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So, you’re a tenant. You’ve been living well with days idly passing you by, no cause for concern and no problems with the landlord upstairs. Great! That is most likely the exact reason why
Besides a fear of the boogeyman, your choice of insurance policy should really come down to how much risk you take on each day. Do you often throw raging parties where your guests do sweet backflips off the balcony, only to land flat-faced on the dirt? That is a risk that could actually come back to haunt you if you get served a lawsuit for their injuries. Renters insurance is good at preventing such hauntings—that’s called "liability protection".
When you begin looking at plans, you'll quickly find optional protections that cost you a bit extra each month. Some are highly advisable, like "third-party liability" coverage, but we'll get to those in a little bit.
For now, let's assess which factors might guide your decision making. Give these a minute of your time.
Consider these before choosing your tenant insurance plan:
Are cat burglars creeping about your area?
Do you trust your roommates? Like really, really trust them…?
Do you have a lovable pet who can be a bit of a handful at times?
Do you have the cash to self-insure?
Let’s focus in on that last one for a sec. Self-insurance is a fancy way of saying you’ve got a lot of savings and can bankroll any costs that renters insurance would otherwise cover.
Those costs could be:
Personal belongings that disappear
Your roommate breaking the toilet (naturally, no one admits to it)
A house guest hurting themselves in some inconceivable way (how much is your friendship actually worth)
A big one that often gets swept under the rug is what happens if your abode becomes uninhabitable? Floods happen all the time, and fires are an everyday reality too. Many plans will set you up in a hotel until you're able to settle back in—that’s called "additional living expenses" coverage.
If you have the misfortune of experiencing a flood or fire and the cause is found to be your own, then you are also liable for the damage it causes if it spreads to neighbouring units. "Third-party liability" coverage reduces that risk by covering a minimum of about $100,000 in damages, but that’s not very much. A good plan should offer you about $1,000,000 or more unless you’ve got a trust fund that we don’t know about.
Really it comes down to how large your rainy day fund is.
Renters insurance ranks really low in terms of cost compared with the amount of coverage it offers. Plans start at about $10 per month or $20 depending on your region. There's no other insurance available that is nearly as cost-effective. We won’t get too in-depth here since we aren’t insurance brokers, but suffice it to say that the benefits outweigh the costs substantially.
When it comes down to it, people still ride motorcycles, skydive, and go bungee jumping – risk is a part of what makes life enjoyable. We advise you to choose based on which risks you take, since the risk of potentially having nowhere to live is a lot less exciting than flying through the air at terminal velocity. Maybe that’s your thing though. That’s cool too.
You will essentially have the option of deciding how much coverage you want, then receive a monthly price based on that. It's simple. Insurance companies essentially function as crowdfunding groups—you put in money along with thousands of others, then if someone has a problem there's enough money there to cover the damages. Whether or not you need top of the line coverage really comes down to your risk factors, so take those into deep consideration before jumping for the cheapest plan available.
You've worked hard for the things you own, and although you don't own a house, you shouldn't care any less about your possessions. Further, you probably don't want to have to pay for your friend's careless injury or a flood that runs into your downstairs neighbour's loft. That's what tenant insurance is there for—to keep you out of financial danger. Plus, it costs practically nothing. In the everlasting words of Nike, "Just do it."
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