Your landlord might be a nice person who takes care of problems like leaky faucets and broken appliances. But your landlord is probably not nice enough to replace all of your belongings if your apartment catches fire. And neither will your landlord’s insurance company. When it comes to problems like fire and theft, you’re on your own.
Fortunately, there’s a solution: Renters insurance. It offers coverage for a wide range of problems, including fire and theft, providing you with the protection you need. And the best renters insurance may be more affordable than you realize.
What Is Renters Insurance?
Renters insurance is a contract between you and your insurer that specifies the types of problems that are covered and how you’ll be reimbursed if you file a renters insurance claim.
Renters insurance includes coverage for your personal property, accidental injuries and property damage to others, medical payments to others and additional living expenses if you can’t live in your home due to a problem covered by your policy (like a fire).
What Does Renters Insurance Cover?
Renters insurance provides multiple coverage types, including coverage for personal property, liability, medical payments and additional living expenses.
Personal Property Coverage
Personal property coverage is what most people think of when they’re buying renters insurance. It covers all that stuff you’ve been accumulating over the years—everything from your furniture, clothes, jewelry, pots and pans, electronics, bicycle and even the little decorative items you keep on your shelves.
Here are the causes of damage covered by renters insurance:
You may notice two big natural disasters missing from this list: Earthquakes and floods. If you want coverage for those, look into earthquake insurance and flood insurance for renters.
When buying renters insurance, you’ll pick a personal property coverage limit. This is the maximum amount your renters insurance company will pay if your personal belongings are damaged or destroyed due to a problem covered by the policy (like a fire).
For example, you might select $20,000 to cover all your belongings. If you have expensive furniture, clothes or other belongings, you might select $100,000 or more.
Make sure your renters insurance policy includes replacement cost coverage. This will reimburse for new, similar items. The alternative is actual cash value coverage, which will pay you only the depreciated value of your damaged items.
A good way to determine how much personal property coverage you need is by creating a home inventory. A good home inventory can be as simple as a written list, or you can use an app or take video with your phone. Then estimate the cost to replace what you have.
Personal Liability Coverage
Liability insurance pays for injuries or property damage to someone else for which you’re responsible. For example, if you knock an errant baseball through a neighbor’s window, liability insurance can pay to replace the window. It also covers your defense costs if you’re sued over an incident covered by your policy.
“A coverage that most renters never consider is liability,” says Josh LaRoche, spokesperson for Toggle by Farmers Insurance. He asks renters to think about a common scenario, like a guest who trips and falls while visiting your apartment.
“That klutzy visitor can sue you for their medical expenses. If they do, renters insurance can help you handle it—both your legal expenses and any medical expenses you might be responsible for, up to the coverage limit.”
Personal liability coverage may help in these instances:
- Medical bills after someone is injured in your apartment.
- Lost wages of that person who was injured in your apartment.
- Legal costs if you’re sued.
- Death benefits if someone dies after being injured in your apartment.
- You damage another person’s property.
You will be able to select liability insurance policy limits. A common default liability coverage amount on a renters insurance policy is $100,000, but you can purchase more. A good rule of thumb is to buy enough liability insurance to cover what you could lose in a lawsuit.
A smart way to get extra liability insurance is by adding umbrella insurance to your renters policy.
Medical Payments Coverage
A standard renters insurance policy includes “medical payments to others” coverage, which pays small medical expenses if someone else gets injured in your home, no matter who is at fault for the accident. For example, if a guest bumps their head on an open cabinet door and requires stitches, your medical payments to others coverage can pay for the trip to the emergency room.
Medical payments to others coverage is meant to cover minor medical claims and is usually sold in small amounts between $1,000 and $5,000. Larger medical claims are generally covered under liability insurance (when you’re legally liable for them).
Certain types of accidents that happen away from your home can also be covered by “medical payments to others” coverage. For example, if your playful pup accidentally scratches someone at a dog park and they see a doctor, this could fall under “medical payments to others.”
Here are examples of medical costs that can be covered by “medical payments to others”:
- Ambulance rides
- Dental
- ER visits
- Funeral services
- Hospital stays
- Professional nursing
- Prosthetic devices
- Surgeries
- Treatments
- X-rays
Your “medical payments to others” coverage will not cover property damage to others, their pain and suffering, or legal fees if you are sued because of an accident. Those expenses are covered under the liability portion of a renters insurance policy.
“Medical payments to others” coverage does not cover your injuries or injuries to others in your household. If you get injured in your apartment, you’ll have coverage through your own health insurance plan.
Additional Living Expenses Coverage
If you can’t live in your apartment due to a problem covered by your renters insurance policy (like a fire or tornado), additional living expenses (ALE) coverage pays for hotel bills and other extra costs, including restaurant meals and pet boarding fees. This coverage is sometimes called loss of use.
“Think about all the expenses you could rack up above your normal daily spend if you had to leave your place,” says Yael Wissner-Levy, a spokesperson for Lemonade Insurance. “Not being able to live at your own place is expensive. But luckily, your insurer will be there to help.”
Other Events Covered by Renters Insurance
Renters insurance can cover other expenses such as:
- Debris removal: A renters policy can help you if you need to get debris removed from your property due to a problem covered by your policy, such as a severe storm.
- Identity theft: You may be able to purchase additional coverage to help with identity theft-related problems, such as restoring your identity if it is stolen and other types of issues, like credit card fraud or check forgeries.
- Lock replacement: If your keys get stolen, a renters policy may pay to replace external locks.
- Spoiled food: A renters policy can help if a power failure leads to spoiled food.
- Temporary repairs: If your belongings get damaged due to a problem covered by your policy, such as a severe storm, your renters policy may help pay for temporary repairs to protect your belongings from further damage.
- Water backup: You may be able to purchase additional coverage for problems related to sewer or drain backup.
What Does Renters Insurance Not Cover?
Renters insurance doesn’t cover everything. Here’s when renters insurance won’t help you.
- The building where you reside is damaged. Your landlord’s insurance covers the building structure. For example, if a fire damaged the building’s vinyl siding, landlord insurance would cover it.
- Accidents that happen in common areas, such as hallways and stairwells. That issue falls under a landlord’s insurance. For example, if your visitor trips on an uneven sidewalk, that claim would be covered by landlord insurance.
- Pet damage to your home or belongings. If your dog chews on your coffee table or soils the carpet, that’s not covered by any insurance.
- Damage caused by floods, earthquakes or landslides. You’ll need extra coverage if those are problems that affect your area.
- Pest infestations. Renters insurance likely won’t cover you if your apartment becomes overrun with bed bugs, mice or rats.
- Roommate’s property. A renters insurance policy probably won’t cover a roommate’s property unless you add them to the policy.
- Home business liability. If you have a home business, renters insurance likely won’t cover you for business-related issues. You instead will need to buy a small business insurance policy.
Does Renters Insurance Cover It?
Renters insurance doesn’t cover everything. Here’s a look at whether renters insurance covers certain situations.
Optional Renters Insurance Coverage
You can add other coverage to your renters insurance.
Replacement Cost Coverage
You can choose actual cash value (ACV) or replacement cost coverage for your personal belongings. Which one you choose affects the cost of renters insurance and what the insurance company will pay if you have a claim.
With actual cash value coverage the insurance company reimburses you for your belongings minus depreciation if you file a claim. Replacement cost coverage reimburses you for new, similar belongings.
For example, let’s say three years ago you bought a new TV with all the latest and greatest technology for $2,000. If the TV is damaged in a fire today, ACV coverage will pay the depreciated value of the TV. Replacement cost coverage will pay to replace the damaged TV at today’s prices for a new, similar model.
Choosing replacement cost coverage is typically more costly, but can be a big help if you file a renters claim.
Scheduled Personal Property
Renters insurance caps how much the company will reimburse you for a problem covered by the policy. Renters policies also have special limits or sub-limits for specific items That may be an issue if a thief steals expensive jewelry and electronics.
It’s common for renters insurance policies to have special limits for stolen jewelry, such as a $1,000 limit. That sub-limit will be inadequate if you have a necklace worth $2,000.
But there is a solution: Scheduled personal property, which is a policy endorsement that lets you get additional coverage for expensive items. You can schedule high-value items, like jewelry, artwork, musical instruments and antiques. Adding the endorsement comes at a cost, but can offer you peace of mind if your jewelry and other items are stolen.
How Much Does Renters Insurance Cost?
The national average cost for renters insurance is $173 a year for $15,000 of personal property coverage. The average cost rises to $227 a year for $30,000 worth of personal property coverage, according to a Forbes Advisor analysis of renters insurance rates.
Here’s a look at the cost for renters insurance by company.
Renters Insurance Rates by Company
Source: Quadrant Information Services, based on average costs nationwide for a renters insurance policy for a 30-year-old single female. The rates shown include $100,000 in liability insurance and a $2,000 deductible.
What Affects Renters Insurance Costs?
Renters insurance costs are based on multiple factors, including:
- Where you live.
- How much coverage you select.
- The deductible amount.
- Your renters insurance claims history.
- If the apartment and/or building have items like dead bolts, smoke alarms, sprinklers and security systems.
How Do I File a Renters Insurance Claim?
Filing a renters insurance claim is similar to a home insurance claim and requires you to provide information promptly to your insurance company.
There may be a few things to do before even filing a renters insurance claim. For instance:
- If your apartment is burglarized and items are stolen, contact the police department and file a report first. Your insurance company will want this information.
- If your apartment is damaged and you need to make emergency repairs, get it repaired first, so you can prevent further damage. You don’t have to wait to get the OK from your insurer to make repairs in that instance.
Contact your insurance company with information about the claim and any receipts, and photos or videos of the damage. It’s wise to create a home inventory of your possessions before you ever need to file an insurance claim.
After you file an insurance claim, the insurance company will assign an adjuster to review your claim. The person will make a determination on the claim and review your policy, including deductible amount, policy limits and sub-limits for jewelry and other high-priced items.
How Do Renters Insurance Companies Pay out Claims?
Renters insurance companies pay claims similar to other insurance policies. If you file a renters insurance claim, the company reviews the loss and makes sure it’s covered by the policy.
If approved, the insurance company will pay for the claim based on the value of the loss, your coverage limits and whether you have actual cash value or replacement cost coverage. The insurer will also decrease the payout by your insurance deductible.
That means if you experience a $3,000 loss and your renters insurance deductible is $500, the insurance company will reimburse you $2,500.
Do I Need Renters Insurance?
Renters insurance could be vital to replace your belongings following a fire or disaster and protect you if you’re involved in a lawsuit. Not to mention the extra bills for additional living expenses that you’d otherwise have to pay on your own if your apartment is damaged by a problem such as a fire.
So even if you don’t want to bother with insuring your belongings, there are other things to consider before deciding if you need renters insurance or not.
It’s a good idea to compare renters insurance quotes from multiple insurance companies in order to find a good deal. The best renters insurance companies combine good service with competitive prices.
