Renters insurance, also called tenant insurance, is a smart way to protect yourself and your belongings in the event of an unexpected loss. In a poll conducted by the Insurance Information Institute, only 37% of renters said they had insurance. However, the average two-bedroom apartment in the U.S. contains about $30,000 worth of belongings, which is a lot for renters not to cover.
Though less extensive, renters insurance is similar in many ways to homeowners insurance coverage. Keep reading to learn what rental insurance covers specifically and what it doesn’t, so you’re prepared in any event.
What is rental property insurance?
Renters insurance will offer you coverage if you rent your home, apartment, condo, or other space from a landlord. It will cover your personal belongings as well as provide you some liability coverage. The main job of renters insurance is to protect your stuff. It’s your landlord’s responsibility to worry about the building itself.
What does renters insurance cover?
Renters insurance coverage offers you protection against covered perils. A standard policy will protect you against losses from theft, fire, smoke, vandalism, explosion, hail, windstorm, lightning, falling objects, and some types of water damage. It will also help protect you if someone is injured on your property. Your coverage may include insurance for personal property, liability, and additional living expenses.
Personal property insurance will cover costs to repair or replace damaged or stolen belongings—up to the limits of your policy. Coverage may extend to belongings outside of your home, such as lawn furniture, equipment inside your garage, or an electronic stolen from your car.
If someone is hurt on your property, liability insurance will help you pay for costs like medical bills or legal fees. Liability can also help cover damage to your personal property. Clarify with your agent whether your policy covers dog bites if you have a dog.
Additional Living Expenses
If your home needs repair, additional living expenses coverage will cover costs that go above and beyond your regular living expenses. Costs may include hotel bills and eating out while you can’t live in your home.
What doesn’t renters insurance coverage include?
Renters insurance won’t cover costs to repair the building itself; that’s for your landlord to cover. A standard policy usually won’t cover flooding, earthquake, or landslide damage. Pest infestations aren’t covered either.
Certain items, such as fine jewelry, rare collectibles, antiques, or artwork likely won’t be covered in a standard renters policy. Ask your insurance agent how you can best protect these items.
How much rental insurance do I need?
Your landlord may require you to show proof of insurance before you’re allowed to sign the lease. Others will leave the choice up to you—whether you want to purchase insurance or not.
As far as the amount of insurance coverage you should take out, it depends on the total value of your belongings. If you have very few items to account for and you’re not too worried about losing them, you may not need renters insurance. If, on the other hand, you have highly valuable furniture, electronics, equipment, jewelry, etc., you should take out a policy to cover them.
To calculate how much coverage you’ll need, take inventory of all your belongings. Estimate the value of each of your belongings and add them together. Taking photos or a video as you walk through your home can make it easier to file a claim. If you lose anything in the event of a covered peril (natural disaster, theft, fire), you can quickly tell your insurance company how much each item was worth.
Check out our previous article, “Actual Cash Value vs. Replacement Cost” for specific information on the type of coverage you should choose for your policy. Actual cash value includes a depreciation deduction, while replacement cost does not.
You’ll also need to determine how much liability coverage you need. Limits typically range from $100,000 to $500,000. Ask your agent how much they recommend based on your needs and assets.
Renters insurance can be very affordable and offer you extra peace of mind. Consider bundling your renters and auto insurance policies for a discount. If you’d like to get a quote, let us know! We’re here to help you find the best policy available to you.