Insurance – It’s Not Just For Home Owners Any More

John H. FischerBy Dr. Rent

In this week’s City Pages, there was a short article discussing Renter’s Insurance.  It pointed out that this type of insurance (one of the most affordable kind of insurances out there) really is under-utilized.

As a general rule, I have mixed feelings about insurance.  I tend to joke that insurance is one of the only products that you are only allowed to buy so long as you promise not to use it.

The cost of insurance on my rental properties, although finally starting to level out, has seen increases of 20% to 30% per year the last 3-5 years.  I actually consider myself one of the lucky ones as many other landlords faced insurance increases of 200 to 300% while others were dropped completely by their carriers.  I do have one building where I was cancelled because of 3 minor slip and fall claims in 2 years.

However, Renter’s Insurance falls into a different category.  It is a product that has held its price consistently year to year, and really is a good value when you consider what you get in return.  Most tenants don’t think they own enough stuff to justify the $10 to $20 per month cost of a policy.  But I would beg to differ.

People naturally look at the big ticket items.  The living room set that was given to you by some relative, the cheap television, the garage sale dishes.  Why bother insuring all of that?  Well… you need to look farther than those things.  The first place I tell people to look is in their closets.  If there was a water leak in the apartment upstairs that ruined ALL of your clothes, how much would that cost to replace?  I would guess for the average single person, at least a grand if not more.

What is worse… let’s say you cause the problem… and flood the apartment downstairs… can you afford that repair bill?

Renter’s insurance would help in these cases.  Most policies pay replacement cost.  That means you don’t get what that old wardrobe and living room set were worth, you get what it will cost to replace them with new stuff.  Also, most policies offer liability coverage to help with .. let’s just call them lapses in judgment.

There is a new product out their gaining in popularity in bigger cities that would eliminate security deposits.  It is like a deposit bond where you pay a small amount of money to an insurance company, which is non-refundable.  But then, they make sure to cover any security deposit damages.  That is about all I know about them right now.  They talk about them in trade magazines, but I have not been able to find a vendor for this product at any property management trade shows here in Wisconsin.

I know this post is not controversial and probably doesn’t focus on Wausau enough, but it was something the City Pages talked about and I thought that it is a big enough issue to discuss it here.  I learned from my last few posts that my views of things are probably the minority as it pertains to people who follow this blog… so best not to share my views with others in this type of forum.

Dr. Rent

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3 responses to “Insurance – It’s Not Just For Home Owners Any More

  1. “I learned from my last few posts that my views of things are probably the minority as it pertains to people who follow this blog… so best not to share my views with others in this type of forum.”

    Why? What are you afraid of? People disagreeing with you?

  2. Renter’s insurance is a great thing to have. Every time you read about a fire in the newspaper, more often than not the victums don’t have any kind of insurance to cover their losses. Shop around, but the same agent you get your auto policy from could probably write a renter’s policy for you.

    Since we’re on the topic of insurance, another good insurance product to have is personal liability insurance. Most homeowners policies max out at $500,000 of coverage, but you can get an umbrella policy to give you additional coverage of a $1,000,000 or more. In these lawsuit happy times, its a good thing to have.

    Finally, I like the idea of a security deposit bond. Way back when I rented, I had a devil of time getting the security deposit back. A bond may give the tenant an extra bit of leverage if the landlord doesn’t want to return the deposit.

  3. controversial is the right word

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