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If you own a home, you insure your stuff against fires, theft, and other disasters. But most renters don't.

Would you rather have a pile of money or a pile of ashes? Most renters are choosing ashes.

Ninety-five percent of homeowners have insurance, but only 37 percent of renters do, according to a study released today from the Insurance Information Institute, an educational group. And there are a lot more renters than there used to be.

“Historically, home owners have outnumbered renters in the U.S. by more than three to one,” housing data firm RealtyTrac wrote earlier this month. But that number is now less than two to one and still dropping.

That’s millions more people who could lose everything to Mother Nature’s next bad mood because they have no renters insurance. Maybe they’re falling for common myths, or maybe they just don’t realize it’s an option.

Here are the basics…

  • Most renters insurance policies cover hurricanes, fire, lightning, hail, theft, and explosions. A basic policy usually doesn’t cover flooding, but probably does cover water damage from burst pipes.
  • Because you’re insuring your stuff and not a building, it’s cheaper than you probably expect; usually less than $20 a month for $20,000 in property coverage and $100,000 in liability coverage.
  • Renters insurance also covers medical costs for people injured at your home, legal costs if you go to court over something like that, and additional living expenses if you can’t stay in your apartment after a disaster.
  • You can get additional coverage for floods, earthquakes, and expensive property (jewelry, professional equipment, collectibles) if you think it’s worth it.
  • Your auto insurance company probably offers renters insurance, and might give you a discount for having multiple policies with them.

Ready to purchase renters insurance? Make sure you take a home inventory of everything you own. It’s time-consuming, but it’s the only way to make sure you get your money’s worth and there’s free software to help.

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About the Author

Brandon Ballenger

Brandon Ballenger

Having more than $10,000 in student loan debt has a way of piquing your interest in personal finance. And because my degree was in English and public communication, I get to share that interest with you. My wide-ranging stories on money and business have run on Business Insider, the Christian Science Monitor, Reader's Digest, the front pages of and Yahoo! Finance, Money Talks News, and the South Florida Business Journal. In my free time, I like to jump off skyscrapers and play video games.

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