Myths of Renter's Insurance

Only 14% of renters are insured in the United States. Renter’s insurance is often overlooked, due to untrue assumptions. Being insured as a renter is a vital personal risk management tool, and typically only costs approximately $12 a month. It is a safeguard for your future, and can benefit both you and your neighbors! This article debunks insurance myths about apartment/multiple-occupancy style living.

Why do so few people have renter’s insurance?

The typical renter does not know the danger they are in. Most believe that if a fire starts, someone breaks in, or if someone gets hurt on the property, the landlord will be responsible. These are all completely untrue and can have terrible consequences. In fact, we’d argue that renters need insurance even more than the typical homeowner! Let’s further explore this by discussing a few myths:

"If a fire burns down my apartment, my landlord will replace my property."

This could not be further from the truth. Unless the landlord is directly responsible for the fire (E.g. he/she purposely set it on fire), you are solely responsible to replace your property. The landlord has no contractual obligation to pay for your items, nor is there any law requiring your landlord to. It is solely on you.

There are a few other ways a fire loss could go, so let’s illustrate those with a few more fire examples:

"If my neighbor starts my building on fire and it destroys my property, the neighbor and the landlord will take care of me."

Once again, it is not required that the landlord replaces or reimburses you for that property. In this case, if your neighbor can be proven negligible in starting the fire, that neighbor is the one responsible for replacing your property, and any damages to the building. The problem with this is the fact that so few renters have insurance! Without insurance, the negligent neighbor will only be able to pay you whatever they have on hand, which is most likely going to be next to nothing, as they will be responsible for the damages to the building and to the other neighbors' property as well.

"If I start a fire that damages the building and other people’s property, I won’t be held responsible for it."

No, if you negligibly started that fire, your landlord is going to sue you for the damage you caused to the building. Your neighbors will then sue you for the damages you caused them. If you don’t have insurance, this will be all out-of-pocket, and most renters don't have the finances to pay for building repairs and damages to their neighbors.

"If a disaster makes it so I can’t live in my apartment, my landlord will furnish a new place to live."

If some disaster makes your apartment uninhabitable, you landlord is not required to pay for a new place to live. The landlord isn't even required to help you find a new place! The time you have to spend in a hotel before you can find a new place to live will be up to you to pay for. As for the previous myth, if you were to make another person’s unit uninhabitable, you would be held responsible for any extra costs they faced because they had to find a new place to live. Each of these could be easily covered by a Renter’s policy, but won’t be easily covered out-of-pocket.

"My roommate has insurance, so I have insurance."

This isn't necessarily true, unless you are legally married to your roommate, or your roommate is part of your immediate family (even extended-family-roommates might not be covered, so make sure to ask your agent!). Otherwise, your roommate’s policy covers only his/her property and liability. So if you were to start a fire, you would still be held liable for everything, and your roommate’s policy would only cover his/her property that you destroyed, though his/her insurance will try to collect the damages from you.

"What's the big deal--I'll just claim bankruptcy."

This can be a misconception, depending on the situation. If you were to be liable only for financial damages, your bank accounts would be depleted and your belongings would be sold off. Anything after that could possibly be written-off with a bankruptcy. However, the problem is if someone were to be injured or killed. The damages you owe to someone when it involves bodily harm or death cannot be written-off with a bankruptcy. What you owe to the victims will be taken as a lien on you, garnished wages, or both. This same concept applies for those without/with too little auto liability insurance.

The Bottom Line:

Many renters believe that they don’t need insurance, but in truth, renters should have MORE liability insurance than homeowners! This is especially true when you’re part of a very large apartment building—just think of what it could cost you to take care of all the people living in the units adjacent to yours, coupled with the costs to repair the building after you started a fire or flood! On the other hand, even if you don’t cause the disaster, think of how likely it is for someone else around you to flood the place or start a fire! Having all of those neighbors only increases the chances of something going wrong!  

A Renter’s policy is very inexpensive, and will pay you in the event of someone else not having insurance. It is a very worthwhile investment, and can make all the difference when tragedy strikes. Think of it this way: that $10 a month can be paid off by skipping fast food for a single meal! Renter’s insurance is a small, but worthwhile safeguard for your future, and can protect both you and your neighbors.


Colten Zamrzla, CPCU

Colten first started in the insurance industry in 2010. He then pursued a Bachelor's degree in Finance & Insurance from the University of Nebraska at Lincoln. Once graduated, he immediately started studying for the CPCU and achieved it in just shy of a year. He is solely focused on commercial insurance, able to assist all types of businesses and nonprofits in risk management.

Colten has dedication and passion for his clients and the insurance industry as a whole. He dedicates time to furthering his knowledge on all things business and insurance, and he volunteers for the Independent Insurance Agents of Nebraska, a state-based trade association.