Jessica Milam was on her way home from picking up pizza to celebrate her son’s third birthday when she and her husband noticed flames shooting into the sky from a rooftop in her neighborhood.

“As we got closer, we realized it was our roof,” Milam says.

They sped toward their house in Hammond, Louisiana and breathed a sigh of relief to find Milam’s mother-in-law standing in the yard with their two children. While their family was safe, the house they were renting was heavily damaged by both fire and smoke.

And with no renters insurance, Milam, 30, and her husband were left bearing the full financial brunt of replacing their belongings. The damage: About $50,000.

Less than half of people have insurance

Only 41 percent of renters have insurance, compared with 93 percent of homeowners, according to a 2016 poll conducted by the Insurance Information Institute, even though the average annual renters insurance premium is just $188.

While the landlord’s insurance will cover the exterior of the building structure and things like plumbing and electrical work, it will not cover a renter’s personal belongings in the event of fire, theft or storm damage, according to the Insurance Information Institute.

Renters insurance is one of the most cost-effective ways to protect your belongings, according to the National Association of Insurance Commissioners. In addition to fire and theft, most policies also cover damage from vandalism, windstorms, lightning and certain types of water damage, such as burst pipes.

The fire that displaced Milam’s family was caused by faulty wiring, Milam says.

“We have tried to save some special clothing, books, and wood furniture, but it all must be sent to specialists to evaluate if it can be saved,” she said.

They found a new rental house shortly after the fire and immediately began researching renters insurance policies.They found a policy for under $40 per month, and they found peace of mind.

“The cost of the insurance is minuscule in comparison to the losses you could incur,” Milam says.

No insurance, big costs

Nate Masterson also learned about renters insurance the hard way, after accidentally leaving an old electric heater turned on in his Riverdale, New York apartment one cold, winter morning about two years ago.

The appliance overheated and the carpeting caught fire. While the fire department was able to save the apartment and the building from being a total loss, Masterson’s belongings weren’t so lucky. He lost his TV, XBox, speaker system, couch and his prized coffee table, a family heirloom bought at the 1893 Chicago World’s Fair.

“I had to go a good year without these things until I could save up enough cash to replace them,” Masterson says, adding he also had to pay his landlord nearly $15,000 for all the damages to the apartment.

Masterson, 28, hadn’t even considered renters insurance until a friend told him how inexpensive it was and how much money it could have saved him. He began to research and said he “flipped” when he realized how cheap a policy would have been. He now has a renters insurance policy for about $20 per month.

“The moral of the story is to always get yourself covered before moving into any apartment as you’ll at least have some kind of buffer in place in case you’re stuck in an emergency situation,” he said.

Extra insurance for special things

Renters insurance not only covers loss of property due to theft, but it’s also possible — and probably prudent— to get what’s called a floater policy for additional coverage for expensive or high-value items such as jewelry or musical instruments.  

Joanie Knight’s property was totally uninsured when she returned home to find that her babysitter had cleaned out her house in Bogalusa, Louisiana.

“I had returned to work after being a stay-at-home-mom and had only been working for two weeks. I knew the babysitter because her granddaughter and my daughter went to school together,” Knight said. “When I returned on that day, everything in my house was gone or broken, even clothes and bathroom supplies. We recovered some of the major appliances, but lost so much more. We ended up filing for bankruptcy almost one year to the date.”

Knight, 29, and her husband had been researching renters insurance and were waiting for her first paycheck to buy a policy. While the babysitter was prosecuted and Knight received a modest amount of restitution, it wasn’t enough to make up for all they’d lost.

She says they will never be without renters insurance again.

“Anything can happen,” she said. “Even by people you thought you knew.”

It’s a great time to take an inventory of all of your major possessions, including electronics, bikes, furniture, dishes and kitchen appliances, clothing and expensive jewelry.

Knowing how much you stand to lose will ensure you get the right coverage, and it will set you up for a smooth claims process if your possessions do get damaged or stolen.

Masterson said he doesn’t want other tenants to learn their lesson the hard way, as he did.

“For anyone in the position of tenant, it’s imperative for them to have renters insurance,” Masterson said.

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