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Even the smallest apartments should have renters insurance

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David Zalubowski/AP/FIle

(Read caption) A sign indicates a vacancy in a rental housing unit near downtown Denver.

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No matter how small an apartment might be, it’s widely recommended that tenants purchase renters insurance

Only about 37% of all renters have a renters insurance policy – well below the number of homeowners with homeowners insurance. The reason that roughly 95% homeowners have a policy is because they are required to by their mortgage lender. Some landlords and management companies require tenants to have renters insurance but the decision to protect themselves with a policy is largely a tenant’s to make.

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Having said that, just because the coverage is not required, doesn’t mean renters should forego it. No matter how big, small, dumpy, or luxurious an apartment is, all tenant’s probably have a need and should consider buying renters insurance. 

Many renters choose not to buy insurance because they don’t feel their belongings are valuable enough to warrant the cost of a policy. This rationalization is completely flawed.

Almost all renters underestimate the value of their personal property. They either aren’t aware of everything renters insurance will cover, or forget entirely about items it covers. But most renters who invest more than a minute or two making a list of their possessions realize they own more than they think.

Someone renting a small studio apartment almost certainly doesn’t own as many things as someone living in a 5,000-square-foot home. However, the few items the renter has probably are worth a considerable amount of money. For example, the renter might own a television, computer, tablet, some furnishings and kitchen utensils – all which don’t take up much room but can be expensive to replace.

Add the cost to replace any clothes, jewelry, sporting goods and other belongings to those expenses and it’s easy to see why protecting your personal property with renters insurance is a good idea. 

Some apartments might be so small there is no space to entertain guests, so why would someone need liability insurance? The answer is many reasons. Even if someone never has any visitors, personal liability protection follows policyholders wherever they go. It also covers policyholders in case some event in their apartment leads to a lawsuit against them.

For example, a renter might forget to blow out a candle in their apartment and cause a fire, damaging an adjacent apartment or their building. Assuming the other parties involved have insurance, they would file claims with their insurance companies, who in turn would investigate and seek money to cover the damages. 

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If you don’t own any belongings or don’t like candles, you still have a need for renters insurance: loss of use coverage. Sometimes called additional living expense coverage, this pays for expenses incurred in case a policyholder’s rental is declared uninhabitable. 

No matter how careful a policyholder is, their apartment is still at risk from roommates, adjacent neighbors and buildings. Although unlikely, a fire or some other incident might keep an apartment tenant out of their home. This coverage might seen like a stretch as a reason to purchase a policy, but renters insurance is relatively inexpensive.

This article first appeared in ValuePenguin.