What is Renters Insurance and Do You Need it in New York?
You've probably heard of renters insurance, but don't think it's a necessary expense for your lifestyle.
After all, you're young and it's not like you have priceless artwork or a Best Buy's worth of computer or TV equipment in your pad.
Plus, the landlord's got you covered. It's their building or unit, right?
Wrong--the insurance policy your landlord holds does not cover your possessions.
Accidents, theft, and natural disasters do happen, and unless you have extra cash lying around, you might find yourself in a bad financial bind like my neighbor did.
The truth is that renters insurance is a security that is worth buying into.
What is Renter's Insurance?
Renters insurance, similar to homeowner's insurance, basically reimburses the renter in case of damage or loss of property due to fire, theft, or vandalism.
Renters insurance can also cover liability or bodily damage incurred by visitors to your rented home or apartment.
It's generally not as extensive as homeowners insurance, but does offer some important indemnities.
Did you know that the number of renters has increased steadily since 2006? Less people are buying homes especially individuals aged 35 and younger.
65% of that younger age group are renting, according to Pew Research, which is up from 57% from 2006.
What Exactly Does Renters Insurance Cover?
While coverage may vary from policy to policy, renter's insurance can cover a lot and offer renters peace of mind.
Loss or damage to possessions
All renters insurance policies cover damage or theft to personal possessions up a certain dollar amount depending on the particulars of the policy.
The damage should have been incurred by no fault of your own--generally due to natural events like a fire or weather-related events such as rain or hail.
This loss can also include loss or damage to your property outside your home. So if someone steals your tablet or laptop, or it gets damaged while you are in transit, many policies will cover the cost.
Much like homeowners and auto insurance, renters insurance can cover medical or dental bills of any visitors to your property are injured on its premises.
This personal liability coverage may even offer compensation for lost wages due to the injury.
Loss of rented property
In case your apartment or house becomes uninhabitable due to an accident or natural disaster, renters insurance cover temporary lodging or hotels.
This coverage can also include expense for food and travel.
Every plan is different, so it's important to read the fine details of coverage.
What is Not Covered Under Renters Insurance?
If you think you don't have to insure your family heirlooms because renter's insurance has you covered, think again.
While some policies may cover your most valuables personal possessions like jewelry or fine art, they will most likely only cover a small percentage.
Some carriers offer more extensive coverage for valuable items, but it'll cost you extra.
If you've got priceless treasures, it may be worth purchasing separate insurance just for prized valuables.
Renters insurance also won't cover damage/loss due to certain natural disasters such as floods and earthquakes, especially if you live in an area that is prone to these events.
Damages caused by your pet are not covered. If your pet likes to chew on furniture or destroys someone else's personal property, you're going to have to pay out of pocket.
Accidentally losing or misplacing items like your smartphone or laptop also won't result in a check from your insurance company.
Am I Required to Have Renters Insurance?
Renters insurance is not like auto insurance or homeowners insurance which are required once you own a car or a home. It's not usually mandatory.
However more and more landlords and management companies are requiring their tenants to purchase renters insurance.
Landlords have their own insurance that cover the overall building, common areas, and includes damage to your apartment as well.
However, their coverage does not include your possessions nor are they legally obligated in anyway to coverage damages to them.
This is true even if there is water damage to your possessions due to a leak from your upstairs neighbor or heavy rainfall.
True story: Years ago I had a neighbor whose possessions were damaged beyond recovery when there was a severe rainstorm.
Even though the building was a new construction, water leaked through her walls to the extent that she had a fair amount of damage in her apartment and to her personal possessions, including expensive stereo and sound equipment.
She immediately assumed that because the building was compromised in the rain, that our landlord owed it to her to pay to replace her personal items.
She did not have renters insurance and she found out the hard way that it was up to her to replace her own items.
The landlord gave her $100 to give her something. She was upset about it, but what she hadn't realized was that legally she wasn't entitled to a single penny.
Consider if items or equipment you needed for work were damaged in such an incident. That's not just loss of money for replacing the items but also loss of income if you're not able to work because of it.
As they say, it's better to be safe than sorry.
How Much Does Renters Insurance Cost?
The short answer is--not very much.
Renter's insurance is indeed much more affordable than almost any other insurance out there.
According to the Insurance Information Institute (III), while homeowners insurance has increased steadily over the past 10 years or so, renters insurance has remained fairly stable, and even has decreased.
Nationwide, policies average around $10 a month, but some cost as little as $5 a month.
Of course, if you have a lot of precious and costly items in your apartment, you might opt for a pricier policy to ensure full coverage.
$10 a month is a pretty good deal considering the policy will probably cover tens of thousands of dollars worth of loss/damage and even up to $100,000.
ValuePenguin calculates that insurance averages around $17 a month in New York. That's about the cost of three lattes a month.
Renters insurance can be purchased from most major insurance companies. Certainly, vendors who offer homeowners coverage, offer renters insurance as well.
These insurance companies include Geico, Allstate, Farmers, Statefarm, Nationwide, Metlife, and Liberty Mutual.
The beauty of going with one of the major carriers is that they can bundle your renters insurance with other types of coverage like auto or life.
Lemonade offers both homeowners and renters insurance, but uses tech and a low flat rate to streamline the process. They even have a giveback program that donates to charities of your choice.
PolicyGenius acts more as an insurance broker allowing you to compare and contrast all policies across the board for all types of insurance.
Below is a list of rates we ascertained for a single person in their 20's, with no pets, living in a one-bedroom in Midtown, Manhattan, looking for basic coverage.
Renters Insurance Rate Comparison Chart for Basic Coverage in New York City
|Insurance Carrier/website||Insurance rates for basic coverage|
|Geico||$12.84/month or $94/year|
|Allstate||$14/month or $186/year|
|Statefarm||$10.42/month or $125/year|
|Esurance||$27.52/month or $363/year|
|Jetty||$9.17/month or $110/year|
|Lemonade||$11.34/month or $136/year|
|Policy Genius||$13.08/month or $157/year|
What Do I Need to Provide to Get Renters Insurance?
Generally, you'll be asked for your name, address to be insured, date of birth, email address, safety features already installed at the property such as fire and smoke detectors.
Some sites required a phone number and others your social security number just for a quote.
Depending on how comfortable you feel with that, it may not be for everyone.
Metlife would not provide a quote online and required an insurance agent to directly contact you.
Liberty Mutual and Progressive will only provide you with a quote once you give them your social security number.
The easiest-to-use site and fastest quotes were from Geico, Jetty, Lemonade, Esurance, and Policy Genius--Jetty being the absolute fastest and user-friendly.