Re: Please explain to me how renter\'s insurance is so cheap....
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In the apartment I'm living in, renter's insurance runs me $60 per YEAR for up to $16,000 in coverage. I got a discount because I also get auto insurance from the same company, but even without a discount it would still be about $90, which I still think is super cheap.
The question I have is, WHY is it so cheap? It just seems WAY too easy to stage a burglary and/or claim items stolen that you never even owned. For just a standard claim policy with no special riders, the insurance company doesn't come and inspect your belongings beforehand, and they don't necessarily require receipts for all your claims.
Now I'm certainly not advocating fraud or saying that I would ever do something like this, but it just seems to me that someone needing to raise some quick cash could pull off a renter's insurance scam pretty easily, and given that, why are premiums so low?
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I work for an insurance company as a product director - setting rates based on our loss experience.
The short answer was made earlier - there simply aren't that many claims that happen. The big dollar losses happen in homes - fires or wind damage when a large storm takes out roofs or fences.
As to fraud - you're right, it wouldn't be too hard to doctor up a false report. But good luck doing it a second time. Every major company subscribes to a database that shares loss history so they know what your claims have been. If you apply for insurance and they see a prior theft loss in the last 3 years, you might find a company willing to take you. If you have 2 or more theft losses, you have almost no shot of getting insurance. Plus - the claims adjustors review this information as well, so they can see that you've had multiple claims and red flags go off.
As for where to get renter's insurance - a number of the major carriers sell it directly online. If you're currently with an agent, give them a call - they can get it done in a very short time period. I always recommend working with an independent agent as they can research the rates for many companies. It won't make much difference for the renter's insurance, but many offer a discount when you have your auto insurance through them, and they might be able to save you money.
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