More households are choosing to rent, but most lack renter’s Insurance
Homeowners rarely question the need for comprehensive insurance that includes protection for their personal property within the dwelling – even though most mortgage companies require that only the real property (dwelling) collateralizing the loan is covered. In the event of a fire, storm, or theft, therefore, most homeowners will be fully compensated (less a deductible) for their total loss, to the extent financial reparations can replace one’s home and personal items.
On the other hand, most renters – 56%, according to a recent survey conducted by Nationwide Insurance – do not purchase property insurance, and it’s hard to understand why. While their total potential loss may be lower than that of a homeowner since the typical apartment is smaller than the average home, because the premium for renter’s insurance is lower as well, insurance is still a good value. The most logical explanation is that renters are just not aware how little it can cost to protect their household possessions.
That makes sense since many renters are younger – the U.S. Census Bureau data from 2006 through 2011 shows an increase among renters of more than a million 24- to 34-year olds. Younger people are unlikely to have experienced the type of disaster than can wipe out a home or apartment building and, perhaps, having never been required to purchase homeowner’s insurance by a mortgage company, are unfamiliar with its cost and value. If our next generation didn’t have it hard enough already with college loans and a stagnant job market, they are also at high-risk of losing everything in a devastating accident or natural disaster.
The Nationwide Insurance survey revealed that 75% of younger renters do not have a clue how much renter’s insurance would cost in their area. Even though those respondents estimated their apartments contained, on average, about $5,000 worth of personal property, 40% of the young renters didn’t see the necessity of securing property insurance to protect that investment.
Renters face the same risk as homeowners regarding their personal property, and they have less control over the maintenance and security of their apartment home. Renter’s insurance is the one positive step they can take to mitigate those risks. At the cost of about one lunch at a restaurant per month, renters can completely cover all their possessions against loss – it’s an easy decision to make once they understand the costs.
Many young renters are also not aware that insurance will cover the costs to replace stolen items as well – it’s not only a loss from fire or natural disaster that is covered. The renter is even protected against negligence claims should a lawsuit be filed by a house guest injured at the dwelling.
Here are a few tips that renters should know before purchasing renter’s insurance:
1.Know how much your possessions are worth. Everyone can easily remember the large, expensive items they own, but often, the smaller, harder-to-remember items can add up to more money. Keep a running inventory of your belongings, including a video, to document all that you have for the claims adjustor in the event of a major loss.
2. Use that inventory to determine how much insurance to purchase. Consider an additional policy endorsement to protect jewelry, collectables, and other items that are not covered by a traditional renters’ insurance policy.
3. Consider additional coverage to provide out-of-pocket living expenses following an accident that forces you from your rented home. Recovering the value of your belongings after a fire or storm is great, but not if you have to spend that money on hotels and restaurants until you can find a new apartment.
4. Choose to do business with a highly-rated insurer and a reputable agency that can provide the prompt claims service you will require following a major event. Focusing only on the lowest premium can be “penny wise, but pound foolish.”
Just because you don’t own your home does not mean your family should not have the same security and peace of mind that insured homeowners enjoy. The insurance professionals at Nahai Insurance are available to design a personalized insurance policy that provides the protection you need at a price you can afford. Contact your Nahai agent today to learn more.