Author Topic: Do I need renter's insurance? (Low income, not much stuff)  (Read 849 times)

Tass

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Do I need renter's insurance? (Low income, not much stuff)
« on: October 01, 2018, 11:41:22 AM »
I am moving out of an apartment that requires me to have renter's insurance into one that doesn't. Currently we are paying $100/year for liability coverage for two people, me and my partner. We are weighing how to update our policy when we move.

We currently have no coverage for our personal belongings. I live with my partner and another couple, and three of us are in graduate school; most of our furniture was acquired free or cheap through that network. My most expensive belongings are my car worth maybe $2k, my $650 computer, and a $900 musical instrument. Maybe a few hundred dollars of books. I can afford to replace these out of my emergency fund. I don't believe I own more than $10,000 worth of stuff, but that's as low as most estimate calculators go. My boyfriend has a few more expensive items -  gaming equipment, electric piano, nice bed - but he can also afford to replace this if necessary. Thus, we decided we didn't need personal property coverage. Willing to hear arguments to the contrary, though.

We currently have $300,000 liability coverage because it's required by our apartment. My understanding is $100,000 is more standard. This is the part where I'm more uncertain what I need, though. When I buy car insurance, I just try to make sure I'm insured for more than my NW, which about $22k - mostly in a taxable account and a Roth IRA, which is not well-protected from suit in California. My partner has more in a 401k, which I believe is much better protected; I would estimate his "vulnerable" assets are roughly equivalent to mine. Do we need liability insurance? Should I just stop fretting because it's less than $10/month anyway?

Thanks for your thoughts.

terran

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #1 on: October 01, 2018, 11:52:22 AM »
Remember that liability insurance not only helps protect your current net worth, but also your future earnings. I would keep the renters insurance for the liability protection. You can reduce the personal property coverage to whatever you're comfortable with.

HamsterStache

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #2 on: October 01, 2018, 11:56:01 AM »
I realize the personal property coverage may not be a big deal to you, but I would still keep the insurance for the liability coverage. Renters insurance is going to be one of your smallest expenses and it could save you a lot of legal sorrow should something happen. I believe some also help cover relocation if something were to happen to make your apartment uninhabitable, but that would be something to research with your particular options.

seattlecyclone

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #3 on: October 01, 2018, 12:23:54 PM »
I had the same thought process when I rented: I had a low net worth, my possessions could all be replaced from savings pretty easily, so why bother? Looking back on it I probably undervalued the liability aspect of the insurance. That said, I'm not sure how much liability a renter actually has. I know homeowners need to be concerned about if someone injures themselves walking across your property, but wouldn't most of that liability accrue to the landlord in this case? What are the major areas in which a renter might be sued, that would be covered by renter's insurance?

patchyfacialhair

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #4 on: October 01, 2018, 01:00:09 PM »
It goes without saying, but I'll say it anyway: insurance companies exist to make a profit off of you. So the chances of you experiencing a total loss are very slim, and the price reflects that.

That said: don't get rid of liability. In a not crazy scenario, it could potentially pay out if you start an accidental kitchen fire and damage your unit and/or your neighbor's unit. In my opinion, a couple bucks a year is worth the peace of mind.

Regarding coverage for personal belongings, your thought process is fine. Though to be a devil's advocate: would you be fine living without personal belongings for a while if everything went up in smoke? I say that because you say your stuff is "worth" not a whole lot because you got it for free from friends and from craigslist, but consider the possibility that you're dealing with a total loss, and "need" to replace something? You're used to a $50 couch or a free couch, but how will you feel ponying up $400 to buy a new one because you "need" one? Replace "couch" with any other personal belonging that you value and ask yourself the same question. It's why it doesn't matter whether you got an item for free or whatever, it matters what it would cost you to replace that item, at today's prices. If you're OK living minimally, and being patient as you re-buy the things you lost (or finding free/cheap alternatives on craigslist), then you're probably fine skipping the coverage. If you're not OK with that, then your calculation for the "value" of your personal belongings should be what it would take to buy everything at today's prices. If it's higher than you expect, then maybe you really should take a look at keeping personal belongings coverage.

Someone else mentioned that keeping the insurance would also provide coverage for replacement lodging if your place was uninhabitable (i.e. a hotel while repairs are being made). Double check your contract: this coverage may only apply if you actually have personal belongings coverage. A liability only property policy may not provide coverage for this.

jeff2017

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #5 on: October 01, 2018, 06:05:19 PM »
I am moving out of an apartment that requires me to have renter's insurance into one that doesn't. Currently we are paying $100/year for liability coverage for two people, me and my partner. We are weighing how to update our policy when we move.

We currently have no coverage for our personal belongings. I live with my partner and another couple, and three of us are in graduate school; most of our furniture was acquired free or cheap through that network. My most expensive belongings are my car worth maybe $2k, my $650 computer, and a $900 musical instrument. Maybe a few hundred dollars of books. I can afford to replace these out of my emergency fund. I don't believe I own more than $10,000 worth of stuff, but that's as low as most estimate calculators go. My boyfriend has a few more expensive items -  gaming equipment, electric piano, nice bed - but he can also afford to replace this if necessary. Thus, we decided we didn't need personal property coverage. Willing to hear arguments to the contrary, though.

We currently have $300,000 liability coverage because it's required by our apartment. My understanding is $100,000 is more standard. This is the part where I'm more uncertain what I need, though. When I buy car insurance, I just try to make sure I'm insured for more than my NW, which about $22k - mostly in a taxable account and a Roth IRA, which is not well-protected from suit in California. My partner has more in a 401k, which I believe is much better protected; I would estimate his "vulnerable" assets are roughly equivalent to mine. Do we need liability insurance? Should I just stop fretting because it's less than $10/month anyway?

Thanks for your thoughts.

Insurance is one of those things that you hate paying for...until something happens.

For the cost of Renters insurance, I opt to just pay it. There are plenty other parts of your life you can trim (one less meal out, not getting Starbucks, etc.), spending $100 a year ($8 per month, that's less than Netflix), you can have major peace of mind.

I'd also add I've seen an instance of RI paying off. My cousin had recently had a child and came back to her apartment one night to see it burning to the ground (I don't remember the cause, but it was not her fault). Her RI covered all of her possessions, it was something like $20,000 when it was all said and done in what she got from the insurance company.

Even if you feel like you don't have a lot of possessions, everything adds up. Even when I was just out of school I had more than I thought. I'm a guy, just with work clothes, you have a couple pairs of good work shoes ($500), dress shirts, dress pants, a suit, tie, a TV, computer, if you have bedroom furniture that is expensive, all the items in your kitchen and office. It all adds up.

Summary: Spend the $100 and sleep better at night.

diapasoun

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #6 on: October 01, 2018, 07:13:01 PM »
Agreed that keeping liability is very, very worth it. Like patchyfacialhair mentioned, just something like homemade tortilla chips gone wrong could make you incredibly grateful.

A note -- if you have car insurance, you should be able to get a discount for having both car and renter's insurance through the same company. My renter's insurance is $130/year to cover myself and my boyfriend, but it gets me $125 off my car insurance -- which means that I'm really paying $5 extra bucks for it. That's more than worth it to me.

sanderh

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #7 on: October 01, 2018, 11:23:05 PM »
Under some assumptions, I would disagree with the other posters about the liability insurance. The probability of the examples they give (start a fire or flooding, damage neighbour's apartment) depends on the building you live in. In concrete or brick, it is hard for a fire to spread to another apartment, so that part is moot. For flooding, you would need e.g. a washing machine or dishwasher that could break and leak on the floor. If you have no such machines, then the flooding liability insurance is almost useless.

I would not insure my personal property, because if it gets destroyed, I do not get the property back, only the money to buy new property, after the bureaucracy of filing the insurance claim. The probability of property loss is too low for me to make even $100 per year worthwhile.

Tass

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #8 on: October 02, 2018, 11:48:24 AM »
For the cost of Renters insurance, I opt to just pay it. There are plenty other parts of your life you can trim (one less meal out, not getting Starbucks, etc.), spending $100 a year ($8 per month, that's less than Netflix), you can have major peace of mind.

Actually, I don't pay for Netflix, don't drink coffee, and rarely eat out... ;)

In the hypothetical scenario where the house burns down, the only things I'd be eager to replace immediately are a bed and some clothes, maybe a few dishes. I have family relatively nearby I could crash with if necessary.

That said, we decided to keep liability and once we discussed it my partner even wants some property coverage, which I respect. We still have to work out the details.

A note -- if you have car insurance, you should be able to get a discount for having both car and renter's insurance through the same company. My renter's insurance is $130/year to cover myself and my boyfriend, but it gets me $125 off my car insurance -- which means that I'm really paying $5 extra bucks for it. That's more than worth it to me.

Yeah, unfortunately the $100/month figure is after the car insurance discount. Dropping to $100k liability coverage brings the cost down to only $60, which is easily worth it, but it's going back up to $160 once we add in some property coverage.

hops

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #9 on: October 02, 2018, 01:22:49 PM »
Good call on keeping liability coverage. When I lived in an apartment, my neighbors had a kitchen fire break out as they made breakfast. The fire was possibly less of a problem than the emergency sprinkler system -- water damage destroyed several units. The neighbors, of course, did not carry insurance (although I noticed they had plenty of money for beer and pizza). The building made it mandatory after that.

This happened during a snowstorm in the bitter cold. The neighbors were outside crying in their pajamas, waiting for a relief organization to arrive with gift cards so they could buy emergency clothes and food. That's not the time you also want to be terrified of lawsuits. I felt bad for them because I'd just lost my apartment, too, but had none of their worries. It was like a very dark Goofus and Gallant comic come to life.

FoundPeace

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #10 on: October 03, 2018, 12:57:13 PM »
It may be worth looking into what kinds of things renters vs land lords are liable for in your state.

My sister was recently sued by her landlord’s insurance company because of a small oven fire that damaged her apartment (she didn’t have renters insurance). They wanted $80k for the damages. She had a lawyer friend help her pro bono and was able to settle for giving them everything in her bank account. It was either that or bankruptcy.

That is why renters insurance is important even if you don’t care about covering your belongings.


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Mr. Green

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #11 on: October 03, 2018, 01:03:56 PM »
Renters insurance is so cheap that I bet the difference between 300k and 100k of liability coverage a year is about $10.

Tass

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Re: Do I need renter's insurance? (Low income, not much stuff)
« Reply #12 on: October 10, 2018, 12:39:29 PM »
It was about $40 difference.