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More Homes Are Being Rented, But Many Go Without Renters Insurance
By Mike Heuer

More than 35 percent of households in the United States are living in rentals, and the percentages are much greater in some of the largest cities in the United States. New York City tops the list of rentals with nearly 70 percent of households located in rented homes and apartments. Los Angeles has about 61 percent of homes rented with Chicago and Houston each posting rental rates of about 55 percent.

While the rate of rented households is up in the United States, a large percentage of those renting their homes and apartments choose to go without renters insurance coverage. About 65 percent of households located in rented premises have no insurance protection, which created problems for those living in areas recently devastated by natural disasters. St. Charles, Missouri, was devastated by a tornado while Hurricane Sandy destroyed many rental units and displaced many families, leaving many renters with no insurance protection to their own devices when it came to covering the costs of relocating on even a temporary basis.

The Federal Emergency Management Agency does provide some disaster relief assistance, but the funds must be repaid. But renters insurance offers additional living expense coverage, which will help pay for temporary rentals, hotel and motel bills, transportation costs, loss of income, meals and other expenses arising from a fire, natural disaster or other peril that forces a move.

Also covered are losses of belongings, but the claims are paid in one of two ways. The financial hurt would be recompensed either based on the replacement cost or on an actual cash value basis. Replacement cost will reimburse for the price to replace the items regardless of their cost. But the reimbursements for losses covered by actual cash value settlements is based on the actual cash value minus depreciation, which means many who file such claims either will not be able to replace their lost belongings or will have to pay more out of their pockets to do so.

On average, the price for replacement cost renters insurance coverage is about 30 percent more than actual cash value policies. And with the average cost of renters insurance running about $185 per year, that 30 percent typically amounts to about $20 or $30 more per year.

Mike Heuer is a former insurance producer in Nevada with expertise in Property & Casualty and Life and Health insurance. He also is a former newspaper reporter with 20 years’ experience in print media.