By Chris Lotz
There are a million “10 things to know about renters insurance” articles out there, but for the most part they don’t give any practical advice. People ask me all the time what they should think about when they need to get renters Insurance – here’s what I suggest:
1. Get it before you move.
Get it before you move and date it in the future to a little bit before you move in. This way, you won’t stress out about whether or not you have it once you’ve moved in. It also means renters insurance will cover your stuff if it is stolen during the move.
People stress about the timing of renters insurance, worrying they might be wasting money. Renter’s insurance is not expensive, and while technically it’s an annual contract, renewal dates don’t really matter much. You can cancel your policy anytime and get a prorated refund of anything you paid.
Don’t stress out about aligning your old insurance and new insurance to your moving dates – just get it before you move. Close enough is good enough, don’t worry.
2. Don’t buy what your landlord is pushing – get three quotes.
Our research and experience shows that we save people who bought their landlord’s plan 68% when they sign up with Goodcover. And we give them better coverage.
Landlord plans are a ripoff. There are lots of mouths to feed in the process – your landlord, for one, then the agency that services the policy for them, their sales agent and then the insurer themselves.
Naturally they see you as a captive audience, too lazy to shop.
So don’t be lazy! Be an adult and get three quotes. You don’t have to put them all in a spreadsheet. (But that helps.) You’ll save yourself money and get insurance that actually works.
If talking to three sales-driven agents sounds daunting, go compare companies you can get all online. Try Lemonade, Policygenius and Goodcover. It will take 15 minutes.
3. Buy the liability coverage your landlord requires.
Get enough liability coverage to satisfy your landlord. That will be the largest number in your renter’s insurance quote, usually $100k or higher (if it is less than $100k, run,don’t walk to a different insurer.) It’s usually called Liability Limit, but if your agent is cruel they may call it “Section II” or “Coverage E” or other obscure names.
How much is enough? Some landlords don’t mention it. If they don’t specify, ask them what they want. It will either be in your lease or in the communications they gave you when you were getting your place. Just don’t screw this up – the cost difference between $100k and $500k is a few dollars a month – not a good value for upsetting your landlord.
4. For goodness sake, don’t put your roommates on it.
Put the names of the people you want to cover on your policy. Your spouse is automatically covered but you can/should name them. If you live with an unmarried partner, you must put them on there to be covered.
But for goodness sake don’t put your roommates on there.
Many insurance providers like Goodcover and Lemonade won’t allow it. Everyone should get their own policy. It seems like it would be expensive, but often (as it is the case with Goodcover and Lemonade) the price of two policies is still less than you and your roommate sharing the same one.
Remember that when you share limits, nobody gets enough to cover what they lost in the fire. When you share claims histories, your insurance record will be identical to your clumsy friend’s.
5. Get enough coverage to buy replacements on Amazon, not Craigslist.
Make sure the quotes are for “replacement cost” coverage. This will pay to replace what you’ve lost, new for old, with no deduction for depreciation.
To understand just how stark the difference can be, I suggest you think about the retail price vs. the Craigslist price. Sure, it will cost you $2,000 to get a new computer. But how much was your old stolen one worth? $1,000 max. After a $250 deductible, you’re looking at $750.
If it does not say “Replacement Cost” on your documents somewhere, then there’s a strong chance you don’t have it. This means the insurer will deduct depreciation for each claimed item. This is a nightmare. If they won’t include this coverage for you, again, don’t walk away. Run.
Be sure to get enough coverage for yourself. Don’t be cheap – “Personal Property” coverage is inexpensive and there’s nothing worse than having a claim and realizing an extra $2 a month could have gotten you real coverage that would have paid you this time.
People often underestimate how much they would need to get back on their feet and feel whole again after a fire, or how much it would cost to live in a hotel until you can find a new place to live. Don’t let this happen to you.
6. Buy the “upgrades”.
Get coverage for your laptop, jewelry and art if you have it. Consider earthquake coverage. These are not “extras” – they are the difference between your insurance being garbage and it behaving like you would expect.
For $1 a month you can get coverage for dropping a computer. For $2 a month you can get coverage for simply losing a ring.
If you have gotten to #6 in my advice, then finish the job. I am as resistant to upselling as anyone, but the problem with insurance is that unlike other products, when you don’t customize you aren’t buying “just the necessary basics”. You’re buying the minimum legally viable policy.
Basic policies aren’t designed to cover “normal” or “basic” needs, they are just the lowest common denominator of coverage that we know everyone needs. After that, we don’t know whether you have jewelry, fancy laptops, etc. So we have to ask.
Pro tip – if you do have expensive stuff, or acquire expensive stuff, keep the documentation you get with it. Most insurers require some kind of proof of value either before they’ll insure something or after a claim. Appraisals, receipts, photos – keep it all in a cloud drive folder. You won’t be sorry.
Bottom line: an hour of work will pay off.
Doing everything I suggest above will take max an hour. After that hour, you will have peace of mind and have actually come out with a policy that can save you weeks of headaches and thousands of dollars. Heck, replacement cost coverage even saved a Goodcover member’s life! (More on that another time.)
Yes, insurance is lame and renters insurance seems like a burden. But, with a little investment of time and very little money it can go from being a total waste of money to a real asset.
Chris Lotz is co-founder and CEO of Goodcover. He has spent a decade in the insurance business working in New York, Singapore, Australia and San Francisco. At AIG, he worked on setting up high net worth personal insurance for clients all around the world. Chris is an insurance nerd who’s passionate about making insurance work better and be accessible for all. Chris and his co-founder Dan are YC mentors who help other entrepreneurs around building a business while raising young families. Dan has three kids, Chris has two (with another one on the way!) all under the age of four.