Renters insurance protects you in two big ways: 1) with personal liability coverage and 2) with personal property coverage (for your stuff).
Your landlord’s insurance protects the building you live in. But what happens if your parents are your landlord?
Here’s a little known fact: You don’t have to pay rent to have a “renters” insurance policy. Don’t need to have a lease. You don’t have to be living in an apartment building. You don’t have to own a lot of stuff. It should really be called “insurance for people who don’t otherwise have homeowners insurance.”
If you are living in a house or a space that you don’t own- it is a good idea to buy renters insurance. Even if the people that own the place are your own parents.
Renters insurance is relatively cheap and easy to set up.
Here is why you may want to purchase your own renters policy:
You can make sure that all of your property is covered.
If you have your own “stuff” that you have paid good money for- you want to make sure that these things will be replaced if there is a fire or a tornado or something. Your parent’s policy was taken out based on their own belongings. If a true disaster destroys everything, the policy limits of their policy may not be enough to replace their stuff- let alone your stuff. This is especially true for certain things like jewelry, sporting goods, and electronics.
You can protect your parent’s insurability.
Part of your insurance is the liability “bucket” right? So what happens if you accidentally trip someone and break their arm? If you are on your parent’s home-owners insurance policy- their policy will pay out the damages and then they will have a claim and their rates will go up- because of you. (Thanks Kiddo!). If you are over 18 – time to start adulting and make sure that your claims are filed under your own policies. The best way to do that is to have your own policy. Once you have your own renters policy- you will still have that liability coverage to protect you- but if you have to use it- it won’t affect mom and dad in the slightest.
You can start building your insurance score.
Do you want to buy a house or a condo someday? You will need home or condo insurance. Do you know that one of the factors that will be used to determine the price you pay for that insurance is your insurance score? Your insurance score is like the insurance version of a credit score- and one of the big things that is calculated in it is how long you have had insurance without any gaps. If you have always had renters insurance – you will look like a bright, shiny, responsible person in the eyes of the insurance company- as opposed to Mr. Risky who has never heard of insurance in his life.
Your liability insurance follows you.
Remember how we said you could protect your parents from your claims? Well- the fact that you have liability insurance that follows you around like a little puppy is so important it deserves to be on this list twice. You may live in your parents’ house- but we know you don’t spend all of your time there. Are you waterskiing at the lake this weekend- and you didn’t see that swimmer and hit them? Thankfully- you have liability insurance that followed you to the lake. (Hey- you even got to set your own liability limits. Maybe you even set it higher than mom and dad’s limits!) Do you have a dog that knocked some lady down at the dog park- that had to get ACL surgery? Yep- your liability policy followed you there too. Your six year old son that lives with you and your parents- your liability policy covers him too! So when he accidentally flies his RC plane and had a crash landing on Little Suzies face… more specifically in her eye- causing her to need 20 stitches- your liability policy followed the two of you there too!
For most people, renters insurance will cost between $12-$20/month- depending on how much personal property they decide to insure and the amount of liability coverage they want to add on to their policy (Plus, you can bundle with an auto policy and save money too!) If you have a claim- I can guarantee you- this will be the best $20 / month you have ever spent.