Renter’s insurance is a must-have for the recent college graduate

This time of year, recent college graduates are in the process of exchanging their dorm rooms for their own apartments or rooms in a group house. As they settle in to their new places, they find there’s lots to buy: furniture, dishes, sheets and towels. One necessity they often neglect to purchase is renter’s insurance.

LaCasse

We asked Tim LaCasse, a State Farm agent in Washington, to tell us more about renter’s insurance. Here are his edited responses to our e-mailed questions:

Why should someone get renter’s insurance? Doesn’t a landlord’s policy protect the tenant?

It’s a common misconception that a landlord’s policy will protect a tenant, but the truth is renters need their own policy. A tenant’s belongings (things like clothes, computers, TVs, and furniture) are not covered by the landlord policy. A renter’s insurance policy protects your belongings from covered losses such as fire, lightning, vandalism, theft, explosion, windstorm and more. A renter’s policy also provides liability coverage, which protects you if someone injures themselves in your home or if a family member causes damage to others’ property. Some policies even pay for defense and court costs, in addition to settlement costs, if you’re found negligent.

Isn’t renter’s insurance only for people who live in apartments? What about people who live in group houses?

D.C. is a renter’s town. In 2011, D.C. had the lowest percentage of owner-occupied units in the U.S., with just 41.2 percent of people owning their home. All of these renters need to make sure they have insurance — whether they live in an apartment or a group house. Events commonly covered by renter’s insurance, like fire or theft, can happen in either type of housing situation. In a group house, it’s important that each person has his or her own renter’s policy to cover his or her belongings. For example, if your house is broken into, your roommate’s policy won’t cover your stolen laptop.

What does renter’s insurance cover? For someone who doesn’t have a lot of expensive stuff, is it worth it?

Many people think that they don’t have enough “stuff” to warrant buying renter’s insurance. However, if your house were to burn down, the cost to replace everything can add up quickly. Oftentimes, people don’t realize that all of their clothes, TVs, computers, digital cameras, iPads, furniture and kitchenware can add up quickly.

But separate from your stuff, it is really important that you have liability protection. If you have a pet, such as a dog, it’s especially important to have liability coverage. If your dog were to bite someone, the liability insurance would help pay for the associated out of pocket expenses. With the average dog bite claim running about $29,000, liability insurance will help you cover those costs.

Isn’t renter’s insurance expensive? What does the average renter’s insurance policy cost in D.C., Virginia and Maryland?

I’ve heard from many people that they don’t purchase renter’s insurance because they think it’s expensive. The truth of the matter is that renter’s insurance costs about the same as ordering delivery pizza once a month. In 2010, the average annual cost of a renter’s insurance policy was $169 in D.C., $152 in Virginia and $156 in Maryland, according to the Insurance Information Institute.

When shopping for renter’s insurance, what questions should you ask?

It is important to find out what is included in each policy you consider. Things such as policy limits, coverages, deductibles and annual costs can vary company by company and policy by policy. Make sure you know how much liability coverage is included, if there is a limit on your contents coverage and what is considered a covered loss (and perhaps more importantly, what is not considered a covered loss). When determining your deductible, balance what you could reasonably cover during a loss versus your premiums. For most, having a higher deductible will result in lower premiums.

 

Kathy Orton is a reporter and Web editor for the Real Estate section. She covers the Washington metropolitan area housing market.
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