Despite the relative risk aversion most people associate with renting a house, the ever rising number of foreclosures has been hurting tenants, sometimes even harder than landlords. In most cases the tenants don't even know that the landlord has been failing to make payment until they receive the foreclosure or eviction notice on their front door. From there, the renter's rights vary from state to state with the protections generally being lackluster. To top off the need to quickly find a new place to stay as the bank takes ownership, many tenants are also out a month's rent and the security deposit.

One renter in Virginia lost $1,200 when her landlord was foreclosed on; a hardship which coupled with the loss of her roommate and access to transportation has left her 6 months pregnant living in a homeless shelter. Some states do provide protections which will allow the renters to pay the bank and live in the home until the new owner moves in but the extra time for tenants isn't usually long enough. In some other areas legal aides actually recommend living in the home rent free while the foreclosure process is completed in order to build up enough money for a new rental. No matter where you live the protections for renters from indiscriminate landlords are not good enough.

The House passed a measure last year which would afford more protection to renters in foreclosure cases but the measure hasn't yet been put into place. Congress needs to stop wasting time with credit card interchange fees and baseball steroid scandals and get on to passing something which I think we can all agree protects consumers. In these cases the foreclosures are especially sad because the displaced renters aren't the irresponsible ones; they have paid their rent and made the smart decision to not buy a home they cannot afford. Congress, quit carrying on about an energy plan for one day, leave your fly fishing trip early and get some protections passed. It'd be great if for once we could reward those individuals who made good decisions when it comes to housing.

Renter's insurance? Why would I need renter's insurance? It's not my problem if our apartment building burns to the ground! It's the landlord's problem. I'm not buying any stinkin' insurance when I'm paying the owner's mortgage!

And so goes the discussion in the heads of many renters around the world. Renter's insurance makes no sense to many, unless they've lived in a place that has indeed actually burned to the ground or otherwise been destroyed. But now those who read this blog can be enlightened too.

The purpose behind renter's insurance is quite simple: It is insurance for all your "stuff" and helps you replace the stuff if it's destroyed. It's not your responsibility to insure the building. That's for the owner. But your stuff is your problem.

Imagine having a fire in your apartment and losing all your furniture, food, clothing, and belongings. Not only do you not have a place to live, you don't have any stuff either. Have you ever considered how much it would cost to replace all of that? Most people I know don't have the means to just run out and buy a bunch of furniture and new clothes and household items at the drop of a hat.