If you’re living in a home you don’t own, whether an apartment or a single-family home, the best renters insurance can provide valuable protection against risks your landlord’s insurance doesn’t cover.1 If fire damages your rental unit, for example, your renters insurance would pay to replace your damaged items. It would also cover temporary living expenses while your rental undergoes repair.
A standard renters insurance policy is relatively affordable, too. The average cost of renters insurance is $20 per month. But before you buy a policy, it’s a good idea to understand how renters insurance works.
How renters insurance works
When you’re renting a home, your landlord may financially protect the building itself through a special type of coverage, such as landlord insurance. This type of policy doesn’t provide financial protection for you or coverage for your personal property. But you can buy your own coverage through a renters insurance policy.
Renters insurance can cover damage or loss of your personal property, provide you with liability protection, and pay for temporary living expenses when you’re displaced after a covered loss. You can buy renters insurance from most insurance companies that offer homeowners policies in your state.
When purchasing renters insurance, you’ll select a coverage amount based on the value of your belongings and potential liability risks. Then, you’ll choose a deductible, which is the amount of money deducted from your payout when your insurance company reimburses you for a covered loss.
You’ll also need to decide between an actual cash value policy and a replacement cost policy. A replacement cost policy will be more expensive, but it’ll pay to replace damaged items at current prices instead of their depreciated value.2
What renters insurance covers
A standard renters insurance policy covers the following:
What renters insurance excludes
Renters insurance doesn’t cover every disaster that may strike. Here are some examples of what a standard renters insurance policy excludes:
Flood damage: Standard renters policies exclude flood damage, but you can purchase flood coverage through the National Flood Insurance Program. You may also buy it through some private insurers.
Earthquake damage: A renters insurance policy also won’t cover damage from earthquakes. If you live in a high-risk area, you may purchase an endorsement or separate earthquake coverage.
Infestations: In most cases, renters insurance doesn’t cover damage from pests like termites and rodents.
Uninsured roommate’s items: Some insurance companies allow roommates to buy a renters insurance policy together. But if your roommate isn’t named on your policy, they can’t file a claim through your coverage.3
Pet damage: Renters insurance doesn’t cover damage your pet causes to your rental unit. Any security deposit you paid the landlord may go toward repairs or cleanup.
Water backup: Renters insurance typically won’t cover damage from sewer line backups. Some insurance companies offer endorsements for water damage and sump pump overflow.
Do you need renters insurance?
Federal and state government laws don’t require tenants to buy renters insurance, so you can typically choose whether to buy coverage. Even when it’s optional, renters insurance is worthwhile in many cases, such as:
Your landlord requires it. Some landlords require tenants to have renters insurance as part of the leasing agreement. A renters insurance policy protects tenants’ personal property and can help prevent disputes if there’s a loss.
You don’t have an emergency fund. After a theft, vandalism, or another covered loss, you may need to replace your belongings or stay in a hotel. Renters insurance helps cover these costs, which protects your finances.
How much does renters insurance cost?
The national average cost of renters insurance is $20 per month for a policy with $30,000 in personal property coverage and $100,000 in liability coverage, Insurify data shows.
But the cost is different for everyone. Factors like your ZIP code, the type of property you live in, the coverage limits you choose, optional coverages, and your deductible can all affect the cost of your policy.
How to file a renters insurance claim
If you need to file a renters insurance claim, it’s important to move quickly. Here are the steps you can follow: