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Do I Need Renters Insurance If I Don't Own Much?

Updated: September 2018

Even if you think you don't own much, renters insurance may be a good idea. Consider the value of everything you own, such as furniture, clothing, appliances, kitchen tools and bedding. Could you afford to replace your stuff if it were stolen or damaged by a fire or windstorm? The personal property coverage in a renters insurance policy may help with those costs.

Creating an inventory of your possessions is a good way to help document what you own and how much it's worth, the Insurance Information Institute (III). says. You may find that the value of all your shoes, books, electronics and other belongings really add up. Once you have an idea of how much your stuff is worth, you may decide renters insurance provides a good safety net.

Knowing how much your belongings are worth may also give you a better sense of how much personal property coverage to purchase. The coverage limit you choose for your personal property coverage is the maximum amount your policy will reimburse you after a covered claim. When you purchase renters insurance, you'll also need to set a deductible. This is the amount you agree to pay before your coverage kicks in to pay for a claim.

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Other Coverages in a Renters Insurance Policy

Renters insurance helps cover more than just your possessions. A standard policy also includes:

  • Liability coverage. Suppose you accidentally cause a fire that damages your apartment, your child bats a baseball through a neighbor's window or a guest is injured after tripping over your area rug. If you're found at fault for damage to another person's property or responsible for their injuries in your rented home, liability coverage may help pay for the resulting bills.
  • Additional living expense coverage. If you were suddenly unable to live in your rented home due to a covered loss (your apartment is damaged by fire, smoke or windstorm, for example), the additional living expense coverage in a renters insurance policy may help prevent you from paying out of pocket for increased costs, such as having to temporarily stay in a hotel room or board your pets.

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Can You Share Renters Insurance With a Roommate?

If you are not related to your roommate, you may not be able to share the same renters insurance policy. That's because it's not allowed in some states, like Florida. Additionally, some insurers (including Allstate) don't sell policies to unrelated roommates.

If a shared policy is available, there are still some things to consider before purchasing one:

  • It can create more administrative work. If you share a policy with a roommate, the III says, you'll have to notify the insurance company and get a new policy anytime a roommate moves in or out.
  • It may not protect you from your roommate. A shared policy may not be your best bet, according to personal finance publisher Kiplinger, when an accident or a dispute occurs and you end up needing legal protection from your roommate.
  • It can complicate a claim. If there's a fire and multiple roommates have items that are damaged, the insurance claim can get sticky if you aren't all on the same page about who owns what. (Make sure to inventory of each person's stuff when you move in, the III says.)
  • It can muddle payments. When there's a payout from a claim, the insurance company makes the check payable to everyone named on the policy, says Michael Barry, a vice president with III. Each roommate has to endorse the check before it cashes, which means you'll need to agree on how money is split. If a relationship goes sour, your roommate can prevent you from cashing a check.

Renters insurance may help cover unexpected costs in a number of situations, even if you don't own much. A local agent can help you review your insurance options. Then, with a renters insurance policy in place, you move forward with the peace of mind that comes with knowing you have a safety net in place, just in case you face an unexpected scenario.

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This content is for informational purposes only and may not be applicable to all situations.

Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Northbrook, IL. © 2018 Allstate Insurance Company, Northbrook, IL.
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