I used to give part of the financial briefing to first term airmen and I would generally get the stunned mullet look when I asked them:
If your iPad is stolen out of your car, does your auto insurance cover it?
The answer usually was “Of course!” (with an implied “idiot” in there at the end). But it turns out it’s not so simple: if your personal belongings are stolen out of your vehicle, your auto insurance does NOT in fact cover the loss, it’s your renters (or homeowners) insurance that does.
A 2015 poll by the Insurance Information Institute revealed that some 95 percent of homeowners have homeowners insurance while less than half of renters have renters insurance.
Why should you have renters insurance?
For starters, according to an article in Forbes magazine, not having renters insurance is a mistake that could cost you $5,000 or more. In reality, the average renter has more than $35,000 in property that is not covered by a landlord’s policy. If that doesn’t make you sit up and pay attention, here are 6 more reasons to convince you to get it pronto:
6 Reasons Why if You Don’t Have Renters Insurance You Should Get a Renters Insurance Policy Pronto
It covers random shit you never realized.
The aforementioned iPad in the car, the laptop stolen out of a hotel room, those are all personal items that are covered by your renters policy (not auto). So is the damage that junior causes when he throws a baseball through the neighbor’s window. Oh, and if Rover bites a guest, liability and medical payments cover it. Ditto if your grandma’s golfing buddy falls down the stairs and tries to sue you.
Your crap is probably worth more than you think it is.
You might think you don’t have enough high-value items to warrant a renters policy, but if you start tallying up the value of your stuff, you might be surprised.
If you couldn’t easily cover the purchase price of all your stuff (and who would want to have to re-buy a laptop, TV, tablet, cell phone, military gear, clothing and washer and dryer all at once?), then you should really consider renters insurance.
Pro-tip: The Insurance Information Institute has a handy online program and phone app you can use to create, store and update the contents of your home inventory.
It can help you in an emergency.
Many renters policies cover hotel stays and other out-of-pocket expenses if your rental suddenly becomes uninhabitable due to circumstances like flooding or fire.
You probably aren’t covered if you live in government housing.
While many service members believe that their possessions are automatically covered if they live on a military installation, this is not necessarily the case. A 2015 BAH change means that most on-post privatized military housing does not cover renters insurance the way that it may have in the past.
Your landlord may require it.
More and more leases are requiring tenants to provide their own coverage. While a landlord may have a rental policy covering the structure you live in, everything inside those 4 walls (unless it’s something like a stove that was there when you moved in) is yours to deal with.
Renters insurance is cheap.
The average renters insurance policy costs between $15 and $30 per month. Premiums can be less expensive if you “bundle” the insurance with your auto or other policies. And you may be given discounts for alarm systems, sprinklers, deadbolts or other safety and security features.
But before you buy a policy, you will have to read the fine print.
There are 2 kinds of policies, ones that base reimbursement on Actual Cash Value (ACV) and ones that reimburse based on Replacement Cost Value (RCV).
The ACV policies will generally have lower premiums, but will account for depreciation when calculating the amount paid out.
A RCV policy will replace your items with similar items at current market value up to the value of your policy. If you have valuable items like furs, costly jewels, expensive cameras or antiques, your policy may not cover them and may require you to purchase a separate “floater” policy.
It’s important to note that not every policy covers your possessions while you are traveling or while they’re being shipped or stored when you are PCSing.
And not every policy will cover for things like earthquakes and flooding. Sometimes those are included, but other insurers will require you to purchase a separate policy. If you are moving to a state prone to these natural disasters, it would make sense to check into coverage limitations.
The Insurance Information Institute provides a handy checklist to help you choose the right coverage for your situation.
Whatever you do, if you for some reason don’t have renters insurance right now, go out and get a policy, even a basic policy, ASAP.
For the price of a couple of movie tickets, you can have something more valuable than all your gadgets and gizmos put together: peace of mind.