Renters Insurance

When you’re deciding where your money goes each month, what’s the one thing you buy hoping you’ll never need to use it?


It may be the most unsexy item in your budget as well—it’s hard to get excited about spending your hard-earned cash on something that, if you’re lucky, you’ll never get any benefit from having it.

Now, you’ve probably got auto insurance; it’s required in all states (minus one: New Hampshire), and you were glad to have it the last time you had an “oops” in a parking lot, or when you got rear-ended on your way home from work.

What about renters insurance?

If you live in a metro area, chances are good that you currently rent your apartment or home: according to the Wall Street Journal, in cities like Miami and New York, as much as 65% of the population sends a check off to the landlord every month.

But, while almost all homeowners carry insurance, the majority of renters go without it. Why? For one thing, most mortgage lenders require it; on the other hand, many landlords and property managers don’t insist that tenants carry similar coverage.

So, when you’re trying to stretch your monthly dollars, is renters insurance worth it? Ask yourself these two questions:

Can I afford it?

While renters insurance is much cheaper than homeowners—$188/year vs. $1,096/year, as reported by the Insurance Information Institute—it’s not free. Is there somewhere in your budget that you could find an extra $15-$30 each month?

So many budgeting tips assume that you’re drinking a $5 latte every day and should be able to come up with an extra chunk of change by dropping the habit, but let’s get real: if you’re working hard to create and stick to a budget, you might not have much wiggle room for one more expense.

And yet, where our money goes always comes down to priorities: we need food, but we want to go out to eat. We have to pay the rent, but we’d rather go on vacation. That leads to the next, and perhaps the most important, question.

Do I need it?

That depends. What do you have in your home, and could you afford to replace it if you lost it all in a fire or natural disaster? If you’re living on the cheap and your apartment is full of do-you-want-this furniture and clothes from the thrift store, you might not need renters insurance. On the other hand, if you have an expensive wardrobe of clothes for work, the latest electronics, or any other big-ticket items, you probably don’t have the money sitting in your savings account to replace it.

Many renters make the mistake of thinking, “Hey, my landlord has to carry insurance, so that will cover me too.” WRONG. Your landlord’s insurance covers the structure itself and anything he or she owns inside the unit (e.g. window treatments, appliances, etc.).

Check out what one victim of an apartment fire had to say about the experience, and decide for yourself if you need renters insurance.