If You Rent or Live on Base, You Need Renter’s Insurance

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“If you rent an apartment or house, the idea of buying renter’s insurance…may not have crossed your mind. But it should have.” – Get a Financial Life: Personal Finance in Your Twenties and Thirties 

It makes sense that if you rent you might need renter’s insurance. If you live on base, though, you might need it as well. For example, the Navy changed policy for people who live in Public Private Venture military housing. Renter’s insurance used to be included, but now it is not. The Air Force did the same in 2015. And as you can read in this Navy article, “All Sailors are encouraged to obtain renters insurance, however, regardless of where they choose to live.” The same is probably true for all others in the Department of Defense.

What is renter’s insurance?

Your landlord’s insurance won’t cover your personal belongings like furniture, clothing, and electronics if they are stolen or damaged. For that you need renter’s insurance, which protects your belongings and offers liability protection, similar to homeowner’s insurance used by homeowners.

The liability protection might be needed if someone injures themselves in your apartment and you are held liable. The renter’s insurance could cover their medical bills and any legal costs you have.

In addition, some policies will cover your expenses if something happens to your apartment/home and you cannot live there for a period of time.

What doesn’t renter’s insurance cover?

This will vary from policy to policy, but in general renter’s insurance will not cover flood damage. To find out if you are in a flood zone and need insurance, go to FloodSmart.gov. It might not cover tornado or earthquake damage either, so you’ll need to check. For info on earthquakes, go to EarthquakeAuthority.com.

Are there limits to the coverage?

As you might imagine, yes, there are limits. Your policy will provide insurance up to a certain amount. It could be $50,000 or $75,000 or whatever you pick and are paying the premium for.

In addition, each policy will either provide coverage for the current cash value or replacement costs. For example, assume you have a $2,000 computer that is 3 years old and is damaged in a fire. A replacement cost policy would give you whatever it costs to replace the computer with a new one, somewhere around $2,000. A cash value policy would only give you what the 3-year-old computer is actually worth, which is likely to be significantly less than $2,000.

Certain items, like expensive jewelry, often have a cap on their coverage. For example, if you have $5,000 of jewelry your policy might only cover up to $1,000 of it. If you want coverage for a particularly expensive item or items, you may need to purchase a “rider,” which is an additional coverage on the policy for specific items like jewelry, electronics, or fine art.

How much liability coverage do you need in your policy?

You should have at least as much liability coverage as your net worth. If you have a net worth north of $500K, you would need to purchase additional liability coverage in the form of umbrella liability insurance.

Do you always need renter’s insurance?

“What if you figure your personal possessions aren’t worth that much or replacing them won’t cause that much of a financial burden? If that’s the case, you may want to skip renter’s insurance – unless your landlord insists you get a policy as a condition of renting the apartment.” – Jonathan Clements Money Guide 2016 

Even if this is true, though, you may need the liability coverage.

How can you make it less expensive?

There are a few ways you can reduce the cost of your renter’s insurance:

  • Have as high a deductible as you can afford. Your deductible is the amount of money that you must pay before an insurance company will pay the rest of the insurance claim. In other words, if you sustain $2,000 of damage and your deductible is $500, then you would have to pay the first $500 and the insurance company would pay the additional $1,500. The higher your deductible, the cheaper your insurance policy is.
  • Make sure you shop around, as prices will vary. I’d check out:
  • Think before you file a small claim. If you have a $700 loss but a $500 deductible, you could get $200 from the insurance company if you filed, but they would probably see you as a higher-risk customer since you filed a claim and raise your rates, costing you much more than $200 over the long haul. Only file claims that are large losses you can’t afford.
  • Ask about special discounts for safety features of your rental property like smoke detectors, fire sprinklers, security alarms, doormen, etc.
  • Get multiple insurance policies you need from the same company. If you get your auto and renter’s insurance from the same company, you could get a discount.

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