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The Importance of Rental Insurance for Retirees

The Importanceofrentalinsurancefor Retirees

Key Summary

Rental insurance can protect you from the cost of property damage and legal liability if you live in a rented apartment, Independent Living, Assisted Living or Memory Care Community. Find out whether renters insurance is right for you, what it covers and how much it is likely to cost.

You’ve worked hard all your life to retire comfortably, with “peace of mind”. You may even have chosen to downsize to a rental property or a retirement community. If so, property insurance is now your landlord’s problem, right? Not necessarily. If renters or tenants insurance is not already required by your property management company, here are some reasons why you should consider getting coverage for your belongings or additional liabilities you may face.

Why Should I Get Renters Insurance?

Can you afford to replace your belongings if they are damaged in a kitchen fire? Or if they suffer water damage from a broken pipe? Sharing a building with other tenants can make their misfortune or negligence more likely to become your problem as well. This goes both ways, since your actions may impact your neighbors. For example, an overflow of your sink, tub or toilet may damage the apartment below, and any damage may become your responsibility.

Rental insurance can protect you from the unexpected costs of personal property damage, theft and legal liability, if you live in an apartment or other rented living space such as a Retirement or Assisted Living Community. It would not cover the building structure, which would be the landlord’s responsibility to insure.

What is Typically Covered with Rental Insurance?

  • Personal property: Clothing, furniture, jewelry, electronics, firearms, musical instruments, collectibles and other contents are protected in case of theft or damage due to fire, smoke, vandalism and other common perils. Some policies can even cover your belongings away from your home, for example if your laptop is stolen from your car or luggage while you’re travelling.
  • Liability: Repairs are covered if you accidentally damage someone else’s property, and medical/legal bills are covered if someone is injured at your residence (i.e., a friend, neighbor or even the pizza delivery guy).
  • Additional living expenses: Hotel bills are covered if the residence you rent becomes uninhabitable, for example due to damage from a fire or leaking water.

The above includes some common examples of “perils” (an insurance term for something that causes financial loss) that can be covered by a rental insurance policy.

In addition to the above, renters insurance can cover debris removal, building additions/alterations/upgrades you funded which were damaged, credit card and check forgery, and food spoilage caused by a power failure.

Most standard policies won’t cover damage caused by earthquakes, hurricanes, floods or riots. They also won’t cover car theft/damage, bed bugs/pests, or damage to your roommate’s belongings. However, some of these items may be covered under a separate rider or policy if they are important to you.

Please note, some property management companies offer renters insurance. Make sure you understand the details of the policy, or you may find that coverage does not include your personal property, or damage you are responsible for.

What Does Rental Insurance Cost?

According to the National Association of Insurance Commissioners (NAIC), the average cost for a renters insurance policy is about $180 a year. This sounds surprisingly affordable, but your actual cost depends on the coverage you select based on your needs, what you wish to insure, the deductible you want to shoulder, the structure of your residence (i.e., single, multi-unit, high rise), and the geographic area you live in. Even owning a dog can impact the cost of your insurance, as you are at risk of being sued if your dog bites someone (this will likely be breed or bite-history dependent.)

Consider this common rule of thumb: If the total value of your personal property is less than $2000, it may not be cost-effective to get voluntary renters insurance. However, if you calculate the value of the belongings in your apartment or home, you’ll likely find that the cost to replace them often greatly exceeds this amount. In fact, if you possess high-value items including jewelry, computers, vintage musical instruments, etc. totaling in excess of $25,000, standard coverage may be insufficient. You may want to buy more coverage with higher limits, specifically for those items. In this case, you might consider choosing scheduled personal property coverage that provides an actual cash value replacement, to protect your higher value items.

Remember that contributing to your “peace of mind” in retirement may be as simple as protecting your belongings or potential liabilities with proper renters insurance. Then relax, and enjoy what you’ve earned!

Find additional information on long-term insurance and what it covers in the next article.

If you’re considering renters insurance because you’re looking for a new home, try our search tool below. It’s your first step to exploring Independent Living, Assisted Living and Memory Care Communities near you.


Author’s bio:

Anthony Zoia, MS, CSP is a recently retired Risk Engineer/Risk Manager/Health & Safety consultant with over 40 years of experience in global insurance and industry.

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