Do I Need Renters Insurance? And How Much Should I Get?

Renters insurance is only required if your landlord or building needs it. While it is not needed, anyone renting a long-term dwelling, whether an apartment or a single-family house, should definitely consider getting renters insurance coverage. Renters insurance is a useful tool for most tenants to protect themselves from potentially disastrous financial consequences. However, wealthy tenants require renters insurance as a means of mitigating the financial impact of devastating, unforeseen events.

When is renters insurance required?

Only if your landlord or property management business needs it will you be compelled to obtain renters insurance. Landlords may require renters insurance to reduce the possibility that tenants will sue them for personal property damage or liability fees. It's not uncommon for a landlord to need renters insurance, but fortunately, the finest renters insurance companies make it simple to compare prices and buy a policy online.

My landlord doesn't require renters insurance. Is it worth it?

While an increasing number of landlords and property management organizations require tenants to obtain renters insurance, the majority of people are not compelled to acquire it and choose not to. Even if renters insurance isn't required in your flat, we believe that anyone who rents their house should look into renters insurance. The policy's personal property, liability, and loss of use coverages are useful for mitigating the financial effect of sudden or unforeseen incidents that damage your personal goods or render you legally accountable.

Renters insurance policies cover...

• Personal property damage: If an event covered by your renters insurance damages or destroys your personal possessions, your insurer will reimburse the cost of the damage up to the limits of your policy.
• Personal liability: Protects you against the legal liability of an accident in your home, such as your responsibility for medical costs and lost wages if a guest is critically hurt while visiting you.
• Loss of use: If your home becomes uninhabitable as a result of a covered occurrence, your renters insurance policy will cover additional living expenses.
• Medical protection: Covers reasonable medical bills for anyone injured in your home.

Renters insurance — particularly liability and loss of use coverages — may be more important for people with lesser incomes. Liability damages, in particular, can be a debilitating financial burden for someone who does not have sufficient assets to afford the charges. However, situations or occurrences that result in such losses can happen to anyone. No matter how much money someone makes, they could be held accountable for whatever the cost of damages is, which can be pretty considerable in some situations. The following are some examples of how renters insurance is generally a valuable buy that is well worth the price, regardless of who you are.

Renters with pets: Consider a tenant who does not have renters insurance and whose dog strikes someone. Typically, liability coverage in a policy would cover any damages (including medical bills) caused by a dog bite. However, if they did not have it, they would have to pay for those out of pocket. The average cost of a dog bite claim in the United States is around $35,000, which may be financially ruinous for many tenants and a big expenditure for the majority.

Wealthy tenants: Even wealthy tenants with large savings might benefit from renters insurance. Although wealthy renters may be able to settle liability claims and modest property damage out of pocket, in extreme cases, tenants may be uninsured for large damage charges to their personal items. These expenses could be covered by a reasonably priced renters insurance policy.

Renters forced out of their homes: Renters insurance can also assist tenants who are unprepared for a disaster that renders their home uninhabitable. If your flat or home is ruled uninhabitable due to a covered incident — say, smoke damage — you will be forced to pay out of pocket for any living expenditures that exceed their regular spending limits if they do not have renters insurance. You will have loss of use coverage with renters insurance, which covers the costs of living above your typical expenses — such as hotel stays, food, and special transportation — that you will need to continue to live until you return home or locate a new permanent abode.

College students who live off-campus: Many college students should think about purchasing renters insurance. Anyone living in a college or university dorm is probably protected by their parents' homeowners or renters insurance policy. However, every college student who lives off-campus requires their own policy.

How much renters insurance do I need?

The key choice you will make when considering how much renters insurance is enough is determining the limits of your personal property coverage and your liability coverage. We recommend that you obtain adequate personal property coverage to cover the worth of your things, as well as at least $100,000 in personal liability coverage. These two features cover tenants' most significant financial risks and will, in most cases, be the primary drivers of policy costs.

Frequent misconceptions about renters insurance

There are some popular misconceptions regarding renters insurance that may deter tenants from getting coverage. We've identified and debunked a few of them below.

Misconception: My landlord insures my personal property

Contrary to popular belief, tenants' landlords or management companies do not cover them or their personal belongings. In most cases, a landlord's insurance only covers the building or unit in which you live. Renters are completely responsible for insuring their personal property, liabilities, and loss of use fees.

Misconception: My possessions aren't valuable enough to warrant renters insurance property coverage

Failure to obtain renters insurance because you do not have many belongings is a mistake for two reasons: Almost everyone's personal belongings are worth more than the estimate, which excludes the value supplied by liability and loss of use insurance. According to Allstate, the average value of assets for a normal two-room apartment is around $30,000. When you assess the value of your possessions, you may be shocked at how much they are actually worth. Even if a tenant has no personal property, the additional coverage features make renters insurance desirable.

Misconception: I don't need liability coverage

Regardless of how cautious a tenant believes they are, they should carefully consider the safety afforded by liability insurance. Too many renters assume they don't need liability insurance because they rarely have guests or believe the possibility of someone injuring themselves at their property is nearly non-existent. This type of self-assurance is risky. Accidents happen — your dog may bite a visitor, or a visitor may slip and fall on your stairway — and it's important to be ready for everything.

Misconception: Renters insurance is expensive

While homeowners, earthquake, and flood insurance can be costly, renters insurance is quite inexpensive. The average yearly renters insurance premium in the United States is $187, which is significantly less than the average annual homeowners insurance policy cost of $1,083 per year. Prices vary, but a conventional renters insurance policy with $30,000 in personal property coverage and at least $100,000 in liability protection (including loss of use and medical costs coverage) may readily be acquired for $20 per month or less.

Overlooked benefits of renters insurance

Aside from the obvious coverages and benefits of renters insurance, there are several lesser-known features that may persuade tenants that it is a worthwhile investment.

Coverage add-ons: Just like home insurance, renters insurance policies can be supplemented with endorsements and floaters to increase personal property coverage. Jewelry, furs, technology, collections (such as baseball cards or stamps), and seismic protection are all common endorsements and floaters. Without a renters insurance policy to which to attach endorsements and floaters, a tenant would have to have a specialty policy underwritten for any given item, which would almost certainly be significantly more expensive.

Your coverage applies outside your residence: Personal property and liability coverage travels with a renter, allowing them to relax with their things no matter where they're carting them. The limits of a renters insurance policy remain in effect, but the coverage is undoubtedly preferable to none. While travelling, it is simple to misplace a necklace or watch, and these goods may also be more vulnerable to theft (and thefts are covered by renters insurance).

Renters insurance protects you for short-term rentals: Renters insurance protects policyholders and their personal belongings from harm caused by short-term renters, such as Airbnb guests. Home-sharing is a terrific way to generate some additional money, and renters insurance provides an extra layer of security in the event something happens to their visitors or belongings as long as the renter follows the requirements of their policy.