What’s All This Buzz About Renters Insurance?

Lately, the topic of renters insurance seems to be circulating across TikTok, specifically across the handle @finance, in collaboration with State Farm®. The recent buzz reminded us that it’s one subject we’ve never reached a definitive consensus on: Is renters insurance actually worth it?

Based on a quick (and by no means comprehensive) office poll, about 60 percent of us have it—some were required by their buildings to get it. Among the 40 percent who don’t, the response was sort of like a collective shrug emoji: Most people conceded they probably should have it but never bothered to follow through.

Well, we decided to take this as a sign to dive into the topic. Here are a few things you may want to consider when exploring a renters insurance policy.

Personal property coverage is probably the main reason most purchase a renters policy. The coverage helps cover losses, damage or theft of your possessions up to a certain dollar amount. Keep in mind that your policy will exclude certain perils (such as earthquake and flood losses), limit coverage on some items (such as firearms and silverware) and might not cover a business in your home. In short, renters insurance:

• Helps Protect Your Belongings: State Farm describes renters insurance as “a type of security blanket for your security blanket.” It helps protect the things you own and love, from TVs and bicycles to laptops and even your favorite down comforter. It helps covers the cost of repairing or replacing that personal property in the event of damage, up to a certain amount.
• Covers Liability: Renters insurance also covers much more than just your personal property. The average policy typically includes a minimum of $100,000 in liability coverage. That means renters insurance may help cover a personal liability loss if you accidentally cause bodily injury to someone or damage their property. It may also help pay for necessary medical expenses if someone other than you is injured in an accident on your property.
• Provides for Temporary Living: If the unit you rent becomes uninhabitable due to a covered event, renters insurance may help pay for additional living expenses like hotels and meals while repairs are made.

Renters insurance is relatively inexpensive. The average renter's policy costs about $12 per month for up to $35,000 in personal property coverage. That’s quality coverage for less than the cost of a few cups of coffee a week. Here are some tips to help you determine your insurance needs:

Completing a home inventory is a good way to determine how much property coverage you need. This inventory lists your possessions, along with details about their age, purchase price or current value and other identifying information. While you’re at it, take pictures or a video of your property.

Your renters policy’s liability coverage may help protect you if someone injures themselves in your home. It may also help protect you in case you accidentally cause damage to others’ property. The typical renters insurance policy offers $100,000 in liability coverage. For renters, this amount is often sufficient. However, if you entertain company frequently at your home or if your assets exceed your limit, you should consider a coverage amount equal to at least the total value of your assets.

Your renters insurance premiums will reflect the deductibles you agree to pay. Lower deductibles typically mean higher premiums; higher deductibles typically mean lower premiums. When choosing a deductible, think carefully about the out-of-pocket costs that you are willing and able to pay.

Finally, your location will play an important role in determining your renters insurance rates. Prices may vary based on your state and city. Your rates will also reflect the safety of the rental property itself. For example, an older, unrenovated building might have a higher risk of electrical and plumbing issues, and that may mean higher rates.