Two out of every three Americans who rent their home are risking all of their possessions.
A recent study has just revealed that only 34 percent of American tenants currently have active renters insurance, which means that the majority of them are taking a gamble with all of their belongings should they ever experience a fire, burglary, or other peril that is typically covered by the policy.
Among the most commonly cited reasons that those without coverage gave was cost.
However, at the same time that tenants were saying that it would be too much money to purchase a policy, they survey also showed that many of the respondents were greatly overestimating what it would actually cost to insure their belongings. This suggests that a large number of people are forgoing renters insurance based on inaccurate information.
Over one fifth of the survey participants felt that renters insurance would cost $1,000 per year or higher.
Among the survey respondents, 60 percent said that they felt that the cost of renters insurance was likely $250 or higher. Another 21 percent stated that they felt that it was $1,000 or higher per year. According to the National Association of Insurance Commissioners (NAIC), the average policy would cost tenants only around $185 per year.
Another renters insurance misconception, said the survey, is that people believe that it protects them only against theft. However, there is a great deal more coverage offered by the standard policy than this one element.
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The survey identified the leading reasons for not purchasing renters insurance as the following:
• The rented home has a high level of security so the tenant feels it is not required (57 percent).
• The policy would be too expensive (52 percent).
• The landlord already has coverage for the building (48 percent).
Unfortunately, each of those reflects a misunderstanding of what renters insurance has to provide. Even the last point shows that many tenants don’t realize that the landlord’s insurance covers the building, but will not provide coverage for the tenant’s own liability or for his or her belongings. The typical contents policy will provide coverage for possessions, liability, and additional living expenses in the case that the unit should become unlivable.