8

The overlooked benefits of renters insurance

A Hoboken resident clears water from a ground floor apartment on Fifth Street on October 31, 2012 in Hoboken, New Jersey.

The storm damage is still be tallied up from Sandy, but lot of New York residents will have to cover their losses themselves. That’s because most households in New York city rent -- nearly 70 percent -- and renter's insurance isn’t a very popular product. Fewer than a third of renters have this insurance, which covers household possessions and may pick up your hotel bill if you’re home gets damaged.

Daniel Schwarcz, who teaches law at the University of Minnesota, says most people don’t buy renter's insurance because they don’t have to.

"It’s an optional product," he says. "There’s no outside compelling force to purchase it, as there is in the case of homeowner’s insurance," which is required by mortgage companies.

Also, renter's insurance doesn’t get a lot of publicity says Amy Bach, executive director of United Policy Holders, a nonprofit consumer group. "You probably never even thought about it, right? It’s an undermarketed product."

Renters insurance typically costs a few hundred dollars a year and even consumers who have heard about it are often inclined to pass, because budgets are tight. "More and more we’ll go into an area where there’s been a disaster and we find people who don’t have insurance," Bach says.

According to Bach, this is especially true in cities like Los Angeles, Chicago and Houston, where more than half of the households rent.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.
Log in to post8 Comments

There are many benefits of having a insurance. At the time of getting insurance we could we only think how to get benefits from our insurance cover. But the residents of New York didn't receive much benefits from the rental insurance as they are not many acquainted with this insurance. This overlooked attitude of New York citizens banned them from enjoying the benefits of this insurance scheme.
http://www.route66ins.com/

Great post!A recent InsuranceQuotes.com survey found that only one-third of respondents had rental insurance. While it's probably a ploy to get more individuals to buy rental insurance from InsuranceQuotes.com, it does raise the question of why more people should at least think about this. See more at:https://personalmoneynetwork.com/

The example you use here is flooding from the recent storm Sandy. It is my understanding that it is common for renter's insurance policies to exclude coverage for floods (and earthquakes). Would water damage from the Sandy surge count as a flood? I was hoping your story would address this issue.

Weird that it's expensive for some people--I pay $160 a year (so like $14 a month) for $30,000 in coverage, and it also covers lodging should my home become uninhabitable. This is for a modern condo (rented) in California. Earthquakes are not covered, you have to buy separate insurance for that.

My policy is through State Farm, and I have no other policies with them so it's not a bundle rate. Maybe if you think renters insurance costs more than about $20 a month you should shop around again! As you see with Sandy, nobody should be without it.

When we bought our first house, my husband and I got a discount on our homeowners insurance. The agent commented on our being "insurance minded" or something like that.

I paid $188 for renters insurance ( premium for 1 year) in Atlanta (a Miami based insurance company - purchased through AAA) and my apartment was recently burglarized. The robbers took about $6000 worth of electronics and jewelry which will all be covered at replacement cost price (and not depreciated market value of each product). The renters insurance was worth every penny! It also covers damages to property but my landlord took care of that. While I was living in Detroit, I paid less than $200 a year for a similar policy with AAA. I guess it helps if you have auto-insurance through the same company so you receive multi-product discounts.

Stacey, here in Chicago it depends on what amount you want covered. I have the least amount $5000 and it cost $100 a year. If you're covering more than $5000 then sure it would be expensive. You need to go online and shop the cost.

Hi Stacey,
I was listening to your report on renters insurance and was surprised to hear renters insurance was "a few hundred dollars a year". I would like to get a little more detail on what that covers. After our house was burglarized a year ago, I looked into renters insurance here in Miami and found the cost insanely high. It was so expensive that the cost of it would replace everything that was taken. I was always under the impression that renters insurance was cheap as well, but in Miami (and I am surprised not NYC) it was shockingly expensive. Can you let your audience know the research behind the 'couple of hundred dollars a year' statement?

With Generous Support From...