Do You Need Renters Insurance? Here’s What You Need to Know


When you’re renting an apartment, condo or single-family home, your landlord may or may not require renter’s insurance before signing the lease. Even if your landlord doesn’t require it however, you may still want to take out this insurance as a precaution against the potentially devastating consequences associated with personal property loss/damage and even the unlikely (yet possible) circumstance in which the residence becomes uninhabitable.

Renter’s insurance can be a financial lifesaver in some cases, yet only one-third of renters actually take out a renter’s insurance policy (and many could be doing it solely because their landlord required it). Whereas a vast majority of homeowners have homeowner’s insurance – likely because mortgage lenders require it and some states even have legal mandates requiring a minimum level of coverage – renter’s insurance is substantially less popular among those who don’t own the property in which they live.

It doesn’t cost a lot of money each month and it could cover you, your family and your possessions in minor and major emergencies alike, so could renter’s insurance be something you need to consider? Let’s unpack what it is and what it covers to help you decide if it’s worth it.

What is Renter’s Insurance?

Contrary to popular misconceptions, renter’s insurance doesn’t cover the property itself. Instead, it covers your stuff in the apartment/townhome/condo and other living expenses you might incur if there’s significant damage to your residence that renders it [temporarily] uninhabitable (such as flooding, fire damage, etc. requiring you to live in a hotel for a while).

Your landlord should have a separate insurance policy covering the actual property, but this isn’t your responsibility as a tenant, so you’re primarily responsible for protecting the cost of your own stuff and living expenses with renter’s insurance.

Rental Property

What Does Renter’s Insurance Protect?

Renter’s insurance typically covers the stuff in your apartment (furniture, electronics, décor, jewelry, collectibles, etc.) up to a certain amount. For instance, if you have a $4,000 couch that’s irreparably damaged by flooding and your insurance maxes out at $3,000 for the furniture category, then that’s what you’ll get back instead of the total cost of the damaged item (unless you purchase additional insurance for certain items). Note: many renter’s insurance policies also have deductibles you must meet before receiving a reimbursement check.

Alternatively, your renter’s insurance may be a “replacement cost value” policy, which means you’ll be reimbursed for the cost of repairing or replacing an item based on its current value. This could cost more money per month, but the main advantage to this type of renter’s insurance is you don’t have to worry about a depreciation gap between what you originally paid for an item and how much your insurance assessor says it’s worth now.

Renter’s insurance covers the cost of repairing/replacing damaged or stolen items (including personal electronics in many cases), as well as living costs associated with a temporarily uninhabitable residence (due to severe weather damage, vandalism, electrical blowouts, etc.). You’ll also receive coverage for personal liability, which pays for medical and/or legal bills incurred by someone injuring themselves in your home.

What Isn’t Covered by Renter’s Insurance?

In many cases, damage from natural disasters like hurricanes, floods, fires and/or earthquakes will not be covered by your renter’s insurance unless you take out additional coverage specifically for these incidents. Additionally, if you own a dog that has bitten someone in the past, you may find it difficult to receive affordable renter’s insurance due to personal liability concerns.

What’s covered and what’s not depends on your type of renter’s insurance policy and how much you pay for any additional coverage. Nobody enjoys reading the fine print for anything, but a renter’s insurance policy may be worth reading thoroughly to ensure you understand exactly what and what isn’t covered before you ever need to file a claim.

How Much Coverage Do I Need?

Many landlords that require renter’s insurance set minimum amounts of coverage for their tenants (e.g., $50,000 personal liability coverage). If you’re not required to get renter’s insurance, it’s still useful to have at least $75,000 (preferably $100,000 or more) in coverage to financially safeguard yourself from any possible accident or damage occurring in your home.

For your stuff, it’s up to you to determine how much everything is worth (and be able to prove it if/when filing a claim). A single college student living in a studio apartment may have less than $10,000 worth of stuff, whereas a family of four in a condo may have $25,000 worth of stuff. It depends on a variety of factors, so take the time to accurately assess your coverage needs before taking out a renter’s insurance policy.

How Much Does Renter’s Insurance Cost?

Renter’s insurance is fairly affordable compared to other types of insurance plans. Many basic policies start at $10 or so per month and go up to $50 or more if you opt for additional coverage for things like high-priced electronics or natural disaster damage coverage.

Your deductible will also determine how much you pay per month; high deductibles for $500+ will result in lower monthly costs, whereas $200 or less deductibles typically mean you’re paying more per month for the peace of mind that comes from knowing you’ll barely have to pay out of pocket in case something is damaged, lost or stolen.

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