What does renters insurance cover?

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Young roommates preparing food in apartment

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Renters insurance is a policy used by tenants to protect their belongings when damage occurs within the rental property. While many people believe this coverage is an extension of landlord’s insurance or hazard insurance as part of the homeowner’s policy, renters insurance actually requires its own separate policy through the tenant.

Luckily, getting renters insurance doesn’t cost a lot of money and actually comes with a number of benefits that protect you as a renter.

What is renters insurance?

Renters insurance is a type of insurance policy designed for individuals who live in a rented apartment, house, or condo. In addition to protecting your personal property in the event of damage or loss, you also get liability protection in case someone is injured while at your home.

Some renters insurance coverage also includes living expenses in case your home becomes unlivable. Your landlord’s insurance covers things related to the building’s structure, but you could have a problem if you can’t live there while repairs are being made. With many renters insurance policies, however, you can get reimbursed when you have to stay elsewhere for a temporary period.

Types of coverage

Renters insurance covers personal property and may also include liability insurance that protects you from getting sued in the event someone is injured on the property. The most common events are covered by a broad form policy. So what does renters insurance cover? And what isn’t covered? Check out the table for an overview of what’s typically covered or not covered by renters insurance.

Covered by renters insurance Not covered by renters insurance
Fire Floods
Lightning Earthquakes
Explosion Sinkholes
Smoke Pests (including bed bugs)
Vandalism Vehicle damage or theft
Theft Roommate’s belongings (unless they’re listed on your policy)
Water-related damage from utilities Amounts over claim limits for each category of possessions

For renters living in areas that are prone to certain types of environmental events, such as hurricanes, you can opt for a comprehensive form of renters insurance that adds on coverage for these specific incidents. This additional coverage is often referred to as a rider or floater because it works alongside the basic broad form policy. You may also need additional coverage when you have certain breeds of animals as pets.

Understanding your coverage

When searching for the best renters insurance available, expect to pay on average between $10 and $25 each month. The cost varies based on where you live and how much coverage you receive. You can also pay more to protect more expensive property.

For example, if you own expensive electronic equipment or fine jewelry, check the limits to see how much coverage you’re eligible for in each category. If the value of your possessions exceed the limits, consider purchasing additional coverage. It’s a little more expensive and you may need to get certain items appraised, but it could be worth the extra time and effort if something is stolen or damaged. You can also use a home inventory app to easily track what you own and simplify the claims process.

Getting reimbursed

Another factor to be aware of when evaluating policies is whether your plan covers the cash value or replacement cost of the items. The difference is that getting reimbursed for the cash value of your belongings considers the age of the property and covers what it would be worth today. For instance, if your three-year old Macbook gets destroyed in a fire, you’ll be reimbursed for the cost of buying the older model today rather than a brand new model.

When your renters insurance covers the replacement cost, you instead get reimbursed for buying the item new in today’s market. It’s better coverage, but of course results in a higher monthly premium. As with any financial decision, you need to weigh the value of your belongings against how much you’re willing to spend if you have to replace some (or even all) of them because of a life-changing event.

Comparing deductibles

Every renters insurance policy comes with a deductible, which is the amount you’re required to pay before your coverage kicks in. A common deductible amount is $500. That means if your apartment is flooded, for example, and there’s $1,000 in damage, you’d first have to pay your $500 deductible out of pocket and would only be reimbursed for the remaining $500 of the damage claim. Check this number for each policy you consider. You may have a lower deductible with a higher premium, or vice versa.

Qualifying for discounts

Some renters insurance policies offer discounts when you bundle with other types of insurance, like your auto insurance. You can also save when your rental has certain safety features, such as a security system, deadbolts, a sprinkler system and fire extinguishers. If you don’t see any discounts advertised with the insurance company, be sure to ask before selecting a policy.

The bottom line on renters insurance coverage

Renters insurance is an inexpensive way to protect your belongings when you don’t own your home. With customizable rider policies, you can easily get the perfect amount of coverage to truly safeguard your most prized possessions. Not only that, many lease agreements actually require renters insurance coverage. Be sure to protect yourself in more ways than one by getting the right policy for your individual needs.