Renters Insurance: How Much Coverage Is Adequate?

“$300,000? Why do I need that much coverage? My items are not worth that much!"

I have heard this question several times recently from our residents. Making sure you have adequate protection is important. There is a misconception out there that you only need enough coverage for your "own" items. The landlord will have coverage that will cover things that happen to the house, right?

The truth is, yes and no!  Most landlords do have a homeowner's insurance policy to cover damages. The fact remains, you as the resident, must also have enough coverage to cover any damage that you or your family may cause to the property. Things that can be accidents such as a kitchen fire, Christmas tree fire (and we just had one just this last Christmas unfortunately), or even falling asleep while smoking in bed can and do happen. Yes, these are real situations that happened to residents living in Management One homes.

Difference between Landlord Insurance and Renter’s Insurance

While the landlord's insurance will cover these damages and restore the home, the home owner's insurance can come seeking restitution from you if they find fault was with the resident.  We want to make sure you are protected. These are actual cases we've had at Management One. The kitchen fire was nearly $50,000 in damages and this doesn't include the resident not being able to stay in the home until the kitchen was restored and that took several months.  Thank goodness, her rental insurance covered her hotel stay while she was displaced.

The Christmas tree fire caused nearly $30,000 in damages, not including a hotel stay and the loss of the resident damages. Smoke and water damage can be very expensive to remediate.

Sadly, falling asleep while smoking ended in the worst-case scenario.  The whole house was lost/damaged and resulted in the loss of life to a resident.

Personal story

My own property management company notified me that I was required to also obtain renters insurance, a mandatory policy before they would release keys to me. I shopped around and found that State Farm, with which I also carried full coverage on my vehicle was by far the best quote. At only $10.83 I was able to obtain renters insurance with personal liability of $300,000.00. My Fiancé, Son, and I decided to take a vacation to San Francisco before his deployment only to have our rental car broken into and all our belongings stolen within 4 hours of arriving in San Francisco. Thankfully, I have renter’s insurance and they also cover theft away from home! In that moment of despair, I was so relieved.  State Farm sent me a check for $2,000.00 to replace our belongings. I was so grateful. I was able to replace my Son’s DS and all his games, my Fiancé’s Lap Top, all our luggage and clothes and essentials are stolen, including my Michael Kors purse and wallet along with my makeup. Had we not had renter’s insurance, we would have been out so much money and personal sentiment because even my Son’s teddy that he has had since a newborn was stolen.

Reality Is…

Many of us don't have $30,000, $50,000, or even $500,000 lying around to pay back an insurance company to restore a home in the event of an accident that we were found liable for, let alone, rebuild our lives from a loss. That kind of judgment is life-altering and we don't want it to happen to any of our valued residents.  We want to protect you and your family.  We also recommend $25,000 in displacement cost and another $25,000 in personal belongings.  This is up above and beyond the $300,000 liability coverage.  A basic policy runs about $9.00 a month on average and a premium package is $15.00 a month on average so you are looking at a $6.00 a month difference between the two packages. To put that in perspective, that is less than .50 cents a day for solid coverage for you and your family. To put it another way, it's less than a latte a week.  The peace of mind is worth it, wouldn't you agree?

Getting Started

Start by calling your car insurance company, most offer renter’s insurance and may even offer a bundle package saving you money. Some common companies include Lemonade, State Farm, and AAA. Not all are created equal so it’s important to ask the right questions such as:

1. What is the daily limit for a hotel stay?

2. Do you offer $300K policies?

3. Do you offer Personal belongings?

Moral of the story

At the end of the day, it is better to ensure that you and your family have coverage in case disaster strikes. Plain and simple.