Most people believe the answer to that question is the amount required by a landlord or rental company as defined in their lease, but that answer might not be right for you.
Think about the things you own. Then think about what it would cost to repurchase or pay to repair those items if they were lost or damaged during a robbery, fire or other incident.
That’s where renters insurance comes in. It can help you cover the cost to replace the things you lose because of an unexpected event. It also can help pay for housing and other living expenses should your apartment, condo or home become uninhabitable due to a covered loss. In addition, it can help to pay expenses if you damage someone else’s property or are found liable for someone’s injuries.
Even though the amount of renters insurance you should purchase depends on your personal circumstances, the average cost of renters insurance hovers around $326 a year, or about $27 a month. That’s the national average cost of a policy with $40,000 in personal property coverage and $100,000 of liability and a $1,000 deductible, according to a 2021 analysis conducted by insurance.com.1 Even a lower cost renters insurance policy could make a big difference in your life and help give you peace of mind if an unfortunate event occurs.
What Renters Insurance Covers
Let’s start with the basics and go over the three things a renters insurance policy typically covers:
- Personal property: Renters insurance can help cover the costs of damage to or loss of your furniture and personal possessions – at home or away from home – caused by things like fire, lightning, windstorm or other perils that are covered by your policy.
- Additional living expenses: You can expect your insurance company to cover some or all of the additional expenses you incur for a hotel or a new rental if your unit isn’t safe to live in because of a covered loss or repairs.
- Liability: Your renters personal liability insurance coverage can help cover the associated legal costs and related damages. Most renters insurance policies provide $100,000 (minimum) of financial protection for covered accidental bodily injury or property damage to others. Higher amounts of coverage are available.
Some of the common perils covered by renters insurance include losses resulting from:
- Lightning, wind, hail and other weather events
- Theft
- Vandalism
- Fire, smoke and certain types of water damage
Your policy documents will define what perils are covered.
It’s important to note that, typically, renters insurance policies don’t cover flood or earthquake damage. You may need to purchase separate coverage if your rental home, apartment or condo is located in an area where these things are likely to happen.
Determine How Much Renters Insurance Coverage You Need
Ask yourself these questions to figure out how much your possessions are worth:
What Do I Own?
You’ll want to make certain that your insurance policy provides adequate coverage for all of your belongings. Start by taking an inventory. Make a list of everything you own and its estimated value so you know how much it would cost to replace or repair anything if it’s stolen or damaged.
You don’t need to figure out the exact price of every item in your unit, but consider doing an online search to estimate the current value of your stuff. Look through your closets, drawers and storage areas, too. You may have valuables put away that you don’t remember.
