Renters insurance is a great deal. For between $120 and $300 per year, your insurance will help replace the cost of belongings lost to acts of nature, theft, fire, etc. A tenant and their landlord may follow all the fire prevention tips, for example, but fire may still happen. So, it’s best not to risk it. Here’s everything you need to know to make an informed decision.
What is Renters Insurance?
Renters insurance covers your belongings and provides liability coverage for tenants living in properties they don’t know. It’s also known as tenants insurance or HO-4 policy. While similar to homeowners insurance, Renters insurance is much cheaper because it only covers your possessions and not the property.
Besides covering your property, renters insurance also covers the cost of temporary relocation while repairs are performed and includes liability if you’re sued for negligence.
Do You Need Renters Insurance?
Although it’s usually on the tenant to decide whether they purchase renters insurance, some landlords do require proof of renters insurance before the lease is signed or that renters insurance be bought around the time the lease is signed.
Some examples of what renters insurance covers include:
Some homeowners insurance covers dependents sufficiently enough that college students don’t need renters insurance. These policies may only cover students living in on-campus housing and may be limited to a certain amount, so it’s essential to check.
What Events Are Covered by Renters Insurance?
Renters insurance tends to cover your possessions in the event of the following types of events:
- Fire or lightning
- Windstorm or hail
- Riot or civil commotion
- Damage caused by aircraft
- Damage caused by vehicles
- Vandalism or malicious mischief
- Volcanic eruption
- A falling object
- Ice, snow, or sleet
- Water or steam caused by household systems or appliances
- Sudden and accidental tearing apart, cracking, burning, or bulging of specific household systems
- Freezing of specific household systems or appliances
- Certain sudden, accidental damage from artificially generated electric currents
Does Renters Insurance Cover Additional Living Expenses?
Yes, during repairs, your insurance should cover:
- Hotels or Motels
- Moving costs if repairs take a very long time
- And more
Does Renters Insurance Cover Items Outside Your Home?
Renters insurance also covers your possessions when they’re out of the house. So if your bike is stolen when it’s chained to a fence or your iPhone gets yoinked while it’s sitting beside you at a coffee shop, you’ll be compensated.
There are some caveats:
- Your deductible will apply
- There’s a limit to how much of your coverage applies when you’re outside your property (usually 10% of your personal property limit)
Does Renters Insurance Cover Items Stolen Out of Your Car?
Usually, yes. However, it won’t cover the cost of damage to your car. Your car insurance should take care of that.
Does Renters Insurance Provide Liability Coverage?
Renters insurance also provides liability coverage in the following scenarios:
- If someone sues you because they were injured or experienced property damage in your home.
- If you or your family accidentally damage others.
- Some policies cover dog bites on or off your property, depending on the breed.
- Renters insurance usually covers legal representation and any money lost in a suit.
- No-fault medical payments if someone is hurt on your property, whether you were the cause or not.
Does Renters Insurance Cover a Storage Unit?
Most policies do. Although, you may get less coverage, just as if your property were damaged or stolen outside of the house. Usually, 10% of your policy max. Consider raising your personal property limit, getting a separate policy, or getting insurance through the storage company if your storage coverage is insufficient.
Does Renters Insurance Cover Mold?
Only if the mold is caused by a sudden emergency, like a burst pipe or roof damage caused by a hurricane that leads to mold growth. Your coverage won’t apply if the mold has been slowly growing for a while because you have poor ventilation.
Does Renters Insurance Cover Broken Windows?
It would have to be because of a sudden emergency. Falling objects are covered, so if a tree limb breaks your window because of a storm, you’re in the clear. But if you break your window trying to get into your home because you forgot your keys, then you’re out of luck.
Your liability coverage may kick in if you accidentally break someone else’s window.
Does Renters Insurance Cover Property Damage Caused by Pets?
No, if your dog pees on the carpet or your cat scratches up your door, that’s on you to repair.
What Are the Reimbursement Options for Renters Insurance?
With renters insurance, you’re likely to get the following two reimbursement options:
Cost of Replacement Policies: These cover the cost of getting replacements for your damaged or stolen goods. So, if your laptop is stolen, you’d get enough money to buy a new, similar version of your laptop.
Actual Cash Value Policies: These cover the cost of replacing your possessions based on their value when they were stolen or damaged. So, if your two-year-old laptop is stolen, you’d get enough to cover the cost of a two-year-old laptop. To get a new laptop, you’d have to pay the remaining cost.
Does Renters Insurance Cover Valuable Items?
Policies usually cap the amount that they’ll pay for valuable items such as jewelry and electronics. If you want coverage for more expensive items, you may need to get what’s known as a rider, endorsement, or floaters. A professional appraisal may be required for these item-specific policy add-ons. That means a rider may be necessary to cover the replacement of an heirloom necklace.
What’s Not Covered By Renters Insurance?
The following types of events aren’t covered by renters insurance:
- Flood or earthquakes
- Except for USAA, which is only available to active military, veterans, and their families.
- You can get flood insurance as a separate policy from any insurer that’s a part of the National Flood Insurance Program.
- Earthquake insurance is available separately or as a rider.
- Other infestations
- Roommates’ possessions won’t be covered unless you’re all on the same policies.
- This is not allowed by all states or insurance companies.
- You’re usually best off having separate policies.
How Much Renters Insurance Do I Need?
The more you might lose, the more coverage you’ll want. Consider:
- How much stuff you have
- Your savings
- What your other assets are worth.
You can consult home inventory apps to itemize your possessions. This can help you choose a plan and file a claim.
Liability limits range between $100,000 and $500,000. You’ll want enough to protect current assets, savings, and vehicles. These count toward your net worth and could be lost during a lawsuit.
Are There Discounts for Renters Insurance?
There are discounts for renters’ insurance.
- Bundle your auto and renter’s insurance policies.
- If your property has a security system, smoke detectors, or deadbolts.
- Have good credit
- Stay with the same insurer
- Are over 55 years old
You can also raise your deductible, which is the number subtracted from your insurance claim. If your deductible is $1,000 and your claim is $5,000, your insurance check will be $4,000. The greater your deductible, the more affordable your premium.
To decide what your deductible should be, consider how much you can afford to pay in the event of an emergency. Remember that you pay the deductible every time you file a claim and that the rate will probably go up after every claim.
There’s no deductible liability claims against you, extra living expenses claims, or riders for valuable possessions.
How do You Get Renters Insurance?
Get quotes from at least three companies.
Most often, you can get your quote online or over the phone. Most major U.S. insurers sell renters policies, but some startups offer coverage fast, have apps, and low rates.