The Ins and Outs of Renters Insurance Coverage

While renters insurance is not mandatory, more landlords require it as part of the lease agreement.

Even if your landlord does not insist you have renter’s insurance, there are some great reasons to get one.

In this article, we’ll discuss the benefits of renters insurance, how it differs from homeowners insurance, what is typically covered and what is not, and the typical costs involved (which are probably less than you think).

Renters Insurance & Why Tenants Need It

Renters insurance is a policy designed to protect tenants from losing their personal belongings and liability while renting a home.

The property owner will have homeowner’s insurance, which covers the building and the homeowner’s belongings, aka chattels, like the Kitchen fittings and features.

As you might expect, since tenants don’t own the building or the land they live on, insuring the property isn’t their responsibility—it’s the homeowner’s. If they are leasing out their home, they are known as landlords.

The tenant’s personal property will include their bed, TV, and other personal furnishings, as well as their liability within the rented space—i.e., the apartment or house and gardens.

Policy components

Renters insurance usually has three core components: coverage for incidents, injuries, and living assistance when required.

Incidents

Renters insurance covers your belongings, such as furniture, clothing, electronics, jewelry, and whatever else you wish to add to the cover because it is in the rental property.

Like other insurances, this covers your belongings against theft, fire, and natural disasters.

Renter Insurance providers tailor their policies so they are not all the same. As such, it is essential to read the terms of the agreement and know what is and is not covered by your policy.

Liability

Secondly, you’ll have liability coverage if someone is injured while in your rental unit or if you damage someone else’s property. Renters insurance can help cover legal fees and medical costs.

Temporary Assistance

Finally, and this is probably the most minor well-known feature of a renter’s insurance policy, you’ll have assistance with living expenses and temporary housing should your rental unit become uninhabitable due to natural disasters or fires.

Remember that some policies may have more features, so it pays to do your research and choose a renter’s insurance policy that covers your requirements.

Does My Landlord’s Insurance Cover Me?

If money is particularly tight, you might wonder if your landlord’s homeowners insurance will cover you in case of a mishap. Unfortunately, the answer is no.

A landlord’s insurance policy covers the building itself and any property owned by the landlord but does not cover a tenant’s personal property.

You also aren’t afforded personal liability coverage by the landlord’s insurance. If a fire, theft, or other incident damages or destroys your belongings inside the rental unit, and you don’t have renters insurance coverage, you’re out of luck.

What Renters Insurance Does and Doesn’t Cover

Typically covered in a renters insurance policy are the following:

• Your personal belongings in case of theft, natural disaster, or other known peril;
• Medical expenses, court judgments, and legal fees in case of a liability claim against you;
• Additional living expenses (hotel bills, restaurant meals, etc) if you’re subject to temporary relocation due to a covered event;
• Medical payments to others if someone is injured while in your rental unit.

Typically not covered in renters insurance are the following:

• Natural disasters like floods and earthquakes
• Expensive artwork, jewelry, etc
• Pest damage

Standard renters insurance policies, much like homeowners insurance policies, don’t cover damage caused by floods or earthquakes. You’ll need an endorsement or separate policy to cover this, like a homeowner.

Costly valuables such as jewelry or artwork may require an additional endorsement or rider to your policy.

Damage caused by bedbugs, rodents, and other pests is typically not covered by insurance; tenants are usually responsible for pest control.

Finally, you may find your valuables aren’t covered for the full replacement cost of items but rather their depreciated value, which could be significantly less than the price you paid for them. You may want to consult with your insurance company to discuss increasing your coverage.

How Much Does Renters Insurance Cost?

The good news about renters insurance is that it can be highly affordable. While the cost of renters insurance can vary based on the value of your belongings, location, coverage amount, and other factors, the average cost of renters insurance in the US is still very low.

According to numbers from Ross Martin at insurance comparison platform The Zebra, your average monthly premium for renters insurance is $19.

The cost also varies depending on the insurance company and the policy. For example, if you choose Allstate, you could pay as much as $31 a month, while choosing USAA might get you a rate as low as $15 a month. Your monthly premiums will likely be very low, even with additional endorsements/riders or a low deductible.

Final Thoughts

Not everyone thinks of having insurance when they rent, perhaps thinking insurance coverage is only for homeowners. But renting instead of owning makes it all the more important to ensure your belongings are covered against damage, destruction, or theft.

With the premiums being so affordable, renters insurance is one of the smartest investments a renter can make.