You never know when disaster will strike. Be prepared.
It’s not often that I tell you to spend money on a Tightwad Tuesday. After all, Tightwad Tuesday is all about saving money, right? Right!
However, sometimes you need to spend money to make sure you’re not caught in a catastrophe that you can’t pay for. Today I’m going to tell you a true story. One that’s close to my heart.
On New Year’s Eve 1996, I got a call from my parents, who lived 100 miles away from me at the time. The home they lived in was a rented home right next to a creek. The rain that year was terrible. Do you see where this is going?
You’re right. The phone call was my parents telling me they might have to evacuate their house. They told me not to worry if I couldn’t get in touch with them. Sure enough. They had to evacuate. I heard from them the next day. Their rental was flooded. The water was 18 inches high throughout the house, and they lost everything, but the photo albums they managed to pack in the car before they left.
Unfortunately, they didn’t carry renters insurance. The Red Cross helped some, and they eventually got some help from FEMA, but they needed to find a new place to stay on short notice, and then they needed to furnish the house and make sure my family had food & clothing (my two youngest brothers were still living at home).
In the end everything worked out, but it was stressful and financially draining.
It’s at this point a lot of people would be tempted to think disaster has struck once, so what are the chances it will strike again?
Fast forward to last week. I brought my kids to the doctor’s office, because they needed to get some shots. As I’m sitting in the waiting room, I thought I heard my mom’s voice. I look up, and sure enough it’s my mom, at the doctor’s office for her flu shot. She looks a bit stressed. She sat down and told me about her day.
As it turns out, her water heater broke in the middle of the night. Since the water heater is downstairs and her bedroom was upstairs, she didn’t know there was a major, and I do mean major, leak. By the time she woke up and went downstairs, there was 4 inches of water on the floor.
This time she had renter’s insurance. Moving to another apartment was stressful, no doubt. Thinking about possibly having to replace furniture, a computer, and countless other things was overwhelming. But in the end, she knew that she wouldn’t have to worry about the financial aspect of things.
Once again, things worked out. My mom got a great deal on a better apartment. And there wasn’t as much damage to her things as she first thought. But instead of stressing about her finances over Thanksgiving, my mom was able to relax and enjoy the day, knowing that everything back at her apartment was taken care of.
The point is, disasters can happen to anyone, and they can happen multiple times. When catastrophe strikes, there are plenty of things to worry about. You don’t need to be worrying about the financial aspect of the disaster.
Renter’s insurance only costs about $10 a month. Please look into it, if you rent and aren’t covered. You never know what could happen.
If you’ve ever rented, did you carry insurance?
December 2nd, 2008 at 5:15 am
This is an excellent example of how spending a little money can save a lot of aggravation in the long run. How much is peace of mind worth? To me, it’s worth a lot. We have rented in the past, without renter’s insurance, and luckily there were no disasters. Now, we own a home, and we do have insurance to cover disasters or injuries to guests, and it still doesn’t cost very much. Just knowing we can replace our possessions in case of catastrophe helps me sleep better.
December 2nd, 2008 at 5:32 am
Just before we bought our house, an apartment unit in our complex had a fire. Somebody was smoking in a closet so “the baby wouldn’t breathe it in” - yeah, way to go, genius. Anyway, four units were involved and we were very lucky - we didn’t have renter’s insurance at the time. Of course, we moved into our house and have had homeowner’s insurance ever since but as a renter, you never know how smart the people nextdoor are.
December 2nd, 2008 at 5:37 am
I didn’t have renter’s insurance in my first apartment. I learned that there were major electrical issues: they pulled the 3rd prong off the fridge plug so it would fit into the outlet, brownouts, fixtures that sparked, etc. The landlord refused to fix them so I called the city’s code enforcement. The landlord was cited. The sparking outlet fried my computer, and at the time I was a student. I had a lawyer friend write the landlord a letter and they wrote me a check for the repairs to my computer.
Needless to say, I moved out at the end of my lease and always carried insurance after that. I never had to use it, but the $125-150 a year for peace of mind was worth it.
Like the previous person said, you never know when the person above, next to or below you will be stupid, or if the building is in a decrepit state of repair like I had to deal with!
December 2nd, 2008 at 5:49 am
In my apartments in college, I was covered under my parent’s homeowner’s policy (everyone should check their individual policies to make sure they’re covered in this type of situation).
Once I graduated, you betcha we got our own renters insurance. It is super cheap, and there’s really no reason not to have it.
Our hot water tank burst, spewing water everywhere. We were able to turn the water off in time to avoid serious damage, but if we weren’t home…that would be a totally different story. We didn’t need to file a claim.
Also, neighbors can do silly things and catch the place on fire.
There’s too many reasons why you should have renters insurance, and no good reason why not.
December 2nd, 2008 at 5:56 am
I used to be a reporter for a newspaper. I cannot tell you how many fires I covered where the people didn’t have renter’s insurance and lost everything they had. It was always sad, even more so to know that it was something that could have easily been avoided. It’s the old adage, an ounce of prevention is worth a pound of cure!
December 2nd, 2008 at 6:27 am
We’ve been renting the same apartment for more than three years now, and we’ve had insurance on it for about two years. Our biggest worries were for the pricey tech gadgets my boyfriend needs for his job, and for the thousands of books we have. $118 a year well spent, I say…
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December 2nd, 2008 at 8:12 am
I always thought my husband was crazy for insisting we have renter’s insurance until he told me about the time his apartment got broken into in college. Luckily for him, his parents had added a renter’s policy for him to their homeowner’s insurance and he was able to replace the things that were stolen. When we got married, we transferred that policy over to our names along with our car insurance and we still have it since we currently live in a parsonage that we do not own. It’s such a minor expense compared to the headache and expense it could save you in the long run.
December 2nd, 2008 at 8:40 am
We carried renters insurance when we had apartments. Look into bundling it with your car insurance. When we did that we got a bundle discount that made the renters insurance nearly free. It’s definitely worth it.
December 2nd, 2008 at 12:04 pm
Remember renter’s insurance is also needed when you are just camping out at a family/friend’s house and most of your stuff is in a storage container somewhere…. You need insurance on the storage unit also!
December 2nd, 2008 at 12:12 pm
I didn’t carry Renter’s insurance until my fiancee’ and 2 stepkids moved into my first place. I decided to start carrying it bc with it just being me I could easily replace the few things I had, but with my additional family members we needed it for peace of mind. Once I bought a house, bc my fiancee’s name wasn’t on the house it didn’t cover any of his OR the kids stuff if something were to happen. So we carried not only home owners but renters as well. It wasn’t much per month and we both felt better knowing it would cover the more pricey things that he had brought with him into the house. I would highly recommend it and a lot of insurance companies will give you a discount if you carry car and renters insurance on the same policy. It’s almost like getting the renters for free! Yay for free stuff!!
December 2nd, 2008 at 1:11 pm
Hi Lynnae,
Earlier this year a second-floor tenant in the building I manage somehow managed to block up his toilet — and it ran for at least three hours. Water ended up in the basement and garage as well as an adjoining apartment and two downstairs apartment.
Yuck.
I wrote “The flood upstairs: Why you need renter’s insurance” (http://blogs.moneycentral.msn.com/smartspending/archive/2008/04/25/the-flood-upstairs-why-you-need-renters-insurance.aspx) for the Smart Spending blog after that unpleasant incident. Nobody ever thinks that they’ll need insurance — until they don’t have it.
Thanks for reminding people. Those real-life examples have quite an impact.
Best regards,
Donna Freedman
December 2nd, 2008 at 1:28 pm
I’m with Kacie. I rented for years and I was never particularly afraid of something going wrong in my own apartment, but I was petrified that a neighbor would leave a candle burning or something like that. Fortunately, I never had to use it, but there were a lot of close calls.
December 2nd, 2008 at 4:39 pm
We’ve had renter’s insurance since we got married and started renting (9 years ago). Our policy has riders for jewelry and electronics (a lot of policies will only cover the cost to replace the depreciated cost of the computer you own, rather than the cost to actually replace it with a new model; a rider will cover the replacement cost)
Earlier this year, we had a break-in: two laptops, a digital camera, a bunch of jewelry and some other small things–over $9000 to replace everything.
But with the renter’s insurance, we were covered and only wound up paying a $250 deductible. I’ve always thought it was a good idea; I now preach the gospel of renter’s insurance. It’s so worth the $120 or so a year for the peace of mind!
December 2nd, 2008 at 5:45 pm
And if you move often due to being military or whatever as long as you continue to carry renters insurance, your stuff is covered in transit. We carried renters insurance with additional coverage for computers and jewelry. When one of the computers died in transit, it was covered!
December 2nd, 2008 at 6:50 pm
I currently rent and absolutely have renters’ insurance.
For the small price I pay each year, it gives me piece of mind in case a disaster happens.
I also run a home-based business and carry additional coverage as I sometimes see clients.
When you rent, you are surrounded by a bunch of strangers and you just never know what will happen.
December 2nd, 2008 at 8:41 pm
We have been renting for over 9 years now and we’ve never had renters insurance. I’ve been meaning to for forever but you know…..Do you know where the best place is to get it?
December 2nd, 2008 at 8:53 pm
Earlier in the comments Nicole mentioned checking with your car insurance company. That’s what we always did, and renter’s insurance was really cheap when bundled with car insurance.
And when you get insurance, make sure you ask if the insurance covers full replacement cost or just what the depreciated item is worth. Both of the companies we worked with (American Family Insurance and Country Insurance) automatically insured us for full replacement value, but as Susan said, all companies are different, and you may need special riders for that kind of coverage.
December 3rd, 2008 at 6:57 am
Flood insurance is separate from all other insurance and only available from the federal government. Be sure to discuss this specifically when purchasing a policy.
Clothing is often the most expensive item most renters have.
December 5th, 2008 at 12:35 pm
Good article and important reminder.
However, I don’t know where you’re getting your numbers from, but the cheapest insurance we can find in NYC is well over $300 for our very modest one-bedroom in a good neighborhood (low crime rate; lots of police stations nearby, etc.).
I’d love to know who would give us coverage for $10 a month!
December 5th, 2008 at 1:45 pm
@IRG - Yeowch! That’s expensive! Still worth it, but expensive! I got my renters insurance (3 bedroom/1 bathroom duplex in Southern Oregon) for about $10 a month by bundling it with my car insurance.
I guess it varies due to location.