Rental Insurance and Holy Shit, Cambridge Fire

Last Saturday there was a ten alarm fire in Cambridge, MA, the largest fire in the area since the 80s. Thankfully, no one was seriously injured, but still – holy shit. Eleven buildings, over 60 people affected, multiple fire departments on the scene, and now that area looks unrecognizable.

It started scarily close to Fergus’s grad school apartment, making me even more thankful nothing similar happened to that fire trap of a house he lived in for years. Seriously – an electrician came by once to fix a problem and basically said “This house would be up in flames instantly if there was a fire,” which unfortunately is not that uncommon with the older homes in Cambridge. And of course those living in these fire traps are often lower income, students, or immigrants – people who don’t have a choice.

We know at least one family that’s been displaced. Apartment, car, all material possessions – gone during one awful day. And no rental insurance. Like many others, they took to crowd funding (we contributed), but not everyone can rely on that.

What does rental insurance cover?

Rental Insurance covers a few different things, the core being (more detail below):

  1. Cost to replace personal possessions
  2. Costs related to loss of use of insured location
  3. Personal liability
  4. Medical payments to others

Any landlord’s insurance policy is going to be for the building itself. Any damage to your property is not your landlord’s problem (except perhaps in cases where their actions directly caused the damage in some way).

And while they are responsible for repairing fire damage in a timely manner, not all landlord insurance covers short term housing for tenants such as hotel stays, making “loss of use” renter’s insurance very convenient.

Personal Liability Insurance as Part of Renter’s Insurance?

This is the best part of renter’s insurance. Basically, just about any damage or injury you might accidentally cause to someone else or their property (without your car) is covered. Anything car-related isn’t covered, as that’s a part of auto insurance.

Liability insurance is awesome as it’s not too expensive, yet it can really save you a lot of pain and hassle if something goes wrong. It’s the exact kind of thing insurance was meant for! If you are really cautious or have reason to carry higher liability insurance, you might want to look into getting an umbrella liability policy.

Medical Payments to Others?

This one is a bit odd, in my mind, because I think, “Wait, everyone I know has health insurance. Why would I need this?” Even though most people have health insurance, this medical payment insurance can go towards paying for copays or towards deductibles.

Plus, not everyone has health insurance, and wow is healthcare expensive (like, way more than the already outrageous prices) if you aren’t looking at the negotiated prices. Hell, my mom recently saved nearly $2k on healthcare by catching an error the hospital made in charging!

How much is renter’s Insurance?

Our old policy when we lived in Somerville (just North of Cambridge) had a limit of $15,600 for personal property replacement, $3,130 for loss of use of our apartment, $100,000 for each occurrence of personal liability, and $1,000 medical per person. These core coverages cost us $184 per year, just over $15 per month. Our renter’s insurance now, quite a bit farther out of the city, costs us just over $10 per month for similar coverage.

Basically, renter’s insurance doesn’t typically break the bank. You can expect to pay between $100 – $300 per year unless you have a lot to insure and/or are paying for more liability coverage. Some factors may change rates, such as age of house, distance to nearest fire hydrant, neighborhood crime rate, etc.

Keep in mind, if you have more stuff to insure, especially fancy jewelry and the like, the costs will be higher. Also make sure to disclose in advance any high-priced objects in your possession. If they are not explicitly disclosed prior to a claim, you’re not going to be happy. If you have any concerns or are on the fence with anything – talk to your insurance provider and get it in writing. Better safe than sorry.

Fluffster with fancy sunglases, pipe, and diamond-encrusted tennis ball

Fluffster’s going to be really sorry if he doesn’t insure all his mad swag

So What Now?

So I’m super curious to know what kind of policies and rates y’all have – anyone care to share in the comments? Any additional information on rental insurance? Any stories to share?

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9 thoughts on “Rental Insurance and Holy Shit, Cambridge Fire

  1. I have auto and house coverage with the liability and deductibles cranked up pretty much as far as they make sense to go with Allstate. Auto is $600/yr on a 2014 Altima with $1k collision deductible (no other deductibles), $500k liability, comprehensive, uninsured motorist, and $5k for medical costs. House is $850/yr with $340k dwelling and $1,000,000 liability with $3k deductible.

  2. I’ll be curious to see if I actually can have personal liability insurance during the period when I don’t own a condo or rent an apartment. I assume they would be willing to sell the liability insurance for people who do not live in permanent homes, but who knows.

    • Oh, for sure! I think that a general umbrella liability policy would apply in that case (or possibly travel insurance, depending on where you travel any given year). Definitely let me know if you figure something out (ooo, and write a post)!

      That’s not something I’ve heard anyone write about before in the many nomadic blogs I’ve read or currently follow. It would be especially useful for an early retiree – else, your assets could be at risk (at least, all assets not in official “retirement” accounts I believe), and you could have to go back to work unwillingly.

    • TJ: some insurers won’t allow you to get umbrella/personal liability with renter’s insurance, but some will. Last I checked, State Farm would. USAA will. I believe that Allstate quit doing so, although I think they did at one time. It may even vary from state to state for all I know. You may have to shop around, but you’ll probably find someone willing to issue you a policy – you’ll just have to ask.

      Bonus tip: I would ask that up front so you know before they sign you up and then underwriting denies your policy, and then you have to shop around again. I agree: if you have much at all net-worth wise (and ours is still quite low), it’s worth protecting it against spurious nonsense. You never know what can happen, and there’s a ton of fraud and greed out there. Best wishes!

  3. Hi Felicity

    its situations like this that make me happy I rent so houses going up in flames aren’t financially scary. just normal scary.

    However even with rentals the items inside the house are worth insuring, some policies here in the UK are as cheap as £2-£3 per month so definitely worth getting for peace of mind.

    • Sorry for taking so long to respond! I’ve been a little MIA from the blog and wasn’t being properly notified about comments.

      £2-£3 a month is about the cheapest I’ve heard of! There are some liability-only policies I’ve heard of for about $75/year, still roughly double the policies you’re talking about. Btw, awesome blog name. 🙂

  4. Hi all, informative article but it doesn’t help the fire victims as much as knowing that there are lawyers that take cases like theirs and and help them to recover the full value of all their stuff, plus a little extra for the hassle and distress. I work for such a firm, we specialize in this stuff. email me for more information if you are in trouble right now. tcj@lawyeradvocates.com

  5. Welcome to the #FI community too! My blog was also just listed just before yours; I happened here after seeing you say the same on Twitter.

    Incidentally, I just posted on this – have been working on a post on this whole topic for a while. I’ve experienced losses before, and here are two BIG tips that helped me:
    1. Be sure your insurance is for “replacement cost” of your stuff. It’s usually super cheap to add that – like $1/$2 per year – and it’ll cover the *full* cost of actually replacing things. Otherwise, insurers depreciate things substantially, such that (especially if you’re frugal!) your stuff may be worth next-to-nothing insurance wise, yet you still need to buy a new TV/fridge/bed/etc. after yours burns (or floats away).
    2. Be aware of *limitations* on your policy. Your insurer may not insure your fancy jewelry at all. Or your coin collection. Or any collection. Or firearms. Or vehicles that happen to be inside the house. They may make you buy a separate policy for that. Or, your insurance may not cover theft. Insurance is complicated, and renter’s insurance no less so. Though I’ve found the policies are fairly readable, especially for legal documents. There’s no substitute for glancing through your policy AND asking your insurer MANY questions.

    The upshot: you do it once, save a lot, and then you can probably leave it on autopilot for years to come.

    • Welcome as well! 😀

      Ah, very interesting — thanks for sharing! I’ll have to investigate further into some of these rental insurance intricacies. Our insurance agent was not the *most* helpful and basically just said “buy as much insurance as you can afford,” which, of course he would say that, he sells insurance.

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