Top 5 Reasons Tenants Don’t Buy Renters Insurance

According to a 2014 Insurance Information Institute poll, 37% of renters do not have renters insurance. Are you surprised by this? We were surprised, so we conducted our own investigation to discover why nearly half of renters do not protect their belongings. What we discovered surprised us yet again, because the reasons tenants gave for not purchasing renters insurance were almost entirely myths and misconceptions.

If you are a renter reading this article, you may be wondering why we care if renters have insurance. After all, aren't we primarily a service for landlords? Yes, to a point. We definitely assist landlords. But, like most landlords, we were once renters.

We also genuinely care about our tenants, which is why we've tailored many of our services to them. You have possessions, and the majority of them are likely to be valuable. Don't you want to protect your belongings from events beyond your control?

So we wrote this blog to hopefully clear the fog of misunderstanding for renters like you, so you can re-evaluate whether it's time to purchase renters insurance. The top five reasons given for not purchasing renters insurance are as follows.

1. I’m covered by my landlord’s insurance
2. Renters insurance is just too expensive
3. My stuff isn’t worth insuring
4. It’s just stuff. My stuff.
5. It takes too long

Let's take a look at each one individually:

I’m Covered by My Landlords Insurance

No way. That is simply not the case. Most landlord policies cover only two things: 1) the physical structure of the building, and 2) liability if someone is injured on the property (not inside your rental unit). His/her policy does not cover your personal belongings or liability within your space. The only exception is when your personal property is damaged as a result of the landlord's negligence (he knew about a leaking pipe, took too long to fix it, and now it ruined all of your clothes). In that case, you could seek reimbursement under the landlord's insurance policy. However, you would be left unprotected if the property flooded as a result of a sudden pipe burst, or if there was a fire, vandalism, or theft.

There's also the issue of a landlord not owning any of your belongings. So, even if he wanted to assist you by filing a claim for your belongings, the insurance company would most likely determine that the landlord lacks a “insurable interest” in the lost/damaged/stolen property. He would then be denied, which means you would be denied as well.

It's also worth noting that landlords are not required by law to have landlord insurance. As a result, many tenants may believe that coverage exists in general when it does not. Even if the landlord has a policy, it will not cover your personal belongings.

Renters Insurance Is Just Too Expensive

Is that correct? Did you know that renters insurance can be obtained for as little as 50 cents per day? Renters insurance premiums in the United States average $12 per month. That's only $144 per year, less than the cost of a leather jacket (and that's just one jacket, not your entire wardrobe if you had to replace them all). The average policy includes $30,000 in property coverage and $100,000 in liability coverage.

There are also levers you can pull to change the total cost. You can change your deductible (the amount you pay before the insurance company pays anything when you file a claim) – the higher your deductible, the lower your annual or monthly premium payments. You can also change the amount of total coverage you want/need. A lower level of property and liability coverage translates into a lower annual or monthly premium.

Rather than believing that the cost of insurance is prohibitively expensive, I would argue that replacing all of your belongings out of pocket at once is prohibitively expensive.

My Stuff Isn’t Worth Insuring 

Please reconsider. You're sitting on a couch, there's a TV across from you, and you're probably reading this blog on a laptop or tablet. There's a good chance you also have some nice clothing, dozens of shoes, and some nice jewellery or a watch in your closet. You might be thinking that those are all "hand-me-downs" and therefore worthless. It's tempting to think in terms of how much you paid, but in reality, you should consider how much it would cost to replace those items.

So, even if your TV was a hand-me-down from your parents when they upgraded, you'd still want to replace it if it was stolen, wouldn't you? And it is this replacement cost that you should think about.

It’s Just Stuff. My Stuff. 

Unfortunately, this is also not true. Yes, you would be insuring your belongings. But there's more to it than that. Assume you have a favorite rug. It's one of those rugs with a lion's head on one side. Your friend comes over and trips on your lion head rug, breaking his leg. When you receive the $30,000 in medical bills, it is no longer just stuff. You must consider that you will have guests who may injure themselves due to a strange piece of furniture or unusual furniture placement, or even because they drank too much wine.

It Takes Too Long

Okay, then. We must give credit where it is due. This is undeniably correct. Something that takes 5-10 minutes may be too long in today's world. But, now that you know what you know from the preceding, don't you think it's worth the five minutes to feel and actually be more protected?

Have you had a change of heart? I hope so, because renters insurance is required. Visit Lemonade to get a quote in seconds.