Experts say it’s a common fact that most renters don’t purchase NJ renters insurance, and many don’t realize that they should for the simple fact that it protects their possessions and belongings in the event of a fire, theft or other act which causes a loss or damage. In fact, a recent Insurance Research Council poll found that while 96 percent of homeowners have homeowners insurance, less than half of renters have any sort of coverage.
Many assume that their landlord’s insurance policy will cover their belongings in the event of a fire (this is not the case), or that the insurance is simply too expensive. However, according to Loretta Worters, vice president of the Insurance Information Institute, an increasing number of landlords are now requiring their tenants to buy their own renters insurance policy. “A typical renters policy runs around $250 to $300 a year, depending on where you live,” she adds.
“At some point when you begin to accumulate things, you have to be more serious about protecting them,” explains Bob Hunter, director of insurance at the Consumer Federation of America. He says middle-income tenants need renters insurance the most because they have personal property to protect and most lack the resources to replace those items themselves should an unfortunate incident occur.
The replacement cost policy versus actual cash value debate
Renters with expensive personal property, like fine art or jewelry are probably better off buying an insurance rider, as regular policies are subject to limits (for instance, jewelry is often capped at $1,000 per policy). Renters need to realize that there is an important distinction between policies that cover replacement cost and actual cash value. For instance, replacing an old stereo system would cost more than the equipment is actually worth because of depreciation over the years.
A costly lawsuit could spell financial ruin
Because we’ve become a very litigious society, having this coverage in place is important because it also has a liability component, which could be the most important part of a policy since it protects a renter against any lawsuits for bodily injury caused by the renter to someone else while in their apartment or residence.
Even for someone that doesn’t entertain friends or family on a regular basis, issues could arise if a repair or delivery person sustains an injury while in the apartment. Most standard NJ renters insurance policies cover about $100,000 in liability but it might be worth getting up to $300,000 of coverage, depending on an individuals financial situation.