Is renter's insurance worth it?

In My Humble Opinion
41

As you said, though - insurance is a margins game. Most renter’s insurance policies I’ve seen offer comfortable coverage for liability (the impression I had from my most recent comparison shopping was at about $250,000 liability coverage, but I’d have to see if I can find the quotes again to verify that) simply because a liability claim is so rare.

And, no offense meant, I don’t know that many singles who have $5000 in liquid assets. It says good things about your fiscal sense, of course, but I think it’s more unusual a situation than you’re assuming.

42

That sounds like very good service. Which company are we talking about?

43

The liability is the big thing. In my town some guy in an apartment complex fell asleep with a burning candle going, and, well, I don’t need to tell you how that ended up. Of course it was identified as the cause of the fire, and the other units it affected (and it was several), sued the poor bastard. I didn’t really follow how it all turned out, I just remember these initial facts; I’m sure he wasn’t solvent enough to cover all the settlements and such, but still a very heavy thing to go through nonetheless.

Get the renters insurance; make sure it has good liability coverage.

44

Thanks, TLDRIDKJKLOLFTW , for starting this thread, and thanks everyone who contributed.
I have one very important question though: How do I get renter’s insurance? A few people mentioned getting it through some other insurance company that one deals with, but I only have health insurance from a company that doesn’t do other kinds. I typed “renters insurance” into google and there’s tons of links that are relevant. Do I have hours of research waiting for me or is there an easy way to get a good, cheap plan quickly?

45

Ruken, I’m afraid you do have some research to do. Or at least comparison shopping.

Before you feel overwhelmed, though - what companies offer coverage in your area is going to be less than that list you just pulled up with Google. So, filter that list by checking your Zip Code.

Also, a lot of the hits you’ll get from Google will be from online agencies - not from actual companies. Now, a good agent can be worth a lot - they act as an interface between you and the company that you’re actually insured with. On the other hand, if you’ve got the time or inclination, there’s little officially that an agent can do for you that you can’t do yourself. (About the only advantage that the agent has that you couldn’t duplicate, yourself, is the networking within the insurance company to know whom to call, or how to finesse a claim.) If you want to go with an online offer, I wouldn’t say that is always a bad choice. But a lot of people in this thread have mentioned how helpful not just their insurance company was, but how helpful their agent was, too. There are times when it’s worthwhile to have someone you know whom you can turn to when you’re looking for the insurance company to pay up.

46

Where the hell are you guys finding renter’s insurance for less than $20 a month? I can’t find anything for less than $70.

On the other hand, my car did just get tagged last night because I parked it on the street. Stupid neighborhood.

47

I’d strongly recommend going to a local insurance agent who knows your area.

When Mrs. Piper and I were looking for insurance, we started with the insurance offered by our professional association, because we’d heard it had good rates. But they were located in Toronto, and we could only deal with them by phone, and we quickly found that they had no familiarity with our area, wanted us to provide a lot of basic information about the area, and so on. We found they were too much hassle, just to get coverage.

Next time we were out grocery shopping, we noticed an insurance agency across the street from the Safeway. We just walked over and asked to speak to an agent. Within a few minutes, we were talking to an agent who knew the area well, knew the type of house we had, and had brought up on his screen coverage from four different insurance companies. He outlined the differences between the four, pointing to the four columns and the different items. Because he knew the area, he was able to give us a lot of good common sense advice, without us needing to provide much information. We left after about 20 minutes with exactly the coverage we needed. I don’t think you’d get that by going to the internet.

Why not try asking around from friends who are renting to see if anyone of them have a local agent that they would recommend?

48

I’m not saying I could go to the bank tomorrow and draw out $5000 but given $12 a month for a $5000 coverage, it would be a 1 in 40 year type event so I don’t worry myself to sleep about it.

49

I use State Farm.

50

USAA. You have to be military (or a vet or retired) to get it, though.

51

non-military children of USAA members are also eligible.

52

When I recently moved, I had to buy new furniture because much of the non-bedroom furniture belonged to the housemates (livingroom, kitchen, etc) and I decided to get a new bed as mine was 15 years old and very worn out. Try 400$ for each piece of a pretty good quality queen size set.

General statement on the topic:

I have replacement value renter’s insurance. I will probably up the coverage amount when it is time for renewal because I have accumulated more stuff that is worth some money. It’s not that I can’t afford to replace one or two items if they get stolen. It’s that I can’t afford to replace everything if the place burns down.

It’s taken me over ten years to acquire all this stuff, and if I had to start over with nothing and no insurance money, I’d be sick. Get the insurance. Even 20$ a month is worth throwing away for the knowledge that if you lost everything, you can rebuild.

53

Another place to check is AAA.

We got our homeowner’s, renter’s, landlord’s and auto insurance through their broker service at one point or another.

Eli

54

I think that anyone considering renters’ insurance should take the responses to this thread with a grain of salt. There are two obvious sources of bias that will seem to tilt the balance toward getting insurance.

The first is that people who don’t have renters insurance and have never had anything bad happen are less likely to respond. People in general (and IMHO message board posters in particular) are story-tellers, and “Nothing happened, but I had an extra $15 in my pocket every month” doesn’t make for much of a story.

The second is that it doesn’t even have to be your own story. Obviously, since the cost of insurance is so low, the risk must also be very low. Yet odds are that everyone has seen a news story or knows someone who has had some catastrophic loss. People tend to be poor judges of risk (except actuaries. They tend to be very good judges of risk), so they overvalue this anecdotal evidence.

Most of the advice about considering what you would do if you didn’t have any of your stuff, and how big an impact it would have is good, but if you do have so many expensive possessions that you can’t replace them, perhaps you should consider putting more money into an emergency fund and less into buying new things. You should also realize that you don’t have to replace everything immediately. Using myself as an example: I’d estimate that my possessions, less my car, are somewhere in the $5-10K range. There’s a laptop, some home theater stuff, a few thousand in clothes, a bit of furniture, etc. Like lots of people. But if my (rented) house burned down tomorrow, I wouldn’t really need $10K immediately. If I have to go six months while I save up for a laptop, it wouldn’t kill me. My DVD collection does not need to be replaced title-for-title the day after the fire. I’m sure that I could buy a serviceable wardrobe for < $1000, and add to it as I go. The fire would suck, but it would not be catastrophic. And that’s what insurance should be for: true catastrophes.

I’m not totally down on insurance, but I think people tend to overinsure for possessions, and underinsure for true catastrophes. For example, many people have fully insured cars, but low liability limits. The risk of a huge payout from crashing into someone who buys a lawyer and a neck brace is way higher than losing the $10-20K you probably have in your car. People have crappy health insurance, but they insure grandma’s pearls against theft.

As pointed out, some insurance is a bad deal. Extended warranties are a good example. My personal philosophy is that insuring against anything that I could afford replacing is a bad deal. In the long run, I’m likely to do better. That $20/mo invested in the stock market is worth a year’s salary (inflation adjusted) when I retire.

55

Catastrophe is defined in the eye of the beholder. If the renter needs clothing to go to work and bedding to sleep on, that’s a catastrophe if the renter doesn’t have the $1,000. in hand.

56

That’s definitely true. I guess I’m saying that there’s no insurance like having an emergency fund, and when you have an emergency fund, you realize that you don’t really need to insure against the small stuff. And in the scheme of things that could be insured against, $1000 really is small stuff, however large a sum it may seem at the time.

The person for whom a $1000 loss is a catastrophe is equally screwed if all manner of things happen that require that money but don’t fall under their insurance. Extra screwed, because they’re short $20 a month for however long they’ve been paying their insurance premiums and they need to come up with $1000.

If you don’t have an emergency fund, then by all means, get some insurance for six months or a year and build one up.

57

In addition to covering the possessions in your apartment and liability, renters insurance also covers anything stolen from or with your car. I’ve had a toolbox stolen out of a car. A friend lost dozens of CDs out of his (I know. I also told him it was stupid to keep those in the car.) How about having your Christmas shopping stolen?

Renter’s insurance doesn’t just cover the content of your house. It covers all of your possessions.

58

This is precisely the wrong reason for getting insurance. What you’re essentially doing is reverse gambling and the house will always win. Instead, just put what you would be paying in insurance premiums into a interest bearing account and use that in case of emergencies.

59

This would be a great idea if you could decide when you were going to have a claim, and what type of claim it was going to be. For instance, you could wait until you have $10,000 saved up ($20/month @ 7% interest compounded monthly would take about 19.5 years), and then allow yourself to have a claim for it.

Unless you plan to have a major liability claim (say $750,000), in which case you’re going to need to save slightly longer (about 77 years).

It’s a foolproof plan!

60

There’s a crucial difference between insurance and gambling. If you’re gambling, you have the choice to stop playing the game and cutting your exposure to the house’s odds. If you quit your insurance policy, that has absolutely no bearing on whether bad things will happen to you.