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Weighing the Pros and Cons of Renters Insurance

UPDATED: July 19, 2013

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Insurance is a necessary evil, and renters insurance is no exception. If you are fortunate, you probably have health insurance to protect yourself against unexpected medical costs. You definitely have insurance on your car if you are a driver, since it is required by state law. Homeowners too are usually required to have insurance on their homes as a condition of their mortgage. What about renters? If you don’t own your home, do you need rental insurance? In most cases, the answer to that question is yes, But you should weigh the pros and cons carefully before you make a decision.

Understanding Renters Insurance

Renters insurance protects your possessions from damage or theft. In many cases, renters insurance protects the contents of your apartment and also protects your belongings when you are away from home. For example, if your laptop is stolen from your desk at work or your luggage is stolen in an airport, your renters insurance may cover it. It is also important for renters to be aware that this insurance may be the only form of coverage for your possessions,  You should never assume your landlord's policy on the building will cover you or any of your belongings.

Furthermore, renters insurance can provide one additional important type of protection – liability protection. If someone is injured in your apartment, or if any dog you own bites someone and you are sued, your renters insurance may pay the legal bills and damage settlement.

Clearly, renters insurance provides many protections. So, what are the pros and cons of getting renters insurance?

The Pros of Buying Renters Insurance

The benefits of renters insurance include:

  • Protection for your belongings. Can you afford to replace every single item in your apartment if it is stolen or there is a fire? If not, you need renters insurance.
  • Protection for your assets. If you are sued for an injury, you could end up facing thousands or even hundreds of thousands in legal bills and damages.

The Cons of Buying Renters Insurance

  • Cost: As with any type of insurance, the major downside is that you will have to pay premiums. If you never end up using the policy, the cost of the insurance premium is essentially money down the drain that you will never get back.
  • The deductible: With most types of insurance, you may have a deductible of a certain amount for any damage you will be responsible for before it kicks in. If your possessions aren’t worth very much, the deductible may eliminate the benefit of the insurance entirely. After all, if the only valuable thing in your apartment is a $1000 laptop and you have a $1000 deductible, then your insurance doesn’t do you any good. Of course, you could always opt for a lower deductible, but that usually makes your insurance premium even higher.

Making a Choice

While the cost of paying renters insurance premiums is a negative, typical policies are fairly inexpensive. This is especially true for a policy with a low policy limit  And, this type of policy would be appropriate if your belongings have a low value.  Therefore, the cost of the protection is usually well worth it for most people.  And, bundling this insurance with any other policies you may own from the same insurance company could give you an even better deal.

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