Why you need renters insurance…

I’m doing more leases than sales lately, as more and more displaced former home owners seek shelter while they rebuild their credit. Whether they have signed a lease or just found a month-to-month rental situation, all renters should have an insurance policy to cover their possessions because, should a disaster hit home, the cost to replace those items will put future home ownership that much further out of reach.

Then there’s the liability issue. If you are held responsible for an injury to someone in your home or someone's property in your home, without the liability coverage provision of a renter's policy, your current and future earnings could be at risk. You'll also have to foot the bill for any legal defense you could need. A renter's policy can also put a temporary roof over your head while damage to your rental home is corrected. Policies come with some limits but typically cover the difference between your additional living expenses and your normal living expenses.

Unfortunately, most renters, especially apartment renters (58 percent), don't bother to buy renters insurance, according to a survey by Apartments.com. Most of them, more than 70 percent, know better and believe the insurance is important to piece of mind when renting, but say cost is a big reason they forgo the coverage. The survey by Apartments.com also applies to home leases and indicated that 40 percent of those responding to the survey said cost is the reason they decide not to buy the coverage. However, an additional 24 percent of respondents said they were unaware that renters insurance exists.

The Insurance Information Institute reminds renters that because the property owner's policy covers the structure and common area and renters insurance covers only the value of the renter's belongings, renters insurance premiums are relatively cheap. The Apartment.com survey also found that an additional 18 percent of renters said the value of their personal belongings wasn't enough to warrant coverage. That's an oversight because renters insurance doesn't just replace property but provides protection from liability claims, loss of use and in some cases, involuntary unemployment insurance in the event are required to have a renters policy to live in their current home.

Renters insurance typically provides coverage for possessions lost to fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods). Liability covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet and it pays legal defense costs if you are taken to court.

Renters can choose between two basic types of policies:

Actual Cash Value pays to replace possessions minus a deduction for depreciation up to the limit of your policy.

Replacement Cost pays the actual cost of replacing your possessions (no deduction for depreciation) up to the limit of your policy.

Typical renters policies come with $300,000 of liability coverage (varies by state and company) and may be purchased with even higher liability coverage. Additional coverage is available to boost limited standard policy coverage, especially for items such as jewelry, silver, furs, collectibles, and some computer equipment and work-at-home related items. Add-ons also cover perils not included in your policy such as accidental loss, according to the insurance institute.

So, as you look for a place to live temporarily, include the cost of renters insurance in your monthly budget calculations. For those in the southeastern portion of Michigan – Wayne, Washtenaw, Oakland, Livingston and Macomb Counties – give Eric Chase of the Insurance One Agency a call at (734)662-0174 to get more information and a quote on renters insurance. Tell him that Norm sent you.