Is renters insurance worth the cost?
Some forms of insurance coverage are mandatory. If you want to drive a car, for example, you are legally obligated to insure your vehicle. If you want to take out a mortgage, most lenders will require that you purchase home insurance. Other forms of insurance, like renters insurance, are optional.
Renters insurance covers theft and damages to those that occupy a dwelling but do not own it. Most commonly, renters insurance is used by occupants of apartment buildings, but it can also be purchased by those renting a room in a house. Basically anytime you live somewhere and pay rent, renters insurance is an option for you.
Sometimes a landlord will demand proof that occupants possess renters insurance, but this is not common. Because renters insurance is usually optional, it's worth weighing the pros and cons. Should you bother to get renters insurance, or is it something you can afford to pass up?
The monetary benefit of renters insurance
Renters insurance covers liability – in case someone is injured in your apartment and sues – and contents – in case they are damaged or stolen. The amount of coverage you receive and the deductible you pay will determine your monthly premium, but renters insurance is typically inexpensive. A standard amount is about $20 per month.
The low cost and substantial coverage of renters insurance makes it a reasonable investment for most people. There is also the psychological benefit that comes with it.
The psychological benefit of renters insurance
As with other types of insurance, renters insurance gives you a certain peace of mind. Though it’s nice to cut out any monthly expense, $20 to know that you won’t be on the hook for a massive legal bill, or that you won’t have to foot the bill for everything if your unit floods, is completely reasonable.
What it comes down to
Even if auto and home insurance weren’t mandatory, both are almost universally wise investments. Renters insurance is also usually a good idea, but it comes down whether or not it is financially viable for you.
If you pay $200 per year to protect contents that are worth only $300, then it doesn’t make a lot of sense to get renters insurance. In order for it to be save you money you’d need to make a claim every year, and that’s before factoring in your deductible.
However, if you have a new laptop and a tablet and some expensive entertainment equipment, renters insurance is definitely a good idea. There is also the liability factor, which regardless of the value of your contents, can potentially be a lifesaver.
There is a reason that renters insurance is not always required. It’s not as fundamental as home or auto insurance. But in most cases it is still a sound investment. For a low monthly fee (see what’s available) you get peace of mind, liability protection and coverage for your possessions.
When deciding whether or not to purchase renters insurance, determine whether or not it makes sense for you. Weigh the cost against the contents you’re protecting to determine whether it is worth the monthly premiums.