Renters Insurance: A Guide To What It Is, Coverage And Costs

When it comes to protecting your home, most people tend to think of homeowners insurance. Homeowners all across the United States understand the importance of having insurance for their houses. However, many renters might not realize they, too, can protect their living space. They may be missing the benefits of having renters insurance. Some renters may believe that renters insurance is just another unnecessary expense to add to their monthly bills. However, the additional coverage you can obtain from renters liability insurance and personal property coverage can save you a lot of stress and trouble in case of theft, accidents, or environmental damage.

What Is Renters Insurance?

Renters insurance is a type of property insurance specifically designed for people who rent their living space. Unlike homeowners insurance, which protects homeowners and their property, renters insurance provides coverage for individuals who do not own the property they live in. It also covers you in the case of an emergency.

A renters insurance policy provides insurance for your personal belongings and liability coverage for any damage or injury you’re found legally liable for. This protects you financially in the case of unforeseen circumstances. That may include theft or damage to your personal belongings or injuries that happen to your guests. Here is some of what renters insurance may cover, depending on your policy:

How Does Renters Insurance Work?

Renters insurance is an investment that can protect you and your property in the event of damage or loss caused by covered events. With this type of insurance, you can have peace of mind knowing that your belongings are safeguarded. In case of a covered event, such as fire or theft, renters insurance can help you recover the value of your damaged or stolen possessions.

There are various types of renters insurance coverage you can get that are available to suit your needs, including but not limited to:

Is Renters Insurance Required?

No, renters insurance is not required; it’s completely optional. However, it’s considered to be a necessity by some. There are probably a few things that are in your rental that you would have a hard time living without. What would you do if there was a pipe burst in your apartment, and all of your furniture got destroyed? Can you afford to replace everything, or would it take a couple of months or even years to save enough money to get your place refurbished and back to how it was before?

Even though these examples are based on hypotheticals, you never know if this can happen to you in real life. If you feel comfortable that you could replace the contents of your apartment if you needed to, basic liability insurance can potentially prevent financial disaster. While you may be able to recoup the cost of your refrigerator on your own, if you end up being responsible for major damage or injury, you could face bankruptcy-level costs.

What Does Renters Insurance Cover?

The extent of your coverage will depend on the policy you choose. Renters insurance is an insurance policy that can cover theft, water backup damage, property damage, damage you cause, certain natural disasters, bodily injuries and more in a rented property. If you rent an apartment, home or even a dorm, renters insurance is recommended for protecting your space and belongings in the event of a covered accident.

Theft

Let’s say someone breaks into your apartment while you are away and steals your clothes and electronics; your renter’s insurance would help pay for the loss of those items. Renters’ insurance policies can also cover personal items stolen in your vehicle or storage unit, as well as places outside of your home. It doesn’t have to be just from your rented residence. Your renter’s insurance could help you replace your stolen valuables even when you’re in a different city, state, and even country.

Property Damage

It’s possible that the place you rent could experience property damage; this could potentially destroy many of your possessions and put you out of your home while the damage is being repaired and the space is restored. However, with renters insurance, you can have peace of mind knowing that not only will it help you replace your damaged personal belongings, but it can also cover the costs of staying somewhere else, such as hotels if you have “loss of use” coverage. You may be able to receive money for any costs related to being put out of your home, like food costs from having to eat at restaurants or the costs of boarding your pets.

Protection from property damage applies but is not limited to any of the following events:

Visitor’s Injuries

Even though it seems like an unlikely scenario to have a guest hurt on your property, liability insurance can cover the costs of medical and legal bills if that happens. In the rare case that one of your guests needs extensive medical care that you’re found responsible for, these costs could easily bankrupt you if you don’t have insurance to back you up to pay for these costs.

What Does Renters Insurance Not Cover?

While renters insurance offers broad coverage, there are many incidents that are not covered by renters insurance. These may include:

Floods And Earthquakes

While most renters’ insurance policies cover many natural disasters, floods and earthquakes aren’t typically included in rent coverage. Therefore, it’s recommended that if you live in an area that is known for having earthquakes (like California) or floods (like Louisiana), you’ll want to purchase a policy that specifically covers what you need.

Auto Theft

Renters insurance also covers the personal belongings in your car, but not the actual vehicle. If the car is stolen, then car insurance will be responsible for that.

Roommate’s Belongings

Your renter’s insurance doesn’t help cover the loss, theft, or damage of a roommate’s belongings. The only other parties your renter’s insurance policy can protect are your spouse and your children who live with you. Even your young adult child is protected under your policy while they’re away at college. However, if your nonimmediate family roommate wants personal property and liability renters insurance, they must get their own policy.

How Much Does A Renters Insurance Policy Cost?

The average renter’s insurance premium costs around $125 – $150 annually, which is about $10 – $12 per month. However, the cost of your renters insurance policy will depend these factors:

Opting for a higher deductible means less risk for the insurance company, which often translates to a lower premium for you.

How Can I Save Money On Renters Insurance?

To save money on renters insurance, you can take several additional security measures in your rental; installing a security system, such as an alarm or surveillance cameras, can lower your insurance premium as it reduces the risk of theft or vandalism. Also, building a strong credit score is another effective way to save on renters insurance. Insurance companies will often review credit scores when determining premiums, so maintaining good credit can lead to lower rates. Additionally, bundling multiple types of insurance, such as renters and auto insurance, within the same company can result in significant savings. Lastly, shopping around and comparing quotes from different insurers can help you find the best deal that fits your needs and budget.

How To Get Renters Insurance

When you’ve decided that getting renters insurance is the best option for you, already knowing the steps you to take when starting the process of getting renters insurance can be helpful.

1. Determine What You Need Covered

The first step is to assess your belongings and their value. Take an inventory of your possessions, including furniture, electronics, appliances, and other valuable items. When listing them, record how much you paid for them or their estimated value. Additionally, consider any specific risks you might face, such as living in an area prone to natural disasters or having expensive jewelry. Assessing your needs will ensure that you have adequate coverage for potential losses or damages.

2. Decide How Much Renters Insurance Coverage You Need

Decide how much renters insurance coverage you need. The amount will depend on what you need coverage for; this is based on the number of personal belongings you have and how much you can afford on top of your monthly rent and additional living expenses. You must factor these into other extended policy options if you have any high-value possessions. Going through your rental space and making a list of your belongings will not only help you get the right amount of coverage but can also be helpful to have on hand if you need to file a claim.

3. Compare Renters Insurance Company Quotes

The last step is considering several renters insurance companies and comparing quotes to get the best option and price. You don’t have to settle for the first offer. It is highly recommended to shop around for different policies to see what coverage options each offers, the best rates, and what their current customers say about them.

What Information Renters Insurance Requires

To help you prepare for getting renters insurance, there are several requirements that companies typically ask for. These requirements include, but are not limited to:

FAQs On How Renters Insurance Works

Here are some frequently asked questions on how renters insurance works.

How do I file a renters insurance claim?

To file a renters insurance claim, you should contact your insurance provider and provide them with the details of the incident. File a police report if needed and make sure you document your losses. They will guide you through the necessary steps and documentation requirements.

What is the difference between renters and homeowners insurance?

Renters insurance covers your personal belongings and liability when you don’t own the home, while homeowners insurance include all of the above plus coverage for the structure of the home – which you own. Homeowners insurance covers the actual building you live in (and associated structures such as garages). With renters insurance, the landlord will be expected to have coverage on the building, while your insurance will cover your personal property. When taking out a mortgage, most lenders will require you to have homeowners insurance. Tenants are typically not required to have renter’s insurance. However, it’s recommended to protect personal property and liability, which is not the responsibility of the landlord. 

Can I bundle renters and auto insurance?

Yes, you can bundle renters and auto insurance with certain insurance companies, often leading to cost savings. A car and renters insurance bundle is when you purchase both policies from the same company. The advantage of bundling is you’ll typically get a multi-policy discount, and you can manage both policies from the same account.

Should I get renters insurance?

Ultimately, the choice is up to you. However, getting renters insurance is recommended as it provides coverage for your personal belongings and liability in case of unforeseen events such as theft, fire or accidents.

The Bottom Line: Renters Insurance Can Financially Protect You In An Emergency

When considering whether to get renters insurance, it’s essential to carefully consider your ability to cover unexpected expenses that may arise. If you’re hesitant to get renters insurance because you think the chances of anything happening are slim to none, it’s worth taking a second look.

Understandably, people don’t like spending money on a service they may never need. However, insurance is meant to protect you from financial ruin in case of unexpected events. Having renters insurance can provide peace of mind that, in case something bad happens, you won’t lose everything.

If you are ready to make the jump from tenant to homeowner,  to begin the mortgage approval process.