An increasing number of Americans view renting a home as a better “investment” than buying one, yet less than half of renters have renters insurance, according to the Insurance Information Institute (I.I.I.).
The U.S. Census Bureau noted that in the second quarter of 2010, 37.1 million housing units were occupied by renters, up by more than 800,000 units from the same period the previous year, and up by 8.2 percent, from 34.3 million units, in 2006.
A survey conducted by Harris Interactive for the National Apartment Association in May 2010 found that 76 percent of those surveyed now believe that renting is a better option than buying in the current real estate market, up from 71 percent in 2008.
“If you rent a house or apartment and think that your landlord is financially responsible when there is a fire, theft or other catastrophe—think again,” warned Loretta Worters, vice president with the I.I.I. “Your landlord may have insurance to protect the building you are living in. But your landlord’s policy won’t replace your personal possessions or pay for your living expenses while the building is being repaired. The best way to protect yourself financially against disasters is to buy a renters insurance policy,” she added.
Renters insurance is relatively inexpensive. The average renters insurance policy premium in the U.S. was $173 a year as of 2008, down 3 percent from 2007, according to the National Association of Insurance Commissioners (NAIC). Yet an Insurance Research Council poll found that only 43 percent of renters had renters insurance while 96 percent of homeowners have insurance on their home.
By purchasing renters insurance, your possessions are covered against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods). Equally important, renters insurance covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet and pays legal defense costs if you are taken to court.
Renters insurance also covers your additional living expenses if you are unable to live in your home due to damage from a fire or other covered peril. Most policies will reimburse you the difference between your additional living expenses and your normal living expenses but may set limits as to the total amount they will pay, or the time-frame they will cover.
The I.I.I.’ s Renters Insurance Checklist provides information on how much insurance you should buy, and what kind of coverages and discounts are available.