Do You Need Renters Insurance?

If you rent your home, you probably signed a leasing agreement that includes a line like, "We strongly encourage tenants to purchase renters insurance." You might even be required to carry a policy to rent from certain property management companies. So what is renters insurance, anyway, and do you need it?

That's what I've been investigating, having moved into a new rental home a few weeks ago. So far, I've found that renters insurance looks like a smart bet for me. The insurance carried by the couple who own the home I rent does not cover my personal belongings, and while I don't have many expensive items in the house, the premiums are quite inexpensive. I've found that in my situation, though the chance of a loss is fairly low, the pros outweigh the cons of purchasing renters insurance.

Pros:

-Covers your personal possessions in the case of fire, theft, and various other losses like freezing of plumbing

-Inexpensive (see below for my comparison of quotes)

-Often also covers damage to landlord/lady's property in certain circumstances, like loss of carpet if a waterbed bursts, which would save you from being charged or having to pay damages from your security deposit

-Shows a property owner that you are a responsible tenant

-Most companies offer add-on policies that cover you under additional circumstances

-Most policies also include personal liability insurance, which protects you from lawyer's fees and civil damages if someone is hurt at your rental home and sues you

Cons:

-Some policies reimburse only for the appraised value of items, rather than the replacement cost- so your laptop that was $1,800 new could be stolen and you might get a reimbursement far less than that amount.

-Some insurers require that you take a physical inventory and photos of all possessions you would like to cover, which can be a hassle

-Very few people experience significant losses of the type covered while renting. Like all insurance policies, your premiums will subsidize the claims of people who do experience losses.

-No amount of money can replace the most important things that could be lost in a disaster

-Deductibles can be high

After making a list of pros and cons and deciding I probably should purchase renters insurance, I got electronic quotes from several major companies. I gave each the same information about the 2 bedroom, 900 square foot single family home, built in 1970, that I rent. I got a quote from each company for $20,000 of personal property coverage, and chose the lowest possible deductible and as few add-ons as possible in each case. I got a quote for coverage beginning a month from today.

State Farm:

Quote- $125.00, or $10.42 per month

Coverage- $20,000 contents, with a $500 deductible. Also includes $1,000 coverage for medical payments to others, and $100,000 in personal liability insurance.

I Liked- Website was very easy to use. It was also easy to find several positive reviews of State Farm's renters insurance using Google. I could cover my roommate on the same policy as myself, and I've had good experiences with State Farm for my car insurance. You can set up a policy over the phone in about 15 minutes.

I  Didn't Like- The lowest deductible is $500, which is higher than I'd prefer. Can't opt out of liability coverage and medical payments to others.

Allstate:

Quote- $133.00 annually.

Coverage- $20,000 personal property protection with a $250 deductible, $100,000 family liability protection, $1,000 medical payments to others, $2,000 building improvements.

I Liked- The more detailed application online means fewer questions to answer later when purchasing a policy. The automatic building improvements coverage is also handy. Quotes are, by default, for policies including the Personal Property Reimbursement Provision, which means that instead of appraised value you would be reimbursed the replacement value or cost to repair certain personal items, should a loss occur. Lower deductible than State Farm.

I Didn't Like- The form asks what breed my dog is and provides a list of "aggressive" breeds as well as the "none of these" option. I don't like insurance policies that discriminate by breed. My dog is a Corgi mix, but some of the sweetest dogs I've ever met have been of the bully breeds. The website doesn't offer a monthly payment plan, though there must be one. It is not clear whether or not roomies can be covered on the same policy. No zero deductible option, and no chance to opt out of the add-ons like liability insurance.

Geico:

Quote: $208.00 Annually

Coverage: $20,000 personal property with $500 deductible, $6,000 loss of use, $100,000 personal liability, $1,000 medical payments to others

I Liked: Automatic loss of use coverage, which pays for any increase in living expenses if you're temporarily forced to move due to damage to your rental unit. Option to purchase additional coverage like identity theft insurance bundled with renters insurance.

I Didn't Like: Hey, isn't that gecko supposed to SAVE me money? That quote's over $70 more than the next-highest! Geico's application, like Allstate's, wants to know what breed my dog is. Damage from a backed up sewer isn't automatically covered. The minimum amount of personal property coverage is $20,000, which may be quite high for some people. Also, Geico sent me three identical emails about my quote within minutes- poorly coded automatic reply system, but Disaboom's thread notifications have been guilty of the same thing.

Esurance:

I wanted to get a quote from Esurance. Hey, they have that foxy pink-haired gal on the motorcycle in their commercials-- I'm sure she knows where to get great deals on insurance and vinyl bodysuits! However, the form requires a social security number and won't provide a quote without it. I don't like giving that information out over the internet, so I passed on that quote. Sorry, foxy pink-haired gal.

Nationwide:

Nationwide only provides quotes by phone. I left my number and information to get a quote, but that's pretty annoying. If Geico, Esurance, Allstate, and State Farm can do online quotes, why can't Nationwide? I wonder what you are supposed to do if you are DHH or have a speech impairment and would like a quote from Nationwide? There was no option to request a TTY or other accessible call, or a text message quote instead.

Based on this research and the quotes I obtained, I will likely purchase a policy with State Farm or Allstate. How about you? Do you have renters insurance and have a story to share?