Is Renter’s Insurance A Good Investment?
If you own your own home, you will be required to carry home insurance by your financing company. However, the same is not true when you rent. The choice is yours whether to get renter’s insurance or not, and the initial impulse may be to see it as an unneeded expense. Like any insurance, renter’s insurance is a risk management tool that isn’t going to produce a benefit, unless you suffer a catastrophic loss. Therefore, the choice to pay insurance for your apartment may seem like it’s not a good deal, until you realize that relative to the premiums, the coverage is actually quite good. You can even choose to pay it all ahead of time, funding it with a paycheck advance to cover you for the entire year.
Why You Should Get Renter’s Insurance
For as low as $12 per month, you can get coverage in the event of a fire, theft, and other types of financial disasters. While you can control your own behaviors and may not smoke, you have no idea what types of activities your neighbors are engaging in and whether they are putting your residence at risk. Maybe they smoke in bed, raising the possibility of a fire. Maybe they are into illegal activities, and thus attracting thieves into your area. When you live in close proximity to other people who are going about their business, and you haven’t a clue what that is, it can create additional risks to you and your home.
Can You Cover Your Losses Without Insurance?
If you can cover your losses without insurance, and you know that it will cost you $150 to $250 a year to get it, you might want to forgo it. However, how big will those losses be? There’s no way to ascertain whether you’ll lose everything you own in a fire, or whether someone will just decide to steal your flat-screen TV. If you were to lose everything you own, the probability is that you’re looking at thousands of dollars in damages. Your landlord may cover some of those losses depending on whether they are liable or not. If you have separate renter’s insurance and you are not at fault for the disaster, odds are you’ll stand to make up all the premiums you paid over the course of four years or more, in just one disaster.
Risk Management For Very Little
As it stands, renter’s insurance is much less than what it costs to insure a home, should you own it. If the structure you live in burns to the ground, you can file a claim and get a good start on a new living arrangement and peace of mind, helping you to move on much faster. Even if you don’t own the home you live in, you should consider obtaining renter’s insurance as a way to manage future risks for very little upfront. You’ll be happy you did the day your upstairs neighbor’s bathroom overflows and your furniture is flooded or your favorite diamond ring is missing. Just be sure to check the terms and confirm ahead of time what to cover on your policy. Always know what is covered and what is not before a disaster strikes.
This entry was posted on Tuesday, November 17th, 2009 at 11:28 am and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
