When asked this question three months ago I would have said that renters insurance was to protect my belongings in case someone robbed my apartment.  While this was true, it was just a start.  Along with theft, protection from fire losses were a much needed coverage as well. 

Yet, being 26 years old and fresh out of graduate school I had very few possessions.  Even if my apartment burned down, my computer and TV were the only things I’d want to replace.  In researching it further I learned that it wasn’t so much what “I had” but rather what “I could lose.”  Let me unpack that statement:

Renter’s insurance is vital to protect oneself from liability.  Even though my possessions weren’t enough reason to insure my rental property, the protection against law suit was.  Let me give you a scenario.  If I had a party at my apartment with a group of friends and someone slipped on a puddle of water in the bathroom, hit their head and suffered minor brain damage, I could be suited for damages.  A minor accident like this could easily cost well over $100,000 in medical and legal bills.  There’s no way I could pay that amount and my personal assets (savings, stocks, property, etc.) would be taken and I could even be sued for my future earnings.  Thus, it’s not so much what I had that was at stake but rather what I could lose in current assets and future earnings.  I realized I needed protection for liability.

All this for around 12 to 20 dollars a month. Pass on three drinks at Starbucks and I could free myself up from liabilities and protect my personal property.

EXTRAS

On top of loss of personal property and liability in my home, renter’s insurance also provides amounts of coverage for property and liability outside my home.  Here’s a couple examples:

Golfers…This is very close to my heart.  If I was liable when I sliced a ball on the 16^th tee box and it hit somebody on the 3^rd hole in the head and they were taken to the hospital with bills of $65,000 in bodily injury, my renter’s insurance limits would cover and defend me for my legal liability.

Travelers…If someone breaks into my car and my valuables were stolen, my renter’s insurance would cover the stolen goods up to the limits and conditions stated in my policy.

Basically, my renter’s insurance allowed me the peace of mind, in case something unexpected happened.

*  These are just illustrations and aren’t actual estimates.  Pricing and coverage differs by circumstance.

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