose a threat or are considered “perils.” These usually include weather (hail, wind, lightning), fire, electrical surges, explosions, water damage, theft, vandalism and falling objects.
Most renters insurance does not cover major natural disasters, like floods and earthquakes. If you live in a disaster-prone area, you can purchase riders to protect against the elements.
Fun fact! Renters insurance does not cover bed bug damage or removal. This is considered a home maintenance issue, so act fast if you find any vermin.
What if you work from home?
Coverage for materials in a home office can be fuzzy. One can claim printers, fax machines, and other materials for both business and personal use. However, most policies specifically don’t cover home office items. You can purchase a rider to cover your business materials.
Should you share a policy with your partner if you’re unmarried?
If you haven’t tied the knot, in most cases, it’s best to buy individual policies. Here are the pros and cons of sharing renters insurance:
Pros
- Splitting an insurance plan may decrease the cost (though this isn’t always true).
Cons
- If one partner has significantly more expensive personal possessions, it may drive up the cost of the policy and thus the premium for the other partner.
- Your partner’s insurance claims will go on your record. For instance, if your partner files a claim for a damaged good, it’s recorded on your personal insurance history, even if your possession wasn’t damaged. Your insurance history can affect your premiums, so it’s best to establish your own record.
- If it’s not forever…. If your partner moves out, it can be financially complicated. Sharing renters insurance with a partner you no longer live with, or worse yet, an ex, is not ideal. (Generally a policy will cover you—or your partner’s—for thirty days at both locations, while you’re in the process of moving. But after that, the partner at the new location would need to take out their own, separate policy for the new location.)
Things to do before buying a joint policy:
- Take stock of your possessions – Compare the value of your possessions with the value of your partner’s possessions. This will help you split the premium fairly (fair does not always mean equal).
- Get a second opinion – Talk to an insurance agent and see if a joint policy is the best option for you.
- Talk to your partner – Decide how you would split an insurance payout in the event of a total disaster. For example, if your apartment burns down, how would you divide the insurance money, if one partner has more personal possessions to replace than the other partner?
- Ask about discounts – Always make sure you’re getting the best deal possible!