Sharon Janigian never intended to move out before her one-year lease was up in her Watertown, Mass., apartment. But after a candle left burning too long by another tenant damaged a significant part of the home, Janigian found herself in need of a new place fast.
Janigian could have had her temporary housing paid for and some extra money to buy some of her belongings that were damaged in the fire, but she didn’t. That’s because she didn’t have renters insurance.
Janigian’s case is a risk many renters face but ignore. And although renters can protect themselves from the face of a tragic event with the help of renter’s insurance, most don’t. Some may find getting a policy to be tedious and expensive. Others may buy into the myth that their landlord’s insurance covers their own personal belongings. Janigian thought she just didn’t need it. But many risk management experts say renters should think of insurance as something just as important as signing a lease.
Here’s what you should consider when you’re looking for a policy.
Paying less when you pay up front
While monthly payments may help you avoid a large dip in your bank account, paying a lump sum for an entire year of coverage may end up saving you in the long run. Just like car insurance, some insurance companies that offer renters’ policies offer a large discount when the policyholder forgoes a monthly premium and pays for yearlong coverage up front.
According to the National Association of Insurance Commissioners, many companies will reduce your premium if your residence is set up with safety features like alarm systems, fire extinguishers and even deadbolts on your doors. Make sure to ask about any discounts for which you could qualify.
Additional living costs and replacement costs
According to Terry Young, a partner at Millenium Risk Managers, based in Birmingham, Ala., check to make sure exactly what type of catastrophes the policy covers. For the most part, renter’s insurance covers most damage that occurs within your unit. Flooding, landslides, and earthquakes are typically not covered. However, for example, if you are unable to live in your unit because of a bursting pipe or fire, the policy should pay for some of the costs to live somewhere else while your unit is being repaired, and even helps pay for some of your damaged belongings.
But do you want a plan that allows you to buy replacement items no matter how old they are, or one that calculates the items’ actual cash value (minus depreciation over time)? What’s the policy’s limit for additional items like jewelry and computer equipment? Will the policy cover your pet? These are questions to consider which could affect the price of the policy, says Young.
Besides the ability to cover living expenses and personal belongings, many policies offer financial protection against injuries that occur to you or any of your guests while they’re at your apartment. For example, if you’re facing a lawsuit after a guest slips and falls in your apartment, according to the National Association of Insurance Commissioners, liability protection on your policy could pay your lawyer’s fees and any money awarded to you by the court.