Renters Insurance Basics

Even though renters insurance is affordable, helpful and sometimes required, most renters (and leasees) make the mistake of not buying a policy.

renters insurance application form

What is Renters Insurance?

Renters insurance is for people living in a housing unit they don’t own. The landlord’s insurance covers the structure and their own things, like appliances already in the home.

This means that the renter doesn't have their personal possessions covered. All valuables destroyed in a disaster would be lost. Even the renter's living expenses during rebuilding would come out of their own pocket.  This can happen even if the disaster was the owner's fault.

To protect against these risks, a renter should purchase renters insurance.

What Type of Renters Insurance Should I Get?

Renters insurance is cheaper than you may think. Most policies cost between $150 to $300 per year and cover up to $15,000 to $30,000 in lost goods. You can often choose to extend that coverage for an additional cost.

Like homeowners insurance, many item claims are limited to $1,000 each. To protect valuable objects like jewelry or computers, you can purchase “floater” policies for each item.

Does Renters Insurance Cover Anything Other Than Loss?

Renters insurance financially prepares you for a situation like a fire, theft, or structural collapse. It covers other related loss scenarios as well.

Personal Liability

Personal liability is attached to a renters policy to protect from legal costs relating to negligence. If a guest hurts themselves in your home, you may be found liable. Similarly, if your dog bites a guest, they can sue you. These injuries and any related legal costs are covered by most renters insurance policies.

Living Expenses

If a covered event makes your home unlivable, your renters policy helps cover additional living expenses. If a tree falls on the roof of a rented home, a renter without insurance is out of luck. The landlord has no obligation to pay for living expenses (or destroyed belongings) during construction. Standard renters policies pay for lodging and other related costs while the home is being rebuilt or repaired.

What Doesn't Renters Insurance Cover? 

Some Natural Disasters

As always, there are many situations that aren't covered by renters insurance. The most common examples are certain types of natural disasters like flooding or earthquakes. Special policies can be purchased to cover these events on a case-by-case basis.

Landlord Fault

A major cause of denied claims stem from situations that fall under the landlord’s responsibility. For example, imagine that a hot water heater leaks, and your belongings suffer water damage. The landlord probably failed to keep up with regular maintenance, and the loss occurred as a direct result of their negligence. You may be able to file a claim under the landlord’s liability insurance in this instance.

Personal Business Items

If you have work from home, your renters insurance might not extend to your work belongings. If you filed a tax deduction for your home office computer, it's technically company property. That requires separate insurance coverage. If you work from home, double check with your insurance company to see if your stuff is covered.

How Does Renters Insurance Work Away From Home?

A great feature of renters insurance is covering belongings outside the home. For example, if your cellphone is stolen while you're out and about, your renters insurance will probably cover it.

Certain exemptions always apply. Read your policy carefully and contact an insurance agent before leaving on a long trip.

What Damages Are Covered by the Landlord’s Insurance?

Say there is a fire that only causes damage to one or two apartments in a building. However, the fire department opens all the units to make sure that there are no more people or pets left inside. Smoke billows into the apartment and causes damage.

Renters insurance can pay for the cleaning of all the personal belongings in this instance. Couches, clothing, and bedding can be restored for free, minus the deductible. The landlord would have to pay for the walls and counters to be cleaned separately. As one claims adjuster puts it: “If you could pick up the apartment and shake it, anything that falls to the floor, that’s what they [would] clean.”

Are There Ways to Save Money on Renters Insurance?

Renters insurance is typically consistent and low cost. You can still save money by taking the following steps:

  • Compare ratesComparing renters insurance rates from different carriers can get you great deals!
  • Bundle coverage — Renters insurance can be a slight cost when added to auto insurance or other similar policies. Find out if your insurance carrier offers it as an add-on.
  • Raise your deductible — A deductible should be as high as you can afford to pay out of pocket, between $300 to $500 for most people.
  • Purchase an umbrella policy — This policy will cost more, but you'll generally save money relative to the coverage you get. Lawsuits from personal injury can soar into the millions due to negligence. Protecting against these enormous risks can be a cheap way to extend your renters insurance coverage.

Do I Need Receipts to Prove a Loss?

Insurance companies have millions of products and values in a database. Often, a video of belongings you want covered should be enough. If you want to hold on to every receipt, then do so. Just make sure to keep them in a fireproof safe!

Remember that you should document your personal inventory before a loss occurs. To make the claims process smoother down the road, write a list of your items and your assessed values in advance.

Keep in mind that instead of replacement costs, some insurers cover Actual Cash Value (ACV). Replacement value covers the cost to buy the item new, ACV takes payout based on depreciation.

So, Should I Get Renters Insurance?

Absolutely! Here's why:

It's Cheap

Premiums are about $10 a month for coverage of $30,000 worth of belongings and liability. The amount of heartache a policy could prevent makes the cost well worth it.

It's Smart

Your landlord's policy covers the four walls around you but nothing in between. If you don't have renters insurance, you're out of luck if your stuff is damaged in a disaster or stolen in a burglary.

Your Possessions are Valuable

You may be surprised at the value of your possessions. There's a good chance you own at least $15,000 worth of furniture, electronics, musical instruments, and sports equipment. These items would be covered whether in your car, hotel room, suitcase, purse, or backpack.

It Offers Liability Coverage

Renters insurance also offers coverage for injuries people receive as your guest. A liability claim is unlikely, but you'll be glad you have it if you need it. Because of these benefits, renters insurance is a great product that can offer amazing return on investment.

Don't have renters insurance or think you're being charged too much? Get a quote and compare renters insurance rates to find the best policy at a price that doesn't bust your budget.

Frequently Asked Questions

Q: Am I covered by my roommate’s renters insurance?

A: Technically your roommate could add you to their renters insurance. However, by having two people on the plan, you are doubling the amount of belongings. You may reach your coverage limits faster. It can get messy if one of you moves out- or worse- leaves on bad terms.

It’s easier to have your own renters insurance, especially because it’s so cheap!

Q: Is renters insurance legally required?

A: No, you’re not required by law to have renters insurance. But many landlords do require it as a condition to signing the lease.

Q: Who should get renters insurance?

A: Anyone who has property they want to protect in case of theft, loss, or damage should get renters insurance. Even if you think your possessions don’t add up to much, think about your laptop, phone, television, jewelry, and clothing alone. Most people own more than $15,000 worth of goods!

Renters insurance also offers liability coverage. If anyone gets hurt in your apartment, you’re covered from medical and legal expenses.

Q: Should I get homeowners insurance or renters insurance?

A: Homeowners insurance and renters insurance are very similar. They have a key difference though: homeowners insurance covers the building itself as well as the possessions inside. Renters insurance primarily covers your possessions.

If you don’t own the building, renters insurance is the way to go.

Q: Do I need renters insurance?

A: Renters insurance is necessary if you want to protect your belongings from theft, loss, and damage. It also protects you from liability claims. Many landlords require renters insurance as a condition of signing the lease, so check with the homeowner if you are required to purchase it.

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