13. why renters insurance is a great idea

You know that its illegal to hit the road without car insurance, and homeowners insurance is something your parents probably have, but have you heard of renters insurance? PropertyCasualty submitted findings that most millennials aren't aware of it, and those that are think they can't afford it.

But did you know renters insurance typically costs you as little as $20 a month? If only you could drive your apartment around instead of your car.

What is renters insurance, and why is is such a great asset? 
Renters insurance is just what it sounds like: an affordable insurance plan tailored to the needs of new families and singles living in an apartment or renting a home. Most new renters think their landlord's property insurance covers their unit in case of a break-in or calamity, but that's not the case.

A landlord's insurance is just that, insurance to protect your landlord's building, not the personal items you fill it with.

As is the case with its homeowner counterpart, renters insurance is the safety net you want and hope you'll never need. It protects you and your valuables in case of destructive weather or water damage incurred from a burst pipes. Fire and smoke damage are covered as well, and most important of all, you'll be covered in case of theft.

"Typically coverage protects your clothes, appliances, and even your pets."

Some coverage even protects your items when you take them with you on vacation. Did something happen to your guitar on your way to your parents' place? Renters insurance can see you're taken care of.

If you keep some extra items in a local storage unit, certain renters insurance can also cover that.

Typically, coverage protects your clothes, appliances and even your pets. You'll want to check with your insurance company about more high-end items like artwork or family heirlooms.

Don't underestimate your home value 
Strangely enough, most millennials don't believe they have any items of value, but a quick inventory of items in your living space can prove otherwise. A room-by-room overview by Protectyourbubble.com estimates a typical bedroom, including your e-reader, wardrobe and bedding comes to nearly $3,000. An average living room with gaming console, couch and television can add up to as much as $3,000, if not more. In all, an average renter's home filled with standard comforts may total as much as $12,000.

CNBC reported from a conversation with Dick Power, a certified financial planner and founder of advisory firm Power Plans, that since millennials may not be used to owning much of value, they may not think about insuring their possessions until it's too late. Power explained that an insurance plan which covers $15,000 to $20,000 worth of property should be enough for most millennials. Those plans can work out to less than $200 a year, or as little as $10 to $15 a month.

According to Insurance Information Institute, an average renters insurance premium was about $187 annually in 2012. 

Renters insurance is so easy to procure and afford that the most difficult part is figuring out how to determine the value of your stuff. First things first, make an inventory list of items in your home. An inventory list, simple as it may seem, is actually the most important bit.

You think you know all the items you have offhand, but how accurately can you list all the DVDs or electronics you own at the moment? An inventory list should include the following item for each of the purchased items in your apartment:

  • Manufacturer
  • Serial number
  • Purchase date
  • Price

This ensures that the value of your items is on record and also gives you proof of ownership in case you didn't keep the receipt for your IKEA coffee table. Make copies of your inventory list, give one to your insurance company and keep one in your home someplace safe. The best idea is to store it in a fireproof home safe.

Is it required insurance? 
In the past few years, more landlords require tenants to have insurance before they move in. The National Multi Housing Council in Washington, D.C. recorded 2012 numbers raising from 62 percent to 84 percent in 2013 through an official survey.

"Most renters do their comparison research online in just a few minutes."

"We started requiring renters insurance in 2007, and we were on the forefront of doing that," explained Shanna Teague Berrien, director of insurance risk for CWS Apartment Homes in Austin, Texas. "In the last three years, everybody who's anybody has made that a requirement."

Renters can do their comparison shopping online. More and more insurance providers are creating smartphone apps that allow you to review or purchase plans.

If you're a millennial renting an apartment without insurance, compare renters insurance rates and get covered now using CoverHound's intuitive tools.

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