What is Renters Insurance?
Renters insurance is a type of insurance that is specifically designed to meet the needs of tenants.
Renters can’t rely on a landlord’s insurance, which covers the building but not your belongings. Without renters insurance, you’d have to pay to replace all your possessions if a fire, tornado or other disaster rips through the building.
Renters insurance not only covers your personal belongings, but it also includes liability coverage and insurance for additional living expenses. Plus, coverage for guest medical payments can pay out for small injuries to guests (such as up to $1,000) no matter who’s responsible for the injury. While renters often focus on insuring their belongings, these other coverage types can prove just as valuable.
How to Get Renters Insurance
Getting renters insurance can be broken down into a simple process:
- Understand what renters insurance covers (and doesn’t cover).
- Determine how much renters insurance you need.
- Compare renters insurance quotes.
- Make an application to the company of your choice.
What Does Renters Insurance Cover?
Here are the main types of coverage in a standard renters insurance policy.
Personal property coverage
This coverage type covers your personal property—your furniture, jewelry, rugs, clothing, dishes, pots and pans, electronics and other times. It covers damage from problems such as theft, fire, smoke, vandalism, falling objects, explosions and the weight of snow and ice.
You’ll select a policy limit for personal property, which is the maximum amount your insurance company will pay if your personal belongings are damaged or stolen. For example, you might choose $30,000 in coverage.
You’ll typically have a choice between replacement cost coverage and actual cash value (ACV). Replacement cost coverage is more expensive but it provides better coverage because it doesn’t take depreciation into account. For example, if you bought a laptop for $2,000 three years ago and it’s stolen, replacement cost would pay to replace the laptop at today’s retail prices (minus a deductible). ACV would pay only the depreciated value of the laptop.
Some items have “special limits” or sub-limits for certain types of losses. For example, a policy might limit stolen jewelry coverage to $1,000. That would be insufficient for a ring worth $5,000, for example.
If you need more coverage for high-value items, you can “schedule” them so you get paid what they’re worth if they’re stolen.
Liability insurance
Many people think of renters insurance only in terms of coverage for property such as furniture. But renters insurance also gives you important liability protection. Liability insurance kicks in when you’re sued for injuries or property damage to someone else. This coverage also pays for your legal defense.
So if someone falls in your apartment—or your dog bites someone—and you get sued, you can tap your renters liability coverage.
A typical liability coverage amount within a renters insurance policy is $100,000 but for the best renters insurance you can increase that amount.
Medical payments to others
Medical payments coverage is typically included in a renters insurance policy and pays for smaller medical bills no matter who was at fault. For example, if a guest slips in your home and suffers a small injury, this could pay out regardless of fault. Coverage amounts are small and usually start at $1,000.
