Everything You Need to Know About Renters Insurance

Getting ready to rent an apartment? Then now is the time to consider renters insurance. Some landlords and management companies require their tenants to acquire renters insurance as part of their lease terms, while others have no preference one way or the other. Either way, it’s always smart to know what your options are when it comes to renters insurance, as well as to do your research so that you have a better idea of what to expect. To help you out, we’ve put together this handy explainer on everything that you need—and want—to know about renters insurance. Let’s get to it.

What Is Renters Insurance?

Renters insurance (sometimes referred to as tenants insurance) is a monthly policy that covers you and your valuables while you’re renting an apartment. Think of it almost like mini-homeowner’s insurance, with protection that reduces your liability in the case of a certain unforeseeable events like burglaries, guest injuries, and natural disasters. Unlike homeowners insurance however, renters insurance doesn’t provide any structural coverage—the onus is still on your landlord to properly insure your unit itself.

To put it simply, renters insurance covers the things in your apartment, and not your apartment itself. So if a pipe bursts in your building and your stuff gets destroyed, or if another tenant’s party guest makes off with some of your valuables, you’ll have recourse for reimbursement.

As with all insurance, however, there are limits to coverage. Your individual policy will spell out the specifics, but expect there to be an overall limit that caps the total amount you can be reimbursed through your renters insurance, as well as per-item limit that limits how much you can be reimbursed for any one specific item.

What Renters Insurance Covers

Renters insurance covers the belongings that you keep inside your apartment, as well as your personal liability if someone is injured in your unit and you are found responsible for that injury. It will also usually cover your short term housing and moving expenses if you are unable to stay in your rented home for certain reasons, such as a fire in your unit.

Instead of breaking down what renters insurance covers into specific items, it’s more helpful to look at the types of situations that these policies apply to. Similar to homeowners insurance, not all causes of damage are considered equally.

In general, a good renters insurance policy will cover damages to your belongings due to:

    • Theft
    • Vandalism
    • Fire
    • Falling objects
    • Freezing
    • Water and steam damage (not including floods)
    • Smoke
    • Tornadoes
    • Windstorms and hail

    This is not an exhaustive list, so be sure to read over your specific policy carefully so you know exactly what you can expect.

    What Renters Insurance Doesn’t Cover

    Just as important as knowing what renters insurance covers is knowing what it doesn’t cover. And here again it is quite similar to homeowners insurance, since left off the list above are two key types of situations: floods and earthquakes.

    If you’re renting somewhere that you need to be worried about either of these two types of natural disasters, then you’ll want to look into purchasing separate policies for coverage. Flood insurance for renters is available through many private insurers, as well as the National Flood Insurance Program (NFIP). And earthquake insurance can often be added on as a supplement to your renters insurance via the same company you purchase your original renters policy through.

    How Much Renters Insurance Costs

    You’ll be glad to know that renters insurance is actually quite affordable, with an average policy cost of just over $15 per month and reputable policies often available for half that. The yearly cost for renters insurance ranges from a low of $114 to a high of $262, according to the National Association of Insurance Commissioners (NAIC).

    There are a few different variables that can affect how much you pay in renters insurance. These include the location that you’re renting in (both your state and your specific neighborhood) and the size and type of building that you’re renting in. As with most things, it pays to do your research when looking for a renters insurance plan and to get multiple quotes so that you can be sure to get the best deal possible.

    Renters Insurance and Moving

    Renters insurance won’t cover your standard moving costs, but if your policy start date goes into effect before moving day it will cover your belongings during transit—to a degree. So while you won’t be able to file a claim for your laptop if you drop and break it while moving, you will be able to do so if someone steals it off the truck.

    Renters Insurance and Storage

    Some renters insurance policies do cover items in storage under what is called “off-premises coverage.” That being said, the reimbursement limits are often lower than they are for items within the actual place that you are living, and there may be a time limit on how long items in storage are covered—for example, only within one month of your move.

    Renters Insurance and Pets

    Notably absent from the list of things that renters insurance covers is damage related to pets. So if your cat scratches up the door frames in your apartment and your landlord asks you to have it fixed, it will be on you to cover the costs.

    A caveat to this is personal liability, with some renters insurance policies covering pet-related damages to guest property when they’re on your premises. As for if your policy will cover pet-related injuries like dog bites, chances are probably no, since these types of liabilities are not generally covered under renters or homeowners insurance.

    Cash Value vs. Replacement Cost Value

    There are two different ways that renters insurance can reimburse you for accepted expenses: cash value payouts and replacement cost value payouts.

    Cash value payouts reimburse you at the actual cost value of the item in question. Keep in mind however that depreciation is considered when determining value—a five year old TV, even if it was expensive when you purchased it, is not going to be valued the same as a new TV that is just as nice.

    Replacement cost value payouts reimburse you in the form of new items that are of “like kind and quality” to the item in question. So instead of giving you cash for that aforementioned five year old TV, you’ll either get the repairs of your TV covered or you’ll get a new TV that is similar in features.

    Check with your policy holder to learn about their specific method of payouts. You may have an option, or you may be relegated to just one type.

    How to Get Renters Insurance

    Your first step in getting renters insurance is figuring out exactly what kind of coverage and how much coverage you need. Take an inventory of the belongings that you’ll be keeping in your apartment. The more things you have and the higher their value, the more coverage you’re going to want.

    From there, do some research to find a company you like. You can go through many standard insurance providers or you can opt for specialty renters insurance start-up companies like Lemonade or Young Alfred.

    Again, your best bet is to get multiple quotes. Consider the premium when making your decision, but also look at coverage amounts and deductibles. It might be worth paying a slightly higher premium if it means a lower deductible and more comprehensive coverage.