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What Does Renters Insurance Cover? Learn How It All Works

As a renter, your landlord's insurance covers the structure you live in but that coverage does not extend to your personal property. Renters insurance covers your personal belongings if they're damaged by a covered loss, such as a fire or a break-in. Costing $15 to $30 per month, on average, renters can gain coverage for their personal property, liability and more.

Keep reading to learn how renters insurance works, when you're covered and when you're not.

What Is Renters Insurance?

Renters insurance (also called tenant's insurance) provides personal property coverage when your stuff is damaged or stolen due to a covered loss and personal liability coverage if you're responsible for somebody else's injuries or property damages. Renters insurance can also pay for daily living expenses, if you're temporarily displaced from your rented unit — hotel bills are covered while your home is undergoing post-wildfire repairs, for instance.

Renter's insurance should not be confused with landlord or condo insurance. Landlord insurance is for your landlord and protects the structure you live in but not your personal belongings. While a condominium and apartment building are similar in housing structure, condo owners have their own type of insurance policy.

Renters insurance example

Fire damage is a covered claim in most renters insurance policies. Say your personal belongings were burned due to a wildfire in the area. Your insurer should reimburse you for your losses, up to your policy limit.

What Does Renters Insurance Cover?

Renters insurance coverage is extended on a named peril basis — only the perils specifically listed in your policy are covered. Fortunately, renters insurance protects you from quite a lot, including some natural disasters, theft, vandalism and the malfunctioning of certain home systems.

Renters insurance (also called tenant’s insurance) provides personal property coverage when your stuff is damaged or stolen.

Generally, renters insurance covers you for 16 most commonly referenced perils:

  • Explosion
  • Riot or civil commotion
  • Damage by aircraft
  • Damage by vehicles
  • Smoke
  • Sudden/accidental tearing, cracking, burning, or bulging of home systems
  • Vandalism or malicious mischief
  • Theft
  • Volcanic eruption
  • Weight of ice, sleet, snow
  • Freezing of home systems
  • Sudden/accidental power surges
  • Water/steam discharge from home systems and appliances

Warning: Not all insurers will cover you for each of the above perils. Be sure to confirm your coverages and ask questions to understand when and when you're not protected.

Personal property damage

Personal property coverage reimburses you for the damages or losses of your personal belongings if caused by a named peril in your policy. Covered personal property may include clothing, furniture, electronics and appliances.

Your insurer may enforce a per-item limit. If you have $50,000 in total personal property coverage and a 5% per-item limit, for example, then the maximum reimbursable amount for a single item is $2,500, minus your deductible. For high-cost valuables, you may need to purchase scheduled property coverage (more on that later).

Personal liability

Your insurer may cover you if you are found legally responsible for bodily injury or property damage to another party. For example, your neighbor sues you for reparations after your dog escapes and chews their expensive lawn furniture. Personal liability coverage would pay for legal fees, such as hiring legal representation.

Additional living expenses

Additional living expenses coverage covers certain living expenses if your home is temporarily uninhabitable due to a covered loss. If your apartment unit is undergoing repairs after a fire, for example, then additional living expenses coverage would pay for hotel bills and meals. Be sure to keep copies of receipts, which you would submit when requesting reimbursement.

Renters insurance can also pay for daily living expenses, if you’re temporarily displaced from your rented unit.

Medical payments to others

Medical payments coverage pays for medical bills when you are responsible for another person's injuries. For example, your insurer may cover doctor bills if your pet bit one of your guests while inside your rental unit.

Additional coverage

Other types of coverage extended under renters insurance may include:

  • Debris removal: Your insurer may cover the cost to remove debris from your rental unit if it was related to a covered loss, such as a windstorm blowing through the rental property.

  • Buildings additions/alterations: If you pay for improvements or installations out of your own pocket due to a coveted loss, some of that cost may be reimbursable.

  • Food spoilage: Food spoilage may be covered by your insurer if it was due to a covered loss, such as food in a fridge spoiling because of a power outage caused by a fire.

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What Renters Insurance Doesn't Cover

There are several types of losses renters insurance companies will not cover. For non-covered losses, you can purchase a separate insurance policy or add an insurance rider to your existing policy to gain that specific coverage.

Certain valuables

Renters insurance covers several types of personal belongings, but typically would not cover high-value items, such as:

  • Jewelry

  • Collectibles

  • Medical devices and equipment (e.g., hearing aids, wheelchairs)

  • Fine art

  • Musical instruments

Some insurers may offer scheduled personal property coverage at an additional cost, which insures select valuables against covered losses.

Earthquakes

Since earthquakes are not covered in a standard renters insurance policy, you would need to buy a separate earthquake insurance policy for coverage. Renters in earthquake-prone states, like California, should strongly consider buying earthquake insurance.

Floods

Just one inch of floodwater can cause significant flood damage to your property, according to the National Flood Insurance Program (NFIP). Flood coverage is available from both the NFIP and from private renters insurance companies. An NFIP flood policy can offer up to $100,000 in personal property insurance with premiums potentially starting at $100 per year.

Roommate's belongings

Your roommate's belongings are only covered if they are also listed in your renters insurance policy. However, renters typically have separate renters insurance policies unless they are family members. Otherwise, they may not be fully covered.

Car theft or damage

Renters insurance does not cover your vehicle if it's stolen or damaged — look to your auto insurance policy for comprehensive coverage. However, your renters insurance may extend coverage to your personal belongings if they were inside your car and stolen or damaged.

Replacement cost value

Generally, most insurers will replace your personal items at actual cash value (ACV) — the value of the item after depreciation. Typically, a check for the item's ACV won't be enough to cover the cost to buy it off the shelf today. You can buy replacement cost coverage, which allows you to replace the item at today's price tag.

Property damage to the building structure

Renters insurance covers only your personal belongings — not the actual structure you live in. Damages to the building structure, such as the roof, walls and foundation would be your landlord's responsibility.

Your insurer may cover you if you are found legally responsible for bodily injury or property damage to another party.

How Much Renters Insurance Costs

Renters insurance costs $15 to $30 per month, on average, according to the National Association Of Insurance Commissioners. The cost of insurance is based on several factors, including:

  • Coverage limits

  • Rental unit size

  • Deductible amount

  • Local fire protection

  • Discount usage

  • Crime level

Determining your coverage level

The average renters insurance policy has $100,000 in liability insurance, according to State Farm. State Farm also notes that the average person owns $35,000 worth of personal property. The amount of personal property coverage you buy will largely depend on the value of your personal belongings.

Tip: To get a better idea of how much coverage you actually need, consider creating an inventory of everything you own and how much each item costs.

How Are Renter's Claims Paid Out by Insurance Companies?

Depending on your insurance company, you may file a claim by phone, through an online portal or mobile app. Generally, the claims process will require the following steps to get paid on an approved claim.

  1. If the covered event is crime-related, such as theft or vandalism, file a police report. Your insurer may request a copy when investigating your claim.

  2. Contact your insurance agent as soon as possible.

  3. Document your losses and damages. Your insurance carrier may instruct you to submit a list of your damaged items with pictures and submit supporting documents, such as a police report. For personal liability claims, you will also want to give the other party your renters insurance policy information.

If your claim is approved, your insurer should send you a check for the depreciated value of the items if you have actual cash value coverage. If you have replacement cost coverage, you may receive a second check for the difference after replacing the item.

Renters insurance deductibles explained

Before your insurer helps cover your losses, you will likely pay a deductible. For example, if you're filing a fire damage claim for $1,000 and you have a $500 deductible, you will pay $500 out-of-pocket and your insurer will cover the remaining $500.

Your deductible can signal whether filing an renters insurance claim is worth it. If your losses are only $200 and you have a $500 deductible, for instance, it may be preferable to absorb the loss yourself than adding to your claims history.

Renters Insurance FAQs

Do I need renters insurance?

There is typically no state legislation requiring renters insurance. However, landlords may require that their tenants carry renters insurance as part of their rental agreement.

What does renters insurance cover you for?

A typical renters insurance policy extends coverage to covered losses for personal property (e.g., clothes, furniture, electronics), personal liability protection (e.g., you're responsible for your neighbor's broken window) and additional living expenses (e.g., you need to stay in a hotel while your apartment is undergoing repairs). Covered losses vary by policy but typically include fires, windstorms, theft and more.

Are renters insurance and personal property coverage the same?

Personal property coverage is a type of coverage extended under renters insurance, which typically includes coverage for personal liability and additional living expenses for covered perils.

Protect Your Personal Property With Renters Insurance

Your landlord has insurance coverage for the building you live in but you'll need coverage for the actual stuff you own. Renters insurance can insure your personal belongings, while also covering you for liability and more.

SmartFinancial may be able to help you find a renters policy that meets your coverage needs and budget. To get matched with a policy and receive your free quote, just enter your zip code below to get started.

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