Most renters lack insurance

While a majority of American homeowners have insurance only 31 percent of renters buy renters insurance, according to recent survey by the Insurance Information Institute.

This number drops to 15 percent amongst Hispanic renters.

This contrasts with how in some of the largest cities, renters significantly outnumber homeowners. In 2010, 69 percent of households rented their homes in New York City, followed by Los Angeles (61.8 percent), Chicago (55.1 percent) and Houston (54.6 percent), according to the U.S. Census Bureau.

“Renters insurance provides financial protection against the loss or destruction of your possessions when you rent a house or apartment,” Jeanne M. Salvatore, the I.I.I.’s consumer spokesperson and senior vice president for public affairs, said in a statement. “While your landlord may be sympathetic if you experience a burglary or a fire, your possessions are not covered by your landlord’s insurance. The good news is that renters insurance premiums are relatively inexpensive.”

In fact, the average renters insurance policy costs only $184 per year in 2009 (the latest year this data is available) according to the National Association of Insurance Commissioners. This is less than $16 per month.

By purchasing renter’s insurance, personal belongings are covered against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods).

Like homeowners insurance, renters insurance also covers policyholders themselves, in their home or by a family member or your pet. It also pays legal defense costs in case of a lawsuit.

Renters insurance also covers Additional Living Expenses if the home is unlivable because of a fire or other covered peril. ALE pays for hotel bills, temporary rentals, restaurant meals and other expenses incurred while a home is being repaired or rebuilt. It is important for anyone to know how much coverage they have and what the limits are.

There are two types of renters insurance policies:

1. Actual Cash Value – pays to replace possessions up to the policy limit, minus a deduction for depreciation.

2. Replacement Cost – pays the real cost of replacing personal belongings (regardless of depreciation) up to the policy limit. 

Anyone with expensive jewelry, furs, sports or musical equipment, or collectibles, may want to consider adding a floater to their policy.

Most standard renters policies offer only a limited dollar amount for such items. A floater is a separate policy that provides additional insurance for valuables and even covers them if they are accidentally lost.

Renters can review the I.I.I.’s Renters Insurance Checklist to make sure they’re adequately covered.

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