Renters insurance is so cheap, averaging just $15 per month, because it only covers your personal property, personal liability, loss-of-use, and guest’s medical bills. In addition, it only covers you in the event of somewhat freak accidents like fires, or relatively inexpensive issues like burglary.
Other types of insurance, like auto or homeowners insurance, need to cover expensive physical items like a house or an automobile. Car accidents and home breakdowns are also fairly common, meaning insurance companies have to cover expensive bills more frequently — so that’s why their premiums are so much more expensive.
Furthermore, renters insurance is designed to be lightweight, and won’t cover you in the event of major natural disasters like floods or earthquakes. If it did, insurance companies would be on the hook for millions of dollars in claims every time disasters like these strike, and your renters insurance premium would need to be much higher for them to maintain profits.
But none of that means renters insurance isn’t worth it, or that you’re getting scammed. In fact, the liability protection portion of renters insurance alone makes renters insurance absolutely necessary for everyone. If you injure someone, and their hospital bills are tens of thousands of dollars, you could go bankrupt. With renters insurance, a standard policy would cover you for $100,000 worth of medical or legal bills, meaning you’d stay out of debt. And that’s just for $15 per month, with which you’d also get $30,000 in personal property coverage.
While it might be hard to believe you can get all of that for such a cheap fee, that’s just how the math works.