Renters Insurance: Underbought By The People Who Need It Most
There comes a time in every young person’s life when living with Mom and Dad ceases to be cool. After all, parents dress like people did 20 years ago, enjoy the worst movies, and are constantly on your case about completely boring things like filing your taxes, renewing your car tags and getting yourself an insurance policy.
Well, on this last point, a new study shows that you should probably start listening.
Renters Insurance: The Policy You’re Foolish To Ignore
Nationwide recently found that despite the fact millennials are renting in unprecedented numbers, over half of young adult renters do not have renters insurance, leaving their homes and belongings at risk.
“It’s clear that there’s a misconception among millennials about the importance of renters insurance and how much it really costs,” said Matt Jauchius, Nationwide’s chief marketing officer. “For the $20 renters spend on items such as coffee and streaming video, they can get the coverage they need to protect their belongings. Considering renters share many of the same risks as homeowners, it’s not only important; it’s a no-brainer.”
The survey, conducted online nationally by Harris Interactive in February and March among 1,028 23-35-year-old renters, found that 40 percent of individuals paying rent without renters insurance didn’t even think it was needed. “At the same time, 68 percent of all young adult renters say they stand to lose more than an estimated $5,000 worth of belongings should an unfortunate event occur,” Nationwide noted.
This brings up the first of many important considerations — not only should you have a policy, but you should also do the math on all your belongings and determine the amount necessary for to replace them.
Furthermore, you should be mindful of the risks involved.
While risk avoidance is always nice — for instance, it’s good to know that jewelry and electronics are frequent targets of theft, while fire damage generally adds clothing to the list of casualties — you can’t constantly be carrying everything around with you.
When you’re first starting out, you always think it can never happen to you. However, fire and theft are common occurrences, and they frequently happen to young people who are out on their own for the first time.
Maybe it’s a careless cigarette butt or a shady dorm-mate to blame.
Unfortunately, these incidents often serve as the catalyst for a young person to purchase a renters policy, rather than something that happens while they’re already covered.
Additionally, when you’re young and your life is filled with exciting new people and events, you can find yourself liable for damages that a renters policy will typically cover, thus protecting your finances and belongings should someone suffer an injury while inside your apartment.
But Won’t My Landlord’s Insurance Cover Everything?
Probably not. As Gayle O’Connell, senior vice president, marketing/communications, Arbella Insurance Group, states: “A landlord’s policy doesn’t cover the tenant’s possessions. Everyone in the insurance industry knows this, but a surprising number of millennials don’t.”
O’Connell also cautions millennials to not assume that their belongings are too small to warrant a policy. “Many first-time renters underestimate the value of the property in their apartment, but their possessions are usually more valuable than they think,” O’Connell said. “Millennials will often bring furniture with them from their parents’ homes, and don’t realize how high the replacement value of these items can be,” adding that “household items like couches and mattresses cost several hundreds of dollars each to replace.”
Other Findings From The Nationwide/Harris Poll
Two in five renters didn’t realize that renters insurance covers stolen property.
A renters policy might cover common apartment damages, such as a broken door, a hole in the drywall, an injured party guest or a damaged laptop.
Since 2008, Nationwide has paid more than $184 million in renters insurance claims, with an average claim of nearly $4,000.
When doing anything for the first time, it’s easy to let yourself become intimidated. But as any agent will tell you, renters insurance is one of the easiest financial products you’ll ever buy. It doesn’t require a doctor’s exam and $20 per month will probably acquire all the coverage you’ll need, at least until you add more assets. One thing is certain: going without it is a risk not worth taking.