2/1/2011 5:02 PM ET|
Who needs renters insurance?
Anyone who doesn't own the place they live is the short answer. But 3 particular groups are most likely to be without coverage. Make sure those you love are protected.
Anurag Wahklu meant to get renters insurance. He'd talked with an agent and was waiting for more info. Then his Boston-area apartment building went up in flames, leaving Wahklu, his pregnant wife and his mother-in-law with little more than the clothes on their backs.
Now, he says, "I am a strong advocate for renters insurance."
So is Joie Tamkin, who came home and interrupted a lunch-hour burglary at her Austin, Texas, apartment. The thieves didn't have a chance to get to her jewelry, but they swiped the television and a smart phone. It took six months to save up for replacements.
"You might think you don't have anything of value, (until) it gets stolen from you," Tamkin says.
Cynthia Clampitt lived in a Chicago-area apartment complex where a resident decided to deep-fry a turkey . . . indoors. The resulting blaze torched the unit and did considerable damage to neighboring apartments.
"There are as many reasons to have renters insurance as there are things that can go wrong," she says now.
If you don't own the place where you live, you need renters insurance.
That includes those of you in rental houses, apartments, dorm rooms and senior living complexes.
Coverage is cheap, generally between $100 and $300 a year depending on where you live and what you're insuring. It takes less than 10 minutes to sign up by phone or online.
Not having renters insurance is the ultimate penny-wise, pound-foolish decision. Think you can't afford it? Well, think about this: How would you pay for temporary lodging and replace all your clothes, dishes, furniture and electronics if your upstairs neighbor fell asleep with a cigarette in his hand?
One-third of us rent
One-third of American households are now renting. That number is likely to rise due to "changing demographics and housing preferences," says the National Multi-Housing Council. The industry group notes that half of all new housing built between now and 2020 will likely be rental units.
- MSN Real Estate: Top 10 ways to lower your rent
The NMHC's annual survey shows that two-thirds of apartment management firms won't rent to you unless you show proof of insurance. That's a 22% increase from the previous year.
Landlords do this for several reasons. Tenants who have coverage won't be financially stressed after a fire or property loss, i.e., they can keep paying their rent on time. A tenant with insurance also is less likely to file a lawsuit to recoup losses, says Eric Narcisco of Effective Coverage, a Manhattan brokerage specializing in renters insurance.
Is Grandma covered?
Nationally recognized insurance lawyer Frank N. Darras notes three underserved populations for renters insurance: college students, the elderly and Americans transitioning from foreclosures to rentals.
His own college-age daughter is covered; he made sure her friends' parents knew about renters insurance, too. "Rental or dorm or sorority, they are subject to vandalism, burglary, theft, electrical surge, fire," says Darras, who practices in Ontario, Calif.
People who have lost homes to foreclosure and seniors who move into apartments may be particularly vulnerable. Both groups probably kept their most valuable possessions when they downsized. Having been homeowners for years, they may not be in the mindset to seek renters insurance.
If you were foreclosed upon, you may still be shocked and grieving. It would be a lot worse if you lost any (or all) of what's left due to a lack of insurance. Do something about this, now.
And hey there, sandwich-generation kids: If your parents are in an apartment or assisted living, find out if they have renters insurance. If they don't, get on the phone with an agent. Certain items - antiques and heirloom jewelry, for example -- may need additional coverage.
Renters insurance isn't just for water or fire damage, or even just for problems on the premises. Here are a few successful claims mentioned during interviews:
- Luggage gets lost by an airline or stolen from a hotel.
- You accidentally injure someone during a pickup ballgame in the park.
- Your car gets stolen the day you pick up a bunch of $300 business suits from the dry cleaner.
- A prolonged power outage ruins a freezer full of food.
- You are robbed of your cell phone and camera while on vacation.
Clearly you should talk to your agent any time you suffer a loss, no matter how unlikely it seems that you'd be covered. (A freezer full of food . . . who knew?)
VIDEO ON MSN MONEY
Before anyone else follows "Love da Okra"'s poor lead, I'd like to point out that there were two pages to this article and that Ms. Friedman has a long and outstanding history of writing articles aimed at helping people live better on less money.
Insurance is important, especially when you're living in an apartment building or some other situation where people you don't know can impact your life in such an enormous way. As far as food in a freezer goes, not all policies will cover that, but personal liability insurance is indispensible- it protects you from your mistakes as well as those of people who come onto your property (with or without your permission). If you're sending a child off to college, check with your agent before buying a separate policy- your homeowners insurance may cover their belongings in the dorms, or be endorsed to do so relatively cheaply. Still, renters' insurance is unbelievably cheap for the protection you get. "Eenie3" made an excellent suggestion on keeping receipts, for at least a few years.
Bottom line: don't cheap out when it comes to protecting yourself and your loved ones.
@Someone (funcheon123): You are mistaken. Two different insurance agents told me that an "accident at the ballfield" would be covered if the person sued you. I interviewed a woman whose expensive business suits were in the trunk when the vehicle was stolen. The car was found in a different state, stripped. Her suits were covered, minus the deductible.
Also, the piece did not say that you have to pay rent on a burned-out apartment.
In the event of a fire or damage to a building that is not livable you should not have to pay your rent. In Massachusetts if you are need to relocate due to a fire or damage to your building the owner must provide each tenant with a relocation fee of $750 IMMEDIATELY to help with their relocation costs. It's not an option in MA, but a MUST DO. And the owner cannot force the tenant to pay rent on a unit that is deemed uninhabitable due to a fire or natural disaster.
Renters insurance will not cover an accident at the ball field nor will it cover your suits in the back seat of your car that may have been stolen. Homeowners insurance might cover your clothing in the car, but is subject to your deductible on your home owners policy and you must fill out a detailed questionnaire and provide receipts with dates, amounts and itemized description.
My opinion is that renters insurance is a nice option and worth it for most, but please don't tell me the tenant has to pay their rent on a burned out building........let's get the facts straight.
Something else to bear in mind is that each state has different insurance laws, so something might be covered in one state, but not in another. It's important to read your insurance policy, and talk it over with your agent so you can be sure you understand everything. If you buy your insurance directly from a company, you should consider an independent insurance agent- they exist specifically to educate and advocate for their clients, because that's who they work for. The people answering your phone at the company (or a captive agency) work for the company, and will usually be working in the best interests of an organization that makes its money by taking money from the consumer.
Also, Ms. Freedman, I'm sorry for misspelling your name earlier.
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