Do I Need Renters Insurance?

When you rent a home or apartment from someone else, your landlord is typically responsible for the upkeep and maintenance of the property. This can be a major perk of renting, especially if you’re not handy or don’t want to deal with maintenance issues.

But that doesn’t mean you’re absolved of all responsibility. Whatever insurance your landlord holds on the property doesn’t extend to you. You’re responsible for your personal possessions or if anything happens at the property while you’re a tenant.

That’s where renters insurance comes in.

. . .

How Does Renters Insurance Work?

Renters insurance covers your stuff and can help you recover your losses if your items are stolen or damaged due to an event like a major storm or fire. 

Some policies also cover medical liability in case something happens to a guest. 

A typical policy includes coverage for:

• Personal property
• Liability
• Living expenses (if your home becomes uninhabitable)

The coverage limit listed in the policy represents the maximum amount of money your insurance company will pay out in the event you make a claim. 

For example, if you think your possessions are worth $75,000 but your policy only covers you up to $50,000, you’ll wind up taking a loss. 

The best way to figure out how much you need (and if you’re fully covered) is to take an inventory of everything you own.

When you’re ready to get a quote, the insurance company may ask you questions about yourself and the property. Questions can include:

• Your security measures (deadlocks, video cameras, etc.)
• Whether or not you have a pet
• Your age
• Your military status (if applicable) 
• If you have a history of making claims

For some companies, you’ll have to speak to an agent to finish enrolling.

COMPARE: Best Renters Insurance

What Does Renters Insurance Cover?

Your policy will cover your personal possessions, your furniture, the clothes in your closet, and kitchen gadgets ranging from a high-speed blender down to your silverware. 

It’s designed to cover property loss resulting from physical damage to your building as a result of fire, smoke, and inclement weather. 

Most policies also provide coverage for vandalism and break-ins.

If you need to file a claim, your insurance company will reimburse you for physical possessions that need to be replaced, minus the deductible. 

If your home is uninhabitable, your insurance company should also reimburse you for costs like hotel stays and meals that you incur while you’re away, although some limitations may apply.

What Does Renters Insurance Not Cover?

While renters insurance covers a lot, it doesn’t cover everything. Your landlord is responsible for the upkeep of your property. 

If an incident occurs and your landlord is found liable, your insurance might not pay. This is especially true if someone becomes injured in a common area or shared space, like a sidewalk or stairwell.

Your policy also won’t cover your roommate’s stuff unless you add them to your policy (which you’ll want to have a separate conversation about). This can make things tricky if you share things, like furniture, but don’t individually own the item. 

Take an inventory of everything you bring into shared housing, so you can ensure what you need covered is actually covered.

Other weather events like floods, earthquakes, and mudslides aren’t usually covered by a standard policy. If you live in an area where these things are a risk, you’ll want to look for an add-on or supplemental coverage.

Pros and Cons of Renters Insurance

In many circumstances, renters insurance is a requirement of a lease. 

Whether you're choosing coverage because you want it or because you must have it, here’s what to consider.

Pros

• Peace of mind: Your landlord has an insurance policy for the physical building, not your stuff. If something happens, you need your own policy to cover your possessions.
• Liability coverage: If something happens in your apartment and you’re sued, like a dog bite or an injury, your policy will help to cover medical expenses, legal fees, and repairs if needed.
• Interim housing: If something like a fire causes serious damage, your home might not be inhabitable for a while. Your policy will pay for your hotel, and may also cover meals while you’re displaced.

Cons

• Your roommate isn’t covered: If you share ownership of a lot of items with your roommate or partner, things can get complicated. Have a conversation about whether you should each have your own policy and who owns what.
• Exclusions apply: With most insurance policies, there’s fine print. You might purchase renters insurance thinking all of your possessions are covered, only to discover there’s an exclusion for personal electronics or high-end jewelry.
• Coverage is based on depreciating value: Unless you purchase a policy with inflation coverage, or you buy from a company that covers brand-new items, your stuff might not be worth as much as you think it is. 

FAQs

How much does renters insurance cost?

The national average is about $15 per month but it varies by state. 

Factors like the type of coverage you want, your deductible, personal information like your credit score, and any add-ons you include, like earthquake coverage, are all taken into account and can increase your premium.

Does renters insurance cover theft?

Yes and no. Most policies cover crime and vandalism, including theft, but there are stipulations as to how much coverage they’ll provide for certain valuables, like personal electronics and jewelry. While those items are covered, the coverage amount is often capped.

TL;DR: Is Renters Insurance Worth It?

Like most insurance policies, renters insurance is something you’re going to pay for and hope you never actually use. The monthly premium might seem like a financial burden, but in the event you need to file a claim, you’ll be glad you have it.

Think of a renters insurance policy as protection over your emergency fund. Rather than dipping into your savings to cover an unplanned hotel bill or the sudden loss of a computer, you can lean on your insurance company instead.

For more tips on managing your money, check out these episodes of the Erika Taught Me podcast:

• 10 Steps Towards Financial Wholeness
• How To Budget For Beginners
• Atomic Habits You’ll Actually Stick To

. . .