Updated: October 16, 2022
The presence of crime is part and parcel of life in the Philippines. While there are certainly more dangerous places in the world, the the Philippines has one of the highest crime rates in Southeast Asia. We are constantly aware of the possibility of being harmed and our property being damaged.
As much as we can be cautious about locking our homes and not walking alone at night, it is impossible to account for all possibilities. That is why insurance can be so important. Yet millions of Filipinos are uninsured.
Insurance that covers you in the case of a burglary can help you replace your possessions, which could cost hundreds of thousands of pesos. For people who own their homes, homeowners insurance covers most of the contents. For those who are renting, renters insurance is necessary.
What is renters insurance? Here is a quick guide.
What is renters insurance?
Renters insurance provides coverage for your possessions if you don’t own a home. In other words, when renting your place, your things are vulnerable to damage and theft but are not covered by the landlord’s insurance. Renters’ insurance pays out claims in this context.
Renters’ insurance can actually cover 3 types of claims, not just one. These include:
- damage and loss of possessions
- personal liability
- additional living expenses
Personal liability cover refers to claims for any damages you cause to someone else’s property or person. For example, if you accidentally hit them with your bike and they need medical treatment, your renters’ insurance may pay their bills. If their phone also breaks, your renters’ insurance may cover repairs or replacements.
Additional living expenses refer to any costs you incur if you need to temporarily move out of your rented place due to damages. For example, if the place is damaged by fire or other means and your landlord needs to have it repaired, your renters’ insurance may cover the cost of a hotel in the meantime.
How much does renters insurance cost?
The cost of renters insurance depends on where you are in the world. But regardless, it is relatively inexpensive. In the United States, the average is $179 a year. That is ₱760 a month. Here, of course, it is far cheaper, seeing as the cost of living is significantly lower.
Why is renters insurance so much cheaper than homeowners insurance? The reality is that homeowners insurance is covering so much more. One disaster could leave a homeowner millions or even tens of millions of pesos in debt. On the other hand, the worst-case scenario for a renter is a loss of possessions worth tens of thousands.
Of course, there is always the chance of a personal liability claim that adds up to a major value. However, these claims are rare, and the economy of scale covers them when they do happen.
That said, renters insurance will not cover all of your possessions. Any particularly expensive possessions, such as expensive computers and jewelry, may require you to pay for additional coverage. You will have to specify each of these objects when applying for renters insurance.
The insurance company will give you a quote, explaining what is covered and what requires extra coverage. While the extra cover will not cost a huge amount, the more luxury possessions you have, the more it will add up.
Do you need renters insurance?
The answer to whether you need renters insurance is that it depends. If you are living with your parents or other family members who consider you part of the household, you do not need renters insurance. If you own a home, you do not need renters insurance.
Only if you are a tenant paying rent every month do you need renters insurance. You may consider forgoing renters insurance if you think you do not have enough possessions to justify the monthly cost. However, remember that everything adds up. If the place you are renting is destroyed in a fire, you will need to buy new clothes, new bedding, and so much more.
Furthermore, personal liability coverage is always worthwhile. Accidents happen, and if you cause someone significant harm, their medical bills can become very costly. They may claim from you, and without insurance, you could be left bankrupt by the claim.
Renters insurance is important for every tenant, no matter how valuable you consider your possessions. At the very least, personal liability insurance will protect you from major claims in the case of an accident that is deemed your fault.
This article is contributed by James Greenstone.
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