MarketWatch just published an article about how most Americans are living one disaster away from complete ruin. According to the article, sixty-two percent of Americans have less than a thousand dollars in their savings accounts. That number likely includes the people who have $0.02 in their savings accounts just to keep them open, which makes this even more concerning. On average, someone with less than a grand to fall back on probably has absolutely nothing to fall back on.
If you have nothing to fall back on and no savings to speak of, it’s imperative to make sure you have renters insurance, and that it has enough coverage. It’s not a question of whether or not something will happen to you, it’s a question of what you would do if it did happen. Never forget that by living in an apartment, you’re at risk for all of the things that all of your neighbors do, as well.
Just because you won’t personally have a loss that happens to you doesn’t mean that there won’t be a loss that affects you. Think about the headlines you’ve seen for apartment fires. Things like “One apartment a total loss, $500,000 in damage to building and contents.”
Those aren’t just the contents of the apartment that had the fire. That’s damage from the fire, smoke, and water to the property of everyone else that lives in the building. Newer apartment buildings are good at containing fires. That prevents the entire building from burning down, in many cases. But it does very little to protect you from smoke and water. Those two things alone are enough to destroy everything you own.
If you have no savings, and you think that the things you own aren’t worth much, that’s not a reason to avoid renters insurance, either. Why? Because it doesn’t matter what the actual cash value of the property is. Renters insurance generally includes replacement cost coverage. If the neighbor has a fire and the smoke destroys your mattress and box spring, you’ll get the money you need to go buy a new one of the same kind and quality at retail – even if yours is old, or was secondhand, or wasn’t worth much.
If you have no savings, you won’t be able to replace those things out of your own pocket. Do you really want to sleep on a secondhand mattress that you don’t know the origin of? It’s fine if it’s handed down from someone you know, but if you buy it for a few bucks at a thrift store you have no idea where it came from – or what’s coming with it into your new apartment!
If a pipe breaks in your apartment, the management will dry out your apartment. But they won’t replace your property. Do you want to sit on a potentially moldy couch? The vast majority of the things you have in your home are soft goods like furniture, clothing, and the like. You don’t want to just hope, you want someone to dry them out properly if possible and you want to replace them if it’s not possible. That’s important for your peace of mind and for your health.
It also doesn’t matter that you won’t get anything in return for your savings. No, savings accounts don’t earn interest to speak of. But that’s not the point. If you have money, you invest it elsewhere. If you just have emergency savings, they’re not there to earn money, they’re there to make sure you have easy access to the money.
The vast majority of Americans would have difficulty coming up with $100 to stay in a hotel for one night if there were a small fire in their building and they were unable to return to their apartment for the evening. Renters insurance helps when you have no savings, because it can take care of additional living expenses like that.
The survey also determined that of those aged 35-54, thirty-one percent reported savings of zero. These are by and large people on whom someone else depends, whether they’re married, have kids, or both. With not a penny available for an emergency, these people would be completely dependent on the generosity of others if there were to be a loss.
You have a one in four chance of suffering a home fire in your lifetime. That’s the chance of you having a fire in your home. That says nothing to account for the chance of you being impacted by someone else’s apartment fire, which is substantially higher. If you have no savings, you need renters insurance to protect you.
Don’t forget the other risks it protects you against, too, like theft, vandalism, and broken pipes. Each of these can cost you a ton of money that most people don’t have. There’s also liability coverage, which can be a life saver in many situations you never would have expected to find yourself in. There are many other types of coverage hidden in your renters insurance policy, as well, so make sure to read it to find out all the things you’re protected against.
The national average cost of renters insurance is just fifteen dollars a month. That’s the equivalent of your Netflix subscription (not including the “and chill” part) and a couple of beers. Most people can find fifteen dollars a month, even if it’s just by taking the spare change from each day’s transactions and putting it in a jar. At the end of the month, there’s your fifteen bucks – or more! If you have no savings, you need a policy and you absolutely can afford it. It takes just sixty seconds to get covered, so it’s also easy!
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