What Is Renters Insurance, and What Does It Cover?

Renters insurance can be a smart (and affordable) investment, but it doesn't cover everything.
Sarah SchlichterSep 27, 2021

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Key takeaways

  • Renters insurance is designed for those who don’t own their own home.

  • A renters policy covers your belongings if they’re stolen or destroyed. It also pays out if you cause harm to other people or their property.

  • Renters insurance covers disasters such as fire, theft and windstorms, but generally doesn’t cover flooding or earthquakes.

One of the perks of renting is that it’s your landlord’s responsibility, not yours, to insure the building and make repairs. But as a tenant, you’re not off the hook completely. Your landlord’s insurance won’t pay to replace your belongings if a storm destroys the building or a thief breaks into your apartment. If you want coverage for these and many other disasters, you’ll need a renters insurance policy.

What is renters insurance?

Renters insurance covers your personal belongings in case of theft, fire and other disasters. It can also pay your legal expenses if you’re sued for causing harm to others.

Also known as tenants insurance or an HO-4 policy, renters insurance is similar to homeowners insurance but designed for people who don't own their own place. At roughly $14 a month on average, renters insurance is much cheaper than homeowners insurance, according to NerdWallet’s rate analysis. That's because it covers only what’s inside your home and not the structure itself.

Renters insurance definition

Renters insurance is a policy designed for people who don't own their own home. It covers your personal belongings in case of disaster and pays out if you're found at fault for injuries or property damage to others.

What does renters insurance cover?

A standard renters policy includes four types of coverage.

Type of coverage

What it does

Personal property

Covers your clothing, furniture, electronics and other belongings.

Loss of use

Pays for hotel stays, restaurant meals or other expenses if you have to live elsewhere while your home undergoes covered repairs.

Liability

Pays out if you're responsible for injuries to other people or damage to their property.

Medical payments

Covers injuries to other people in your home, regardless of fault.

Personal property

Most renters insurance reimburses you for the loss of items such as clothing, smartphones and other personal belongings due to 16 specific events:

  • Fire or lightning.

  • Windstorm or hail.

  • Explosion.

  • Riot or civil commotion.

  • Damage caused by aircraft.

  • Damage caused by vehicles.

  • Smoke.

  • Vandalism or malicious mischief.

  • Theft.

  • Volcanic eruption.

  • A falling object.

  • The weight of ice, snow or sleet.

  • Accidental discharge of water or steam from within certain household systems or appliances.

  • Sudden and accidental tearing apart, cracking, burning or bulging of certain household systems.

  • Freezing of certain household systems or appliances.

  • Certain sudden, accidental damage from artificially generated electric currents.

Your personal belongings aren’t just covered when they’re in your home, but also when you’re out and about. So if your bike is stolen outside a store, your renters insurance policy will cover you — with a couple of caveats. First, your deductible will apply. Second, there may be a limit on how much coverage you have outside your home (typically 10% of your total personal property limit).

Loss of use, or additional living expenses

If you can't live in your home after a disaster covered by your policy, renters insurance coverage generally pays for you to live elsewhere during repairs. It can cover expenses like hotel bills, restaurant meals and other costs above what you would normally pay.

Liability insurance

If someone is injured in your rental and sues you, a lawsuit could wreck your finances for years. The liability portion of your renters insurance policy covers you in these events, paying out for someone else’s bodily injury on or off your property. (One exception: If you injure someone in a car accident, your auto policy would handle the expenses.)

Renters liability insurance also covers damage you and your family accidentally do to others' belongings.

Your renters policy may pay out if your dog bites someone. However, some insurers exclude dog bites or certain breeds from renters policies. If you have a dog, check with your agent to be sure you’re covered.

Renters insurance typically covers legal representation in a lawsuit and any money awarded to the other party.

Medical payments

Like liability insurance, this coverage pays out if someone is injured on your property. What's the difference? Medical payments coverage will pay no matter who’s at fault for the injury, while liability insurance is triggered only if you’re found responsible. Liability coverage also tends to have much higher limits.

Optional renters insurance coverage

In addition to the standard coverage listed above, you can usually pay a little extra to customize your policy with endorsements that add more coverage. Here are a few of the most common.

Replacement cost coverage

A standard renters policy pays to replace your belongings based on their “actual cash value.” That means if your ruined sofa is 10 years old, your claim check would probably only be enough to buy a used sofa. To get a new one, you’d pay the difference yourself.

With replacement cost coverage, you’ll get the cost of replacing your lost items with new ones. So if your 10-year-old sofa is ruined, you’d receive enough from your insurer to buy a brand-new one.

Scheduled personal property

Renters policies typically cap the amount they’ll pay for valuable items such as jewelry, firearms and electronics. To get coverage for items that are worth more than this limit, you may want to add a scheduled personal property endorsement.

Say you’ve inherited a diamond ring from your grandmother. Your insurance company will likely ask you to get it professionally appraised and then add separate coverage for the ring onto your policy (for an extra cost).

Identity theft coverage

Some insurance companies offer optional coverage for expenses associated with identity theft. This may include credit monitoring services, coverage for legal fees and help replacing your documents.

What renters insurance doesn’t cover

Every insurance policy has exclusions, and renters insurance is no exception. Below are a few things renters insurance won’t pay for.

Flood damage

Most renters insurance won’t cover damage from flooding. If your home is at risk, you’ll have to pay for repairs yourself or purchase separate flood insurance. (One exception is USAA, which includes flood coverage as a standard part of its renters policies. USAA insurance is available only to active military, veterans and their families.)

Nerdy tip: You can get flood insurance that’s backed by the federal government or buy coverage through an independent company. Learn how to find the best flood insurance.

Earthquake damage

Earthquakes also won’t be covered by the majority of renters insurance policies. (Again, USAA is an exception.) You can buy earthquake insurance separately or as an add-on to your renters policy.

Infestations

Most renters insurance won’t cover bedbugs, mice or other infestations.

However, you may be able to get bedbug coverage with an Assurant renters policy, depending on where you live. Another option is Jetty, which offers insurance only at participating properties but includes $300 worth of bedbug coverage in its basic policies.

Your roommate’s belongings

Most renters insurance won’t cover your roommate’s stuff unless the two of you share a policy, which not all states or insurance companies allow. In most cases, it’s best if you each get your own renters policy.

Is renters insurance required by law?

No, but some landlords require proof of renters insurance before you sign a lease, or within a certain time period. Usually, though, it’s your call.

If your worldly possessions amount to a futon, a coffee maker and a toothbrush, you probably don’t need renters insurance.

But for most renters, it can be a smart (and surprisingly affordable) investment. Having renters insurance could prevent you from paying out of pocket to replace everything that could be damaged or stolen: jewelry, TV, computer, furniture, clothing and so on. A landlord’s insurance policy won’t pay your living expenses while the building is under repair, but renters insurance generally does.

Nerdy tip: College students may not need renters insurance if their parents’ homeowners policy provides adequate coverage for dependents’ possessions. Check the policy to be sure; in many cases such coverage applies only to students living in on-campus housing. It may also be limited to a certain dollar amount.

How much renters insurance do I need?

The amount of renters insurance you need depends on how much stuff you have and what your savings and other assets are worth. The more you have to lose, the more insurance you need.

Before buying renters insurance, take stock of your belongings to decide how much personal property coverage you need. Several home inventory apps are available to help you catalog your possessions. This can also be useful if you ever file a claim.

To get an idea of how much your belongings are worth, use our renters insurance cost calculator below.

Liability limits typically start at $100,000 and top out at $500,000. You’ll want at least enough to protect your current assets, including savings and any vehicles, because they're part of your net worth and could be seized in a lawsuit.

How much does renters insurance cost?

Though renters insurance is generally about $14 a month, the average renters insurance cost varies from state to state. Most insurance companies offer a discount if you bundle your auto and renters insurance policies. They might also reduce your rate if your apartment has a security system, smoke detectors or deadbolt locks.

If you’re looking for more ways to save money, consider raising your deductible. That’s the amount that will be subtracted from an insurance claim check.

For example, if you have a $1,000 deductible and a claim for $5,000 in property damage, your insurance company will pay $4,000. The higher your deductible, the cheaper your premium.

When deciding on a deductible amount, ask yourself: How much can you pay out of pocket after a disaster? Keep in mind that you’ll pay the deductible each time you file a claim for personal items. Your rate is likely to increase after each claim, so weigh carefully whether to file one for an amount close to the deductible.

Nerdy tip: There’s generally no deductible on liability claims against you, loss of use claims, or riders for high-value belongings.

How to get renters insurance

Ready to buy a policy? Take these steps.

1. Evaluate your needs. Figure out how much coverage is right for you by using the calculator and tips above.

2. Research insurance companies. Most major U.S. insurers sell renters policies, including Allstate, Farmers, Geico, Progressive and State Farm. You may also want to consider newer insurance startups such as Lemonade and Toggle, which offer quick coverage, slick apps and affordable rates.

3. Shop around. We recommend getting quotes from at least three companies. You can search for quotes online or call an agent to talk through your options.

Frequently asked questions

Yes, theft of your personal belongings is typically covered by renters insurance, even if you’re not at home. But there's one major exception. If your car is stolen, you’ll have to file a claim under the comprehensive section of your auto insurance policy, not your renters policy.

Generally, yes. Just as your renters policy covers your belongings when you’re traveling, it will usually cover them when they’re stored somewhere besides your home. However, you may have less coverage for belongings stored off-premises (typically limited to 10% of the total personal property value on your policy).

It depends on the cause of the mold. Renters insurance is designed to assist with damage from sudden, catastrophic events — like a burst pipe that floods your bathroom, leaving mold in its wake. This type of event would likely be covered. But if the mold has been slowly developing because you haven’t gotten around to cleaning your basement, you’re out of luck.

It depends. Say your bedroom window is shattered by a falling tree branch in a storm. Because falling objects are a covered event, the damage would be taken care of through the personal property part of your policy. But if you accidentally break your own window through an errant game of fetch with your dog, it wouldn’t be covered.

Your liability coverage can help here as well; it may pay out if you accidentally break someone else’s window.

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