Before learning about insurance, how it works, and what it covers, I had no need for Renters Insurance.  Why would I pay to cover my hand-me-down furniture, out of date electronics, and a bike I hardly ever ride?  NO Reason to cover this Junk, Right?

We get it – when most of us first move out on our own, we are renting and don’t have a lot of great stuff to insure.  However, we likely DO have something other than STUFF that we NEED to insure, and that’s Future Earnings!

What?  Future earnings – if my bike gets stolen, maybe one week of future earnings will be my setback, I can deal with it.  Okay agreed, that’s true.

But what happens if you have a friend come over, he or she goes outside your apartment to have a smoke, throws a cigarette butt in a planter box, and the cigarette slowly starts a fire in the planter box that jumps to the building and burns down half the apartment later that night…  Who is liable? 

Sadly, this case is true and we didn’t make it up.  But the story has a good ending – read on….

As we all know, cameras are everywhere these days.  After the fire was put out, the fire department told the landlord that the fire had started from the planter box area.  The landlord reviews the surveillance recording and sees your friend leave and re-enter your unit and putting out the cigarette in the planter box.  While the landlord has fire insurance, and the fire insurance pays to repair the building, as part of the insurance contract, the landlord’s insurance company has the right to subrogate against the responsible party.

In this case, the landlord’s insurance went after the tenant and the friend. The tenant had a renters policy which settled with the landlord’s insurance company resulting in no out of pocket to the tenant or friend.  What could have happened is the landlord’s insurance could have tried to make a claim against future earnings.

So, now that you Get it, don’t forget it when it comes to Renters Insurance

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