Renters insurance is a type of homeowners insurance, called HO-4, that protects renters from fire, storm, theft, or damage to personal property. Your landlord has insurance covering the building and structure, but you are responsible for the contents of the rental unit.
According to Value Penguin, renters insurance protects renters from unprotected personal property damage or theft and the cost of legal liability.
Unlike auto insurance, renter insurance is not required by state law. Only 37 percent of renters have renters insurance, according to the Insurance Intelligence Institute.
Just like home insurance, a tenant’s insurance policy is often multifaceted. Liability insurance, property protection, and even extra living expenses if your rent is temporarily uninhabitable.
For example, if a visitor slips in your apartment and decides to sue you for an injury, your renter’s insurance policy will protect you from liability. Liability insurance also helps cover any damage to the building caused by you or your guests.
Is it worth having renters insurance?
Renters insurance is worth buying because it can protect you from the unexpected at an affordable price. With a renter’s insurance policy, you’ll pay a reasonable fee now—about $16 a month on average—to protect yourself from huge and unpredictable future expenses.
The benefits of having renters insurance come from its diverse coverage, which insures you against the following injuries.
- Personal property damage: The average renter owns $20,000 to $30,000 worth of goods, depending on the major insurance company. If your personal property is stolen or destroyed due to a covered peril, such as a fire, renters insurance will cover the damage up to the limits you specify.
- Personal liability: If you are liable for bodily injury or property damage, renters insurance covers the cost.
- Additional Living Expenses: If your rental home or apartment becomes uninhabitable due to covered hazards, a renters insurance policy will cover expenses beyond your normal expenses. This ensures that your budget stays the same, even if you temporarily live elsewhere.
- Medical Expenses: This feature covers medical expenses for guests injured on your property, usually up to several thousand dollars.
All of these features provide coverage far beyond the annual premium you will pay. For example, a typical renters insurance policy will cover $30,000 in personal property damage and $100,000 in liability expenses, and these limits can be adjusted to suit your needs. As a result, your level of coverage is well above the average renter’s insurance policy of about $190 per year.
Do I need tenant insurance?
Also known as tenant insurance or an HO-4 policy, tenant insurance covers many of the same situations — such as fire and theft — but it’s much cheaper because it only covers what’s inside your home, not the structure itself.
A renters insurance policy can also help renters who are not prepared for a disaster that makes their home uninhabitable. For example, if your apartment or home is deemed uninhabitable due to a covered event like smoke damage – if they don’t have renters insurance, you’ll have to pay out of pocket any living expenses above their typical spending levels. With renters insurance, you get loss-of-use insurance that covers living expenses beyond your normal expenses—such as hotel accommodation, food, and special transportation—that you need to continue living until you get home or find a new permanent home.
What does renters insurance cover?
Renters insurance is insurance for renters. This type of insurance protects against the loss of personal items such as;
- TV or entertainment system
- a computer
- music or sports equipment
How much is renters insurance?
The average cost of renters insurance is about $15 per month or $180 per year. Some of the factors that determine your premium are the amount of coverage you want, where you lived when you had your pet, and your credit score. If you already have existing auto insurance, you may get a discount from your provider because you’re bundling renter and auto insurance together.
If you happen to live in an area prone to disasters such as floods, hurricanes, tornadoes, wildfires, mudslides, and earthquakes, you may have to pay a premium because they are not covered by basic insurance.
How many renters insurances do I need?
Your renter’s insurance premium depends on the amount needed to replace your item. Renters’ insurance policies cover up to a certain amount, usually worth about $20,000 or $30,000. Determining the value of your belongings will help you decide how much coverage to get.
How to get renters insurance
Just like auto insurance, renters insurance prices vary by state. Where you live will play an important role in your offer, and each company will consider this differently.
To make sure you get the best price on renters insurance, you’ll want to shop online and get quotes from several different insurance companies. Compare offers and find the most coverage types and limitations. Then, look for the lowest premium that fits your budget. If you have auto insurance, consider bundling your renter and auto insurance.
To get your coverage, you need to take the following steps:
Step 1 – Find out what is covered by renters insurance
The coverage of renters insurance can generally be divided into three main types of coverage:
Personal property insurance:
This covers everything in your home, from furniture to jewelry. Coverage pays for repairs or replacements when a problem covered by your policy causes them to be stolen or damaged.
When you are legally responsible, this applies to injury or property damage caused to others. For example, if a guest is injured in your apartment, liability insurance will pay for medical expenses. Liability insurance can also cover your legal defenses if you are sued for an accident.
Additional Living Expenses (ALE):
Sometimes called “loss of use,” ALE pays for your hotel bills, restaurant meals, and services like pet boarding or laundry if you’re unable to live in your home because of a policy-covered issue.
Step 2 – Find out the coverage amount
The next step is to find out how much renters insurance you need. The best way to start is to create a housing inventory.
A good home inventory will contain:
- Description of the project (or project group)
- estimated value
- purchase date
- Receipt and serial number (if possible)
You can use an app, such as the National Institute of Insurance Commissioners’ Home Inventory app (available on the App Store or Google Play).
Now that you’ve got everything in one handy list, summarizing the total estimated value, you can get a rough estimate of how much personal property insurance you’ll need. A typical amount is $20,000 or $30,000, but you can buy more if needed.
Step 3 – Compare renter’s insurance prices
The best way to buy renters insurance is to compare quotes from multiple insurance companies. You can get a free quote online or by calling an independent insurance agent.
But don’t rely strictly on price. The best rental insurance companies combine competitive pricing with good customer service.
What does renters insurance not protect?
A renters insurance policy does not provide coverage if your belongings are damaged in certain events. Natural disasters such as earthquakes and floods are generally excluded, but there may be specific policies for these events. Other events may not be covered by your policy. You should always review your policy documents and contracts for safety.
Specific coverage limitations for items such as jewelry, art, and antiques may also apply. Make sure to choose enough coverage to protect your belongings.
What if I don’t have renters insurance?
Without renters insurance, you will not be able to recover lost items. Your landlord will file a claim against his or her insurance policy and use the money for repairs and renovations. However, this policy does not extend to your items in any way.