This is a question we hear all too often. There are several common misconceptions about renters insurance held by people who ask the question.
An Apartment Fire Won’t Happen To Me, So Who Needs Renters Insurance?
First of all, renters insurance protects against more than just fire. From a property standpoint, it also protects against theft, vandalism, and even renters insurance named perils unlikely to be found in most apartments.If your dogwalker steals something, it can be replaced by your renters insurance. If your property is damaged by malicious mischief, you can be made whole. It’s about more than just apartment fires and renters insurance.
What happens if a burglar isn’t just greedy, but he enjoys creating mayhem?
Perhaps before he leaves with your television and jewelry, he turns on all the faucets in the house and plugs the drains in your second floor apartment. Or maybe he just leaves the window open accidentally after escaping through it. Both the faucets or the frozen pipes can wreak havoc with your downstairs neighbor’s life. It’s your apartment, and your water that caused the damage. The liability part of your renters insurance could cover this damage even though you didn’t personally cause it.
So who needs renters insurance anyway? You do!
Confirmation Bias Has Causal Relationship With Inaccurate Risk Evaluation
Whether considering burglaries, fires, or other perils that renters insurance might protect you from, it’s common to think that the odds are in your favor. While technically on a daily basis or at a given moment in time, you’d generally be correct butyou’re terribly wrong overall. If you flip a coin, your odds of getting heads is exactly 1 in 2. No matter how many times you flip the coin, it never changes. If you flip the coin more than twice, there is a strong chance, though not guaranteed, that you’ll get at least one heads.
According to KPHO News, any given household has a one in four chance of having a fire large enough to be reported to a fire department in a lifetime. Many people consider the total number of homes in America and the daily average of 1,024 home fires nationwide. If that were an accurate appraisal of the risk, those odds would be astronomical. However, it’s wrong. Just because you haven’t experienced a loss in the past does not guarantee you’ll continue the luck. That’s called confirmation bias, essentially letting your experiences affect your perception of the statistics.
Today, you did not have a house fire and need to use your renters insurance.
One day does not a lifetime make. There are 374,000 home fires in a year (f). There are 115,226,802 households (h) in America, per the US Census Bureau. That means that over the course of one single year, the odds of a fire in your home are 1 in 308. Assumptions include full year occupancy, even distribution, and no household suffering two fires in a year. The impact of those assumptions is minimal. If we reduce the number of home fires to 350,000 annually to all for a hypothetical 24,000 struck twice by fire in a year or who are not full year occupants (college students living in dorms, which are not counted in the 374,000 number, for example), the odds improve only slightly to 1 in 329, a 6.38% improvement. At the end of the day, slight statistical deviations do not affect your actual, practical chances of waking up to smoke or of never waking up because of the smoke. Who needs renters insurance? You do!
So now we know that the odds of your household suffering a fire in a year are somewhere between 1:308 and 1:329
We’ll take the median of those at 318.5, and call it 1:320 for convenience. The problem is that you don’t live for just a day or a year. You live for a lifetime. Given that you have another 50 years left and the housing stock in America stays roughly equal, there will be 18,700,000 (l) fires between today and the day you shuffle off this mortal coil. h / l is 115,226,802 / 18,700,000 (l is 50h based on 50 assumed years.) That gives you a one in six chance of your household suffering a major fire in your remaining lifetime. KPHO cited 1 in 4 chances with a variance likely resulting from factoring in population changes, household consolidations, and similar factors.
Underwriting Your Own Life
We’ve walked through the math and roughly validated the above-cited official odds of a 1 in 4 lifetime chance of a devastating home fire. We’ve explored the variance between our math and theirs, and the variance is statistically unimportant. Look around you right now. Find the three people nearest you. Look at them for a moment. They’ll look at you funny because you’re looking at them, but that’s not important. Of the four of you, one will suffer a devastating home fire during your collective lifetimes. Do you have three kids? Statistically, once they grow up and move out, one of those three kids or you will suffer a home fire in your lifetime. Who needs renters insurance? ou do!
From an underwriting standpoint, the larger numbers are important. Not every person who will have a house fire in his lifetime will have one this year. But that’s from the perspective of an insurance company with a few million policies in force and significant reserves. Your own risk, however, applies to you and your family and to your own financial reserves. Even if everything you own is secondhand, it’s still unbelievably expensive to replace clothes, furniture, kid’s toys, just the basics. It’s also expensive to find alternate housing. Who needs renters insurance? You do. Renters insurance protects you with replacement cost coverage for your personal property, as well as additional living expense coverage associated with a covered loss. Renters insurance runs fifteen or twenty dollars monthly in most areas. You stand a one in four risk of a house fire. What about your risks for other covered perils? Chances are good you’ll need to use that renters insurance.
Do You Have More Than Four Neighbors? If So, You Will Suffer A Fire Loss!
That doesn’t mean a fire in your own home, necessarily. But fire, smoke, and water damage generally extend far beyond the apartment or house that had a fire. Entire buildings of high rise apartments can be unlivable for months as a result of smoke damage. Water damage from high pressure fire hoses is more devastating to your property than a common leak might be. Even if it’s not your home, the fire will affect you. The odds above show that any one person with more than four neighbors is highly likely to suffer a loss caused by a fire during his lifetime, even if it’s not his home that has the fire. Who needs renters insurance to protect from negligence of other people? You do!
Your renters insurance policy covers personal property against perils like smoke. This means that your renters insurance policy can cover your personal property for damages suffered as a result of a fire in someone else’s home that affected you, even if the fire did not spread to your home. Interestingly, there are very few limitations on smoke coverage for personal property. “Industrial operations” are generally excluded, but it’s possible that even if the fire itself isn’t covered under the responsible party’s policy – perhaps the fire was caused by an illegal methamphetamine lab, and the criminal acts exclusion applied – but your damage in a separate home or apartment from the smoke caused by the fire may still be covered under your own renters insurance policy. Who needs renters insurance? You do!
One In Four Households Will Have A Home Fire, And Be Legally Responsible For Damages To Its Neighbors And The Premises!
If you are one of those one in four people who will have a home fire in their lifetime, you should know that 86% of those home fires involve negligence of some kind. 56% of home fires are cooking related, 16% attributable to heating such as electric space heaters, 8% are “Other unintentional, careless,” and 6% are due to open flame. When you are responsible for a fire, you are responsible for damage to others as well as damage to the rented premises you live in. That’s the smoke, the fire, the water, and all the other things affecting other people, including related medical costs. These costs add up quickly, and very few people can pay them out of pocket. That’s why renters insurance includes liability coverage. Damage due to your unintentional negligence that affects others can be paid for this way, and everyone you affected can be made whole again. Otherwise, it’s likely many victims of your fire will sue you because they can’t collect against your renters insurance. Who needs renters insurance? You do!
Who Needs Renters Insurance? I do! Who Do I Call?
Effective Coverage, For Renters, specializes in meeting the insurance needs of renters at an affordable price. Instead of large ad campaigns, your premium dollars go directly to providing the renters insurance coverage you need. It only takes a few minutes, and generally costs around fifteen dollars a month! Call Effective Coverage today at (800)892-4308 or start your instant renters insurance quote above!