In many instances, apartment renters are already on a tight budget. So adding more financial responsibilities doesn’t do anything but make things harder. Although there are many areas in which renters can and should cut back (hint: daily lunch outings with coworkers), renters insurances is definitely not one of the expenses you should ignore.
First of all, what is renters insurance?
Much like health or auto insurance, a renters insurance policy will cover the cost of certain losses or damage to your apartment when something goes wrong. In general, you can be reimbursed for the cost or value of your furniture, clothes, electronics and even housing if an event forces you out of your place. The most basic renters insurance policy may cover damage caused by some natural weather conditions (i.e. hail or wind damage, lightning or fire). Theft may also be covered in a basic policy. More robust insurance policies will cover more types of damage.
It’s also important to know how you will be paid if you are entitled to a pay out. That will depend on if your policy specifies your settlement type, chosen by you before the policy goes into effect. If you choose to be paid the actual cash value of your things, this means that you will be reimbursed the current value of your items. So if you have a 5 year old laptop computer, you will be paid today’s assessed value of that computer–not the sticker price you paid 5 years ago. On the other hand, if you choose to be reimbursed the replacement cost of your things, you would receive the retail value of your items. This means you will be paid enough money to buy an identical or comparable new laptop computer.
Now that we have the basics of renters insurance out of the way, how the heck do you decide whether or not it’s an expense you can afford?
Renters insurance is actually more affordable than you think
Now, depending on your location, dwelling, liability, coverage options, belongings and other factors, the price of renters insurance does vary greatly. However, it is entirely possible for a policy to set you back less than $20 per month. Now, if even that low cost is an amount you just cannot bear to part with each month, think of it this way: a cheap renters insurance policy is less expensive than the costs incurred after an accident takes place.
For example, let’s say you have all your gadgets plugged into a power strip and it overheats, starting a fire. If you have insurance that covers such an incident, your policyholder will shoulder the burden of defending you in the event of any lawsuits, injuries or property losses. The policyholder would also eventually pay those entitled to a settlement. But without renters insurance, all of those headaches would fall solely on you. Who wants that?
These days, renters insurance is commonly a requirement that many landlords and apartment managers strictly enforce. So even if you do not want to shell out the extra few dollars each month, you may not have much of a choice. And although the extra expense may be a little bit of a hassle, even the most cautious renter will be grateful for a policy when Mother Nature–or some bonehead criminal–decides to make an entrance.