Renters insurance covers many of the financial losses you might experience when renting a home or apartment. A standard renters insurance policy typically includes three components — personal property coverage, liability coverage, and additional living expenses. For most tenants, renters insurance is pretty affordable, with an average premium of $15 to $30 per month.
Learn more: Should you rent or buy a home? How to decide.
If you’re a renter, you might need to carry renters insurance. While renters insurance isn’t legally required by law, your landlord can require it as a condition of your lease agreement. But even if your landlord doesn’t require renters insurance, it’s still good to have. Your landlord’s insurance doesn’t provide any coverage for your personal items, liability, or additional living expenses.
Learn more: Is homeowners insurance required? The answer might surprise you.
Renters insurance can reimburse your financial losses after a covered peril. The policy has a coverage limit, which is the maximum amount of money your insurance company will pay for a covered loss. You might also have a deductible, which gets subtracted from each claim payout.
The amount of reimbursement you can get depends on whether you have an actual cash value (ACV) or replacement cost value (RCV) renters insurance policy. Here’s how they work:
-
ACV: With an ACV renters insurance policy, your personal belongings are covered at their depreciated value, which accounts for age and wear and tear. Renters insurance policies with ACV coverage typically have lower premiums and lower claim payouts.
-
RCV: If you have RCV renters insurance, your items are covered at their original value, without subtracting any money for depreciation. While RCV renters insurance rates are more expensive (about 10% higher), you’ll receive a bigger payout when you file claims.
Learn more: Actual cash value vs. replacement cost: Understanding the difference in home insurance
Personal property insurance covers your personal belongings that get damaged, lost, or stolen by a covered peril. It typically covers items such as furniture, clothing, small appliances, cookware, decor, and sporting equipment.
Most renters insurance policies have a separate, lower coverage limit for valuables. The limit is usually around $1,500 or less. If you need extra coverage for fine art, jewelry, collections, or other expensive items, you can add an endorsement that will raise your policy limits.
Renters insurance doesn’t just cover items that are inside your home or apartment. It can cover your personal items outside of your home. That includes items that get lost or damaged while traveling and belongings that get stolen from your car.
You should choose a personal property policy limit that would cover the full cost of replacing all your personal items in the event of a total loss, like a fire. One way to estimate the value of your items is to make a home inventory with a list of all the things you own and their estimated cost.
Watch and learn: What’s better for your wallet: Renting or buying a home?
Liability insurance covers you financially if you get sued for bodily injury or property damage. It also covers damage caused by pets and family members. In addition to your legal fees and court costs, your liability insurance can pay a settlement or judgment.
For example, imagine that you’re installing a window AC unit and it accidentally falls out of the window and onto someone’s car below. If the owner of the damaged car sued you, your renters insurance policy could pay to repair the car.
Learn more: What is liability car insurance, and how much do you need?
Most renters insurance policies provide at least $100,000 in liability insurance. However, that might not be enough coverage for everyone. Your liability insurance coverage limit should match or exceed your personal assets that would be at risk in a lawsuit, like money in a retirement account or savings account.
Renters insurance may also include medical payments insurance, which provides a small amount of coverage for someone’s medical bills if they get injured in your apartment. It doesn’t provide any coverage for your own medical bills or a family member’s injuries.
Additional living expenses can pay for necessary living costs if your rental gets destroyed in a covered loss, and you have to temporarily relocate while the landlord makes repairs. Some insurance companies call this coverage loss of use insurance.
Additional living expenses will cover reasonable costs, like a hotel stay, restaurant meals, parking, transportation, and laundry. Some policies have a maximum daily coverage limit, or a maximum coverage duration, or both. You must keep your receipts for these expenses to get reimbursed.
Another thing to know about additional living expenses is that you’re only entitled to reimbursement if your apartment gets damaged by a peril that your policy covers. If the peril isn’t covered (like flooding), your insurer likely won’t cover temporary living costs.
Under most apartment insurance policies, the coverage limit for additional living expenses is around 20% of your personal property coverage limit. So, if your personal property coverage limit is $50,000, your policy might pay $10,000 for temporary living expenses.
Learn more: Homeowners insurance: What it covers and how much you’ll pay
Renters insurance covers a number of perils that could damage or destroy your personal belongings. Here’s a list of perils that are commonly covered:
-
Fire and smoke
-
Theft and vandalism
-
Wind, hail, lightning
-
Explosions
-
Falling objects
-
Aircrafts and automobiles
-
Damage caused by the weight of snow, ice, or sleet
-
Sudden and accidental water damage and electrical surges
Learn more: What does homeowners insurance cover?
Most renters insurance policies have some exclusions. In order for a loss to be covered, it typically needs to be “sudden and accidental.” The following losses aren’t usually covered under a standard rental insurance policy:
Learn more: What does homeowners insurance not cover?
The average renters insurance premium ranges from $15 to $30 per month, according to the National Association of Insurance Commissioners. However, the actual amount you’ll pay depends on these factors:
Learn more: How much is homeowners insurance? A guide to lowering costs.
Many property and casualty insurance companies sell renters insurance, and most tenants have an easy time getting coverage. Here are the basic steps you should follow if you’re ready to purchase a renters insurance policy:
-
Research insurance companies: Start by researching insurance companies that offer renters insurance in your state. Pay attention to the coverages and discounts available, as well as the customer service and policy management tools. It can also be helpful to read customer reviews and check the insurer’s financial strength rating from AM Best.
-
Consider your coverage needs: Think about the type and amount of renters insurance coverage you need for your situation. If you haven’t already, make a home inventory to figure out how much personal property insurance you should get. Decide whether you’ll need to add endorsements, like valuables coverage, to fill gaps in your policy.
-
Get quotes: Once you’ve identified a few insurance companies with policies that meet your coverage needs, get personalized quotes. Aim to get quotes from at least three different insurance companies to see which carrier can offer you the most affordable premium for your situation and coverage needs.
-
Purchase the policy: The final step is to purchase your policy. To bind the coverage, you’ll have to pay the first month’s premium. Keep a copy of your insurance documents in a safe place in case you need to file a claim.
Everyone who rents has unique insurance needs. You can use these tips to choose the right renters insurance policy for your situation:
-
Understand what’s covered: Renters insurance policies differ in terms of what’s covered and what’s not. It’s important to understand what losses are covered and which ones are excluded before you choose a policy.
-
Consider optional coverages: Some renters may need to add endorsements to their policy to get the protection they need. For example, if you live in an area that is prone to flooding, you might benefit from getting renters flood insurance from the National Flood Insurance Program (NFIP) or a private flood insurer.
-
Check insurer reviews: It’s a good idea to read insurance company reviews to see what current and past policyholders think about the carrier. You can also check J.D. Power’s latest U.S. Home Insurance Study, which includes renters insurance ratings, to see how the top insurers fare in terms of customer satisfaction.
-
Look for discounts: Many renters insurance companies offer discounts that can reduce your premium. When comparing insurers, pay attention to the discounts they offer. You can often find discounts for bundling your policies, installing smoke detectors or a home security system, and setting up automatic payments.
Learn more: How an auto and renters insurance bundle can save you big
Renters insurance is worth it for many people who rent their homes. This type of insurance can provide valuable financial protection for your personal belongings if they are stolen or damaged by a covered peril. Your policy can also cover temporary living expenses after a major disaster, and your liabilities if you get sued.
Even if you don’t own many belongings, it’s probably still worth getting renters insurance. For a relatively low cost, apartment insurance can provide peace of mind in case something unexpected happens, like a break-in. Remember, your landlord’s insurance policy doesn’t provide any coverage for your items, so without renters insurance, you could be at risk.
Renters insurance isn’t legally required, but your landlord can require it.
Yes, renters insurance covers the personal items you have in a storage unit. However, items stored away from your apartment are typically subject to a lower coverage limit than the rest of your belongings.
Yes, renters insurance covers damage to property, but only your personal property. It doesn’t cover damage to the physical structure of the building or the interior walls of your apartment. Your landlord’s insurance policy will cover those things.
Yes, renters insurance will pay to replace your personal belongings that get damaged in a house fire or wildfire. If your apartment becomes uninhabitable after a fire and you have to relocate, it will also cover additional living expenses.
Learn more: Does homeowners insurance cover wildfires?
No, renters insurance doesn’t cover car theft. If your car gets stolen, it would be covered under your comprehensive car insurance policy.
Learn more: What happens when your car is stolen
Yes, rental can cover your relocation costs if your rental unit is destroyed by a covered peril, and you’re forced to temporarily move out. However, your policy won’t cover voluntary relocation.
Tim Manni edited this article.
