If you're not ready to be a homeowner or prefer the ability to move around frequently, you may be a long-term renter. While this is a great choice for many - including a large number of young Americans - others are making a big mistake in terms of personal finance. According to a new study, more than half of adults between the ages of 23 and 29 have yet to take out a renters insurance policy, leaving many with a high financial risk if anything were to happen to their belongings.
While no one expects their home to be a victim of crime or severe weather, these things can and do happen from time to time. Your landlord likely has an insurance policy over the entire property or the structure of the building, but that does not extend to your personal belongings or your valuables.
What renters insurance covers
A typical renters insurance policy will come with a few different coverage options, but will most likely include coverage for your belongings if they are damaged or lost due to a natural disaster, fire or theft. Most of the time, this also includes destruction of property from lightning, windstorms or hail and plumbing freezes.
It is important that you get enough coverage to pay for the cost of all your belongings if you needed to suddenly replace them after a loss. Without enough coverage, you leave yourself in a vulnerable position and open to financial downfall. The best approach to determine the amount or value of your personal property is to assess everything you own and assign a dollar amount. Even if you think your belongings don't have great value, when you add everything up you may find yourself unable to pay for all new stuff.
Furthermore, if your home was hit by a massive storm and you needed to stay somewhere else while repairs are made, your renters insurance policy will provide you with additional living expense coverage, helping you pay for a temporary living situation.
In addition to coverage for your personal belongings, furniture and electronics, insurance will also provide liability coverage in the event that someone were to be injured at your home. If you are found responsible for someone else's medical bills or a lawsuit from an injury, your renters insurance will help your pay for these costs.
How much does a policy cost?
The rate of a policy will vary from provider to provider and coverage options including your deductible limit. You will need to ensure that you get enough coverage to pay for your belongings and that you include all your valuables in the policy. In general, if you set a high deductible, you will pay less for coverage, though you will pay more out of pocket before your provider will start paying for anything. For most renters, insurance policies are affordable and, compared to the high risks of going without coverage, it is one of the best investments to make for financial protection.
Most renters can find coverage for as little as $30 a month. To compare renters insurance quotes, visit CoverHound today.