Do I Really Need Renters Insurance?

Imagine you’re sitting on the couch one evening with your significant other trying to decide if you are going to go to bed. All of the sudden you hear a loud pop at the back of your house. You look up to see the entire back wall is engulfed in flames. By the time you get outside, the rest of the house is in flames and you are left standing in the street with no shoes, no car keys, no cell phone… nothing from inside your home.

This may seem like an extreme story, but it is something that happened to my brother-in-law earlier this year. The home they were renting burned to the ground, and they didn’t even have time to grab shoes. They were fortunate to be alive, but it didn’t take long for the reality of their situation to set in. They had lost everything, and they didn’t have insurance.

Many believe that in an event such as a fire, the landlord’s homeowners insurance will cover the cost to replace their personal property. Unfortunately, this is an incorrect assumption. Landlords insurance may cover the physical structure, the personal property they own (such as appliances), and loss of rent, but does not cover the renter’s personal property or the expenses incurred while looking for a new place to live.

Renters insurance is incredibly cheap (relative to other insurance policies). The cost depends on where you live, and how much personal property you have, but for the typical renter it may cost less than $20 per month.

The popular response I get from renters is “I don’t have enough stuff to make it worth getting insurance.” Think about how much it would cost to replace your furniture, electronics, clothes, shoes, kitchen appliances, and everything else in your home. $10,000 – $20,000 may not be an unreasonable amount, and it could easily be more than that.

So what happens after you make the decision and get renters insurance? Document everything in your home that you would want an insurance company to replace. I prefer to have clients walk around their home and make a video of everything in it. Store the video on the internet (so you can access it if your phone doesn’t make it out of the burning home with you) so that you have proof of your personal property.

What do you think? Do you rent, but don’t have renters insurance? Is there a reason you haven’t purchased it? Please share in the comments section.

About the author

Alan Moore, CFP®, MS

Alan is passionate about providing individualized financial advice to individuals and families, regardless of their net worth, income or investable assets. An educator at his core, he strives to serve as his clients’ guide, available to help with the sometimes stressful or exciting financial situations that life inevitably brings.

Alan is the founder of Serenity Financial Consulting, which he started after noticing the lack of hourly, as-needed financial planning advice available to consumers. With experience working in several nationally recognized firms including Kahler Financial Group and Financial Service Group, Alan combines his industry experience and technical knowledge with his entrepreneurial spirit and penchant for teaching others to create a refreshing style of truly personal financial planning.

Alan is a Certified Financial Planner™ professional and Certified Retirement Counselor™. He earned his bachelor’s degrees in Family Financial Planning and Consumer Economics and his Master’s Degree in Family Financial Planning from the University of Georgia. Driven by his desire to educate, Alan also taught undergraduate financial planning courses while in graduate school.

Alan prides himself on being active in his community and feels privileged to have served in the Georgia National Guard for four years before receiving an honorable discharge. Originally from Georgia, Alan now lives in Shorewood with his wife Melissa, and enjoys taking advantage of the abundance of activities that Milwaukee has to offer.

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