Renters insurance is a policy for folks who are currently renting their home, condo, townhouse, or apartment. It can help protect your personal belongings against theft and damage due to natural disasters, fire, and more. It also provides personal liability protection if someone is injured in your home as a result of your negligence.
Knowing what renters insurance covers is key to maximizing the benefits of your policy. What is covered by renters insurance tends to be consistent from policy to policy and ranges from various disasters that could damage or destroy your personal property to incidents involving third parties that could potentially end in a lawsuit.
Many landlords require prospective tenants to get a renters insurance policy before they're allowed to sign a lease. Having renters insurance helps protect not only you but also any guests who visit. An independent insurance agent can help you find the best renters insurance for your needs.
What Is Renters Insurance?
You may have asked yourself, what does renters insurance do? Renters insurance provides coverage for lost, damaged, or stolen personal possessions. It also provides coverage for injuries to another person that might occur in your rented home, condo, townhouse, or apartment.
For example, if someone gets hurt in your apartment, the insurance company would pay the costs associated with the injury up to the limits of the policy.
What Does Renters Insurance Cover?
Renters insurance provides financial reimbursement to cover a tenant’s lost or damaged possessions as a result of fire, theft, or vandalism. It also covers a tenant’s liability in the event that a visitor is injured on the premises.
Whether the renters insurance or the landlord insurance pays for the costs associated with the injury will depend on the circumstances of the incident, the location on the premises where the injury occurs, and who is at fault.
Renters insurance can also provide compensation for alternative living arrangements if your rented home, condo, townhouse, or apartment becomes uninhabitable due to storm damage or a fire. You can customize your policy to include additional types of coverage, as well.
Basic Renters Insurance Coverage
Renters insurance can shield you from financial harm in a few different ways. You can expect your renters policy to provide three types of coverage:
- Personal property coverage: Covers the costs to repair or replace your belongings if they are lost or damaged by a covered event. Covered hazards include:
- Property crimes, like burglary and vandalism
- Fire, whether it originated in your own home or a neighboring unit
- Severe weather, like hurricanes, thunderstorms, windstorms, blizzards, and hail
- Renters liability coverage: Covers your financial obligations if you unintentionally cause someone else to experience injuries, property damage, or financial harm. It can cover you for things like:
- Injuries caused by your pets or children
- Accidental injuries sustained by visitors in your home that can be attributed to your negligence
- Accusations of libel or slander
- Loss of use coverage: Covers your various living expenses if a covered event leaves your home uninhabitable and you must seek alternative living arrangements while your landlord makes repairs and brings your home back to code.
Renters personal property coverage
Your personal property is protected against many types of disasters by renters insurance, including:
- Fire
- Smoke
- Lightning
- Vandalism
- Theft
- Explosion
- Frozen pipes
- Weight of snow or ice
- Fallen objects
- Aircraft damage
- Riot or civil commotion damage
- Windstorms
- Certain types of water damage
When deciding how much contents coverage to purchase, be sure to consider all of your belongings, including electronics, furniture, clothing, jewelry, and kitchenware. Estimate how much it might cost you to fully replace everything if you experience a total loss.
Your personal property is likely to be covered even if you're away from home. So if you take a vacation and your bag containing your clothes gets stolen, you should have coverage for this property up to your policy's limit. You'd have to pay your deductible, though, so filing a claim might not be worth it unless the value of your stolen property exceeded this amount.
Renters liability coverage
Standard renters insurance policies often include up to $100,000 in coverage for personal liability. If a third party, like a friend, relative, worker, delivery person, or other guest, got injured on your property or got their property damaged while visiting your home, they could sue you. Your personal liability coverage, however, would help pay for your legal expenses, including an attorney, court fees, and settlement fees.
If you have a dog and it bites one of your guests, you might end up with a lawsuit on your hands. Dog bite lawsuits can cost tens of thousands of dollars to settle, so the liability coverage provided by renters insurance is crucial. Also, if you live in a single-family rented home and a third party slips on your icy stairs and injures themselves, your renters insurance's liability coverage could protect you in case of a lawsuit for this incident.
Renters loss of use coverage
Loss of use, or additional living expenses coverage, is provided when you can't make regular use of your home due to a disaster. So if a major disaster like a fire damaged your home and personal property badly enough that you couldn't live there for a while, your loss of use coverage should reimburse you for additional expenses, such as hotel stays, while you wait for repairs to be completed. If you had other additional expenses due to not living at home, such as needing to eat takeout meals or use laundry services, these additional costs should also be covered.
Optional Renters Insurance Coverage
Basic coverage might not be enough for all renters. You'll want to consider the following types of optional coverage when putting together your policy.
- Scheduled personal property coverage: Certain valuable items, like jewelry, art, furs, and collectibles, may have specific coverage limits included in your renters policy. These limits may not be sufficient to cover the loss of a single item or the total loss of all of your valuable items. If your valuables exceed the coverage limits in your policy, you can add a scheduled personal property endorsement, or rider, to your policy. It will cover any noted or “scheduled” items for their full appraised value.
- Medical payments coverage: If a guest or other third party gets injured on your property, you may not only need liability coverage for a possible lawsuit, but you also may need to help pay for medical treatment, an ambulance, a hospital stay, or even a funeral. Renters insurance can help reimburse for these costs. So if a friend or other guest is at your home and trips on an uneven stair or burns their hand in your kitchen, the medical payments section of your renters insurance could help pay for their doctor visits and related bills.
- Water backup coverage: Water can back up through sewers or drains and seep into your home and cause costly damage. Water and sewer backup coverage is not normally included, but if you keep belongings in a basement or lower level of your building, adding water backup coverage to your renters insurance policy may pay for damage to your belongings in these situations.
- At-home business coverage: If you run a business out of your rented home, this can help protect your business property from theft, fire damage, and more.
- Identity theft coverage: This endorsement can help you receive reimbursement for incidents of identity theft that cause financial damage to you.
- Pet damage liability: This endorsement can help ensure you'll receive your security deposit back after damage your pets cause to your rented property's structure, such as through biting, clawing, urinating, etc.
- Earthquake coverage: Coverage for earthquake damage is typically excluded from standard renters insurance. Earthquake endorsements can sometimes be added to your policy to help you receive reimbursement for items damaged by these natural disasters.
- Flood insurance: Flood damage is excluded from standard renters insurance. You can purchase a separate renters flood insurance policy, and in some cases, you may be able to add flood coverage onto your renters policy as an endorsement.
Talk to your independent insurance agent about adding these endorsements to your renters policy today to help greatly extend your coverage.
What Else Does Renters Insurance Cover?
Your renters insurance may also cover the following without any special endorsements:
- Debris removal: If a tree falls on your property and leaves lots of twigs and leaves behind after it's removed, your renters insurance might be able to cover the removal of the debris, as well.
- Building additions/alterations: If you've made additions or alterations to your rented property on your own dollar, your renters insurance may provide a limited amount of coverage (e.g., often up to 15%) for disasters that impact this portion of your property.
- Credit card and check forgery: Your renters insurance may provide limited coverage, up to $1,000 or so, for incidents of being a credit card or check forgery victim.
- Food spoilage: If your food spoils due to an extended power outage or other disaster, your renters insurance may be able to help you replace your food items, minus the cost of your deductible.
- Other people’s property: If you're storing borrowed property at your home, such as a record collection or something else on loan from a friend, and it gets destroyed in a fire, your renters insurance should pay to replace this property as well as your own.
- Items stored elsewhere: Your renters insurance may provide limited coverage for personal property in a storage unit or belongings kept in your car if they get stolen or damaged.
Double-check your specific renters insurance policy to be sure exactly what's covered.
What Renters Insurance Doesn’t Cover
Like most other insurance policies, your renters insurance policy will exclude coverage for certain circumstances and types of claims. Some typical renters insurance exclusions are:
- Floods and earthquakes: Renters insurance won’t cover damage caused by flooding or earthquakes. But you can purchase separate flood insurance and earthquake insurance if you live in an area prone to these events.
- Your roommate’s possessions: Your renters insurance policy covers your own belongings, not your roommates' or anyone else’s (unless it’s your spouse or your child) that’s in your apartment, unless the other person is specifically listed on your policy.
- Damage caused by pests: Renters insurance won’t cover damage caused by pests (rodents, bugs) or the cost of an exterminator.
- Structural damage: Renters insurance is strictly for your personal possessions. It does not cover damage to the physical structure in which you live. Your landlord’s insurance would cover that.
- Expensive items: Remember, your policy may contain limits for certain types of personal property, like jewelry. If you have valuable items that exceed the limits in your policy, you can purchase a scheduled personal property rider to make sure you are covered.
It is important to be aware of what your policy does and does not cover so that you do not face any unfortunate surprises later. When you work with an independent insurance agent, your agent can help you go through your policy and understand when your coverage doesn’t apply.
How Much Renters Insurance Should I Have?
Did you know that the average person has over $20,000 worth of personal belongings? When you consider the cost of electronic equipment, clothes, jewelry, tools, kitchen gadgets, and other personal items, you probably have far more invested in your personal property than you realize.
The best way to determine how much insurance you should carry for your personal property is to create an itemized list of your belongings and their replacement costs.
It is important to determine how much it would cost to replace each item as brand-new. This should give you a ballpark figure for the total amount of insurance coverage you should carry.
To choose the amount of liability coverage you need, consider the potential costs of a liability claim if you were sued for negligence or another person’s loss.
An independent insurance agent can help you assess your needs and risks and choose the coverage amounts that are right for you.
Renters Insurance FAQs
How does renters insurance work?
Renters insurance will help reimburse you for certain losses, such as the cost of stolen or damaged property after a burglary. The amount of compensation you will receive depends on the type of loss and the amount of coverage you have in place.
Certain items, such as jewelry, collectibles, or other valuable items, may have a value limit or require additional insurance coverage to provide full coverage for loss, theft, or damage. You will also be responsible for a deductible, which is an out-of-pocket expense.
If a visitor to your home, condo, townhouse, or apartment is severely injured, that person can file a claim with your insurance company, and your insurer will address the claim.
Is renters insurance necessary?
Renters insurance is necessary if you are renting a home or apartment and want to be sure your valuable possessions are protected from loss, theft, or damage. It protects you in the event of liability claims as well.
You are not required by law to carry renters insurance, but a landlord can require renters insurance in your rental agreement.
Carrying renters insurance protects you and the landlord by ensuring that no matter what happens on the premises, either your renters insurance or the landlord’s insurance will provide compensation.
Why is renters insurance important?
Renters insurance is important because your possessions are not protected by the landlord’s insurance policy. Landlord insurance covers damage to the building but does not protect your possessions.
Another good reason to have renters insurance is for protection against liability claims. The liability portion of your renters insurance will provide compensation if a visitor to your rented home is injured. If that person files a lawsuit against you, your renters liability insurance will also help to cover the costs of your legal defense.
Renters insurance can also cover temporary accommodations if you have to live elsewhere while your rental is being repaired due to fire, smoke, or water damage.
Is renters insurance tax-deductible?
Renters insurance is not tax-deductible except in the following situations:
- You use a part of your residence regularly and exclusively to operate a business. You then may deduct a portion of your renters insurance based on the dimensions of the space where you operate your business relative to the total size of the premises.
- You are an employee and work in both your employer’s office and your rented premises. In this case, you can deduct a portion of your renters insurance in the same manner as a home office. Check with your accountant for complete details.
Does renters insurance cover fire damage?
Renters insurance covers fire and smoke damage after you pay your deductible. The amount of compensation you will receive in the event of fire damage depends upon several factors, including:
- The amount of coverage you buy
- Whether you choose actual cash value (depreciated) coverage or replacement cost coverage for your belongings
- Your deductible amount
In the event of a fire, you will file a claim for the loss, pay the deductible for your policy, and then receive compensation for the remaining costs of your loss, up to the limits of your policy.
Does renters insurance cover theft?
Renters insurance covers your possessions for theft after you pay your deductible amount. Renters policies typically cover your belongings, whether the property you're renting is burglarized or the items are stolen from your car or while you are traveling.
Review the specifics of your policy to determine the circumstances under which you can file a renters insurance claim for theft.
Does renters insurance cover car damage?
Your renters insurance will typically cover your belongings if they are stolen from your car, but it will not cover damage to the car itself. Your car insurance policy provides compensation for vehicle damage, depending on how the damage occurred and the coverage included in your policy.
Does renters insurance cover storage units?
Whether your items are covered if they are damaged, stolen, or destroyed while in your storage unit depends on the specifics of your renters policy.
Some insurance companies do not cover personal items in a self-storage unit, while other companies will extend limited coverage. You can buy additional insurance coverage through the storage facility if it is offered, or through your insurance company.
Does renters insurance cover dog bites?
Many renters insurance policies exclude coverage for certain pets. And some insurance companies will not provide coverage if you have a high-risk dog breed like a pit bull. You may need to get special insurance coverage that covers dog owners liability.
Sources
https://www.iii.org/article/renters-insurance
