A renters insurance policy can protect you if you experience fire, theft, or another covered peril. Before purchasing a policy, read our guide to learn what renters insurance is, what it typically covers, and how much it costs.
Renters insurance protects you and your belongings if an unexpected event were to occur to or in the apartment, condo, or house you rent. Covered perils like fire, pipe leakage, or theft can cause thousands of dollars in damage, and a renters insurance policy can help you cover that cost. Keep reading to learn more about renters insurance and its benefits.
What Does Renters Insurance Cover?
Before opting into a renters insurance policy, look for these coverage elements:
- Loss of personal property—This part of the policy protects damage to your personal belongings caused by events out of your control, such as theft, fire, and smoke.
- Loss of use—If the property you’re renting is damaged enough that you have to leave it while it’s getting repaired, your policy will cover additional living expenses up to a certain amount. This may include the cost of a hotel room or temporary rental and may even cover the cost of food.
- Liability—This portion of your policy covers damage caused to someone else. If you’re held legally responsible for an accident that occurs on your property, your policy will cover bodily injury and property damage for that person. Examples of this may include if your tub overflows and causes water damage to the apartment below you or your dog accidentally bites your neighbor.
- Medical payments to others—If someone gets injured in your residence, your insurance provider will pay for their medical bills. Note: this clause may only be used for injuries to other people.
- Endorsements—This additional coverage is optional and requires an additional fee every month and may include identity theft services, personal injury, and protection for electronics and jewelry.
What’s Not Covered Under Renters Insurance?
There are certain situations that a renters insurance policy won’t cover, such as:
- Natural disasters—Most renters insurance companies won’t cover damage from natural disasters, like earthquakes and hurricanes.
- Property damage caused by pests—If you get a termite or bed bug infestation, your renters insurance policy won’t cover the costs associated with the damage.
- Items of high value—Items worth a lot of money, like an engagement ring, won’t be protected under a policy. However, you can purchase an endorsement to extend your replacement cost coverage to more expensive items or take out a separate ring insurance policy.
How Much Does Renters Insurance Cost?
A 2019 study done by the Insurance Information Institute, a trusted source of unique, data-driven insights on insurance to inform and empower consumers, found that the average renter paid $180 for renters insurance in 2017, which is equal to a payment of $15 per month.
Here are some factors that will increase or decrease the cost of your policy:
- Location—Where you live may increase or decrease the price of your policy. For example, a state with a higher cost of living and a higher likelihood of natural disasters may cost more than a state that doesn’t experience many natural disasters.
- Credit score—A high credit score is a sign of financial health to insurance companies, so your rate could be lower than those who have a low credit score.
- Amount of belongings—If your personal belongings are worth a considerable amount of money, you may have to buy a more expensive insurance plan to cover the full cost of your items.
- Level of coverage—The price of your policy will increase if you want to add on endorsements like identity theft and scheduled personal property.
- Deductible—Insurance companies typically allow you to choose the amount you want to pay when filing a claim to use your policy. The lower the deductible you choose, the higher your monthly or annual premium will be.
- Claims history—If you have a history of filing claims with insurance companies, a renters insurance provider may be wary of protecting you and could charge you more with the expectation that you’ll eventually file a claim with them.
- Safety features—A renters insurance provider may give you a discount for including extra safety features, like smoke detectors and fire extinguishers, because those features may decrease the amount of damage done to your property.
- Pets—Pets often increase renters insurance rates for liability reasons. For example, you could be sued if your dog bites someone.
- RCV vs. ACV—Replacement cash value (RCV) is a type of policy that will pay replacement costs as if your belongings were new. This type of policy will cost more than an actual cash value (ACV) policy, which takes into account the depreciated value of those items.
How Does Renters Insurance Work?
Once you buy a renters insurance policy, your coverage will begin immediately—this differs from other protection policies, like a home warranty, that has a waiting period before you can file a claim.
When damage occurs, your first move should be to file a claim with your insurance provider. Most companies will have a customer portal or specific phone number to contact for filing a claim. If your claim is approved, you pay the deductible in your contract, and your provider will guide you through the next steps for handling your situation.
Note: Coverage limits do exist, so if the damage costs more than the amount your provider is willing to pay, you assume the rest of the cost.
Is Renters Insurance Necessary?
Renters insurance is not required by law, but some landlords may require you to have a policy. Even if you’re renting from a complex that doesn’t require renters insurance, we recommend buying one to protect you if the unexpected happens. Here are just a few benefits of renters insurance:
- Low monthly premiums—An entire year’s worth of protection can cost the same as two or three months of auto insurance. For a low monthly premium, your provider will cover damages to your property and belongings for you.
- Coverage away from home—A little-known secret of renters insurance is that it protects your personal belongings even when you’re not at home. For example, if your laptop is in your car and someone breaks in to steal it, you can file a claim with your renters insurance company to receive coverage.
- Peace of mind—Even if nothing were to happen while you rent, having a renters insurance policy can provide peace of mind that if a covered peril were to occur, you’d be covered.
How Much Renters Insurance Do I Need?
The This Old House Reviews team gathered quotes from eight of the top national renters insurance companies to determine how much renters insurance a customer should buy.
- $30,000 personal property—This is an estimate from usnews.com on the amount of personal property the average renter has in their home. You may be able to get up to $100,000 worth of personal property coverage.
- $6,000 loss of use—This covers $6,000 worth of living expenses when you temporarily leave your rental property, which is 20% of your personal property coverage.
- $100,000 liability—Most landlords require at least $100,000 of liability insurance, but you can increase this amount to $500,000.
- $1,000 medical payments—This covers $1,000 worth of medical bills for each person that is injured in an incident. Most companies allow you to increase this amount to up to $5,000.
- $500 deductible—This is the standard deductible amount, but some renters insurance companies will allow you to go down to $250 and up to $2,500.
How Can I Find a Renters Insurance Policy?
Finding the right renters insurance policy can be a daunting task, but there are a few tips to make your search easier:
- Take an inventory of your belongings—Before searching for coverage, know how much coverage you need. Take inventory of your personal property and do some research to see how much those belongings are worth.
- Consider named-peril vs. all-risk policies—Named-peril policies list the specific scenarios in which you can use your policy, while all-risk policies allow you to file a claim for any situation except the ones listed as exclusions. Decide which type you prefer so that you can eliminate the providers that don’t provide this type of coverage.
- Start with your auto insurance provider—Insurance companies often give you a discount for bundling renters insurance and auto insurance, so if you’re happy with your car insurance provider, look into a renters insurance policy with them.
- Consider an independent insurance agency—Independent insurance agents spend their days doing research on the insurance industry, so working with them can save you time and money.
- Compare quotes—By getting quotes from several companies, you can compare prices and coverage to find a plan that works for you.
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