Renters insurance protects tenants renting an apartment, condo, or home. Also known as HO-4 insurance, renters insurance can save you from high out-of-pocket expenses to repair or replace your belongings after an unforeseen event, like a fire or theft.1
It can be a challenge to determine how much renters coverage you need. Here’s what you need to know about renters insurance to make an informed decision for your situation.
The right amount of renters insurance depends on your particular circumstances. As you try to determine how much coverage you need, be sure to consider the following factors:
The value of your belongings: Create an inventory of the items in your apartment, making special note of your more expensive belongings.2 You’ll need more coverage if you own a lot of expensive electronics and jewelry than someone who doesn’t.
Liability risks: If you entertain regularly and have frequent visitors, you have a higher liability risk and should consider a policy with more liability coverage.
Safety and security of your rental unit: Less coverage may suffice if you live in a newly renovated rental property with safety features, such as fire extinguishers and smoke detectors.
Your area’s crime rates: If your rental is in an area with high crime, you’ll likely need higher coverage limits than if it were in a safer neighborhood with low crime rates.
The cost of temporary housing where you live: Consider increasing the amount of coverage if you live in an area with expensive rental rates.
A landlord insurance policy won’t cover your damaged belongings after an unexpected event. You’ll need your own personal property coverage for your personal items. This includes clothing, electronics, appliances, jewelry, and anything else you own.
You should perform a home inventory to figure out how much personal property coverage you need to protect your items. Make a list of your personal items, including their age, how much you paid for them, and their current value. You may also document your belongings through pictures and videos.
Renters liability insurance may kick in if someone sustains an injury on your rental property or if you damage someone else’s belongings. For example, if your friend comes over for dinner and slips on your wet floor, your liability coverage can help cover their medical bills.
If you have a lot of assets that a lawsuit would potentially expose, you’ll likely benefit from having a higher amount of coverage than a renter who doesn’t own much. Consider your net worth when determining how much renters liability insurance you need.
Loss of use coverage can pay for your living expenses if a fire or other unforeseen event forces you out of your rental. It can reimburse you for hotel accommodations, meals, and other additional expenses.
If you live somewhere with a higher risk of natural disasters, severe weather, or property crime, you may want to increase this coverage amount. Take a look at hotel rental costs in your area to help gauge the right amount you’d need to cover living expenses temporarily.
Here’s an overview of what coverages renters insurance typically includes:
It’s important to know what renters insurance doesn’t cover. Here’s what renters insurance typically excludes:
Flood damage: A renters insurance policy won’t pay for flood-related damage. But you can buy flood insurance through a private insurer or the National Flood Insurance Program (NFIP).
Earthquake damage: Renters coverage doesn’t apply to damage from earthquakes. If you live in an earthquake-prone area, you might want to buy an endorsement or stand-alone earthquake insurance.
Your uninsured roommate’s belongings: Some insurance companies let roommates buy a renters insurance policy together. Your roommate can’t file a claim through your policy unless it lists them as an insured. It’s important to make sure that both you and your roommate have coverage.
When you buy a renters policy, you’ll choose a coverage amount based on the value of your personal items, the location of your rental, and your particular liability risks. You’ll also have to select a deductible. This is the amount of money you’ll have to pay out of pocket when you file a claim before your renters insurance company kicks in and covers the rest.
You may opt for either a replacement cost policy or an actual cash value policy. A replacement cost policy will cost more. This is because it covers damaged items at their current prices rather than their depreciated value.
Your renters insurance can reimburse you for covered events that result in property losses or liability claims.
If someone steals your laptop from your rental, here’s how to file a claim and receive reimbursement.
Document the claim. Gather photos, videos, and receipts that can support your lost laptop and its value.
File a police report. Contact your local police department to file a theft-related claim.
Reach out to your insurer. Inform your insurance company of the stolen laptop. You can do this online, by phone, or through the mobile app.
Notify your landlord. Explain the incident to your landlord. They might need to file their own insurance claim or schedule repairs, depending on the circumstances and damages.
Wait for your settlement. Once you submit a claim and work with an adjuster, wait for approval and then receive your settlement via a check or direct deposit.
Renters insurance in the U.S. costs between $15 and $30 per month, or $180 to $360 per year, on average, according to the National Association of Insurance Commissioners (NAIC).4
Compared to other types of insurance, such as home insurance and car insurance, renters insurance is very affordable. Factors like your rental location, coverage limits, deductible, whether you opt for basic or comprehensive coverage, and the rental insurance company you choose will influence your premiums.
You can choose renters insurance that aligns with your unique budget, needs, and circumstances.
Here’s a look at the main factors that influence what you pay for a renters policy:
Your location: If you live somewhere with high crime rates and frequent natural disasters, you’ll likely pay higher rates for renters insurance. On the flip side, you may have lower costs if you live in a ZIP code with low crime and milder weather conditions.
Coverage limits: Higher coverage limits lead to higher premiums. But depending on your situation, the additional investment might be worth it for greater protection and peace of mind.
Deductible: A higher deductible can lower your renters insurance rates. The caveat is that you’ll have higher out-of-pocket costs after you file a claim.
Insurance company: Each insurance company determines the cost of its premiums differently. You should always compare quotes from multiple companies to determine which insurer offers the best value.
The following tips can help you find more affordable renters coverage:
The following information can help answer your remaining questions about renters insurance policies.
Renters insurance is a smart investment if you rent a property, such as an apartment, condo, or home. It can protect your personal items. Without it, you may face hefty out-of-pocket costs if your belongings sustain damage from a fire or other unforeseen event.
Conduct a home inventory to estimate the value of your belongings. List all your personal items and their estimated value. You may also want to take photos and track down receipts.
College students might need renters coverage in some cases. If you’re living independently from your parents and not covered under their home insurance, it may make sense.
An interested party — or additional interest — on a renters insurance policy is someone with a financial stake in your rental property. This is typically a landlord or property manager. Your insurance company will inform this person if you make any changes to your policy, cancel your coverage, or let your coverage lapse.
Deductibles for renters insurance typically range from $250 to $2,500. But $500 is the most common amount, according to Progressive.5
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