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I'm thinking about getting a renter's insurance policy. Here's my question: What should I consider when deciding to get it or not? Edited to add: Is it a good idea to get renter's insurance?

I'm looking at a policy with $20,000 in asset protection, $500,000 in liability coverage and $10,000 in personal injury protection. I'm thinking of buying a house in the next year or so, if that matters.

The cost seems low enough (~$13/month) that I could just get it without worrying too much about the extra expense, but I know there's a lot of knowledge in this community and figure somebody will have some tips or pointers for me.

Thanks!

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    You can likely cancel the policy if you purchase a home and they will refund you the unused value of the insurance. You can do this with most policies.
    – Scott
    May 11 '11 at 22:12
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Yes you should get rental insurance. It covers more than you think, much more than just belongings.

  • Replacement cost for all your property in event of damage or theft. This one's been mentioned a couple times. Do you really want to buy everything twice?
  • Replacement cost for items that are damaged or stolen outside your house. For example, this will cover bike theft if you've locked it up downtown while on errands.
  • Liability if you are responsible for damaging property of others in the building (or injuring them). Like you start a fire or clog the drains which causes flooding.
  • Living expenses if some incident or someone damages your apartment and you need a temporary place to stay. They start the fire, pipes burst, etc.
  • Liability and medical coverage if someone injures themselves in your apartment. Say they slip on the stairs or trip on a carpet and decide to sue you.
  • You can add additional coverage for high-value items like jewelry, boats, art, etc.
  • Californians may be able to tack on earthquake insurance
  • You may be able to also tack on flood insurance

Of course read the coverage details of any plans your are considering. You may get a discount if you have other policies with the company. You may get a discount if you have a burglar alarm system, have a fire hydrant on your block, stuff like that. When you buy the house and shop for homeowner's insurance you'll find a lot of coverage similarities.

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  • also, the vast majority of leases I have seen in KY and NC require said insurance, or they can evict you with nasty penalties!
    – warren
    Mar 26 '12 at 15:13
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Generally speaking, yes. The landlord's insurance is there to cover their loss, not their tenants' loss.

That rate seems reasonable and much less than what I was expecting it to be. (On a side note, I've been meaning to get renter's insurance myself for some time, but thought that the rate was much higher than that.) Of course, do your due diligence and don't go with some fly-by-night insurance company.

As far as I know, you have little recourse to recoup losses as a renter. I do believe that gross negligence on the part of the landlord may be an exception. However, that isn't necessarily easy to prove and I wouldn't count on it.

For example, if you're renting an apartment and there is a fire in another apartment which results in property loss/damage, you wouldn't be able to get anything from the landlord. You may be able to sue the tenant, but that may still get you next to nothing.

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  • I hadn't even thought about landlord liability. Interesting, thanks.
    – Sean W.
    May 12 '11 at 15:29
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Check with whoever has your other insurance products. My company charges me about $10/month for my renters, but having multiple lines I get about $9/month discount off of my total.

If you are renting and cannot afford to replace everything you have out of pocket, then you should strongly consider getting renter's insurance.

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  • Good tip, MrChrister. Unfortunately (or fortunately?), I don't have any other insurance products.
    – Sean W.
    May 12 '11 at 15:28
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Yes, you need renters insurance. It may seem like you don't have much until you start adding things up. Just think about how much it would cost to replace all of the cloths in your closet, all the pots, pans, dishes, etc. in your kitchen, all the books on your bookshelves, your furniture, etc. This can easily add up to thousands of dollars pretty quickly.

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Yes. You should definitely get renters insurance. It covers things outside of fire, flood, etc. A power surge hit my sister's apartment and her renter's insurance paid to replace all her electronics that got fried.

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This question really depends on your net worth, the structure of that net worth, and risk profile.

If you don't have many assets, then it might not be worth insuring them for 20k. Keep in mind we're talking about replacement value, not how much you bought stuff for. So that collection of video games isn't worth much, for example. On the other hand, if you have enough cash that you can replace everything, again it makes less sense to purchase insurance. This is kind of a self insurance approach.

The other thing is risk profile. If you have say a waterbed, or smoke, or have a dog, or some other source of risk/liability, it might be worth the peace of mind or even required by your landlord. You already self insure a bit of liability to the landlord via the security deposit.

Since most of my assets are liquid, and I have a cushion of cash should anything bad happen, and I'm not a smoker / dog owner etc, I just skip the renter's insurance, and spend the difference on protecting things insurance can't replace: put important documents and data in a fire safe.

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