Surprising Things Renters Insurance Covers — And Leaves Out

You may think buying renters insurance means you're covered for just about any disaster, but that's not the case.
Sarah Schlichter
By Sarah Schlichter 
Edited by Lacie Glover
Surprising Things Renters Insurance Covers — And Leaves Out

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Insurance is designed to offer peace of mind, but there's a reason your policy has all that fine print: You might not have the coverage you expect. Like any other insurance policy, renters insurance has exclusions, and knowing about them ahead of time can help you avoid unexpected bills in a disaster.

Just as important, though, is knowing what is covered. Your policy likely includes a few benefits you might not realize, which could save you money down the line.

Covered: Belongings outside your home

Most renters know insurance covers personal belongings within their home but may not realize their things are probably covered off-premises too, including when traveling. For example, say someone breaks into your vehicle. While damage to the car itself is generally covered by your auto policy, your renters insurance pays for items stolen from the vehicle, as long as their value exceeds your deductible.

Did you know...

A deductible is the amount an insurance company subtracts from your claim payout.

Your renters policy will also cover your belongings if you move them into a storage unit or take them on a trip.

Covered: Living expenses if your rental is uninhabitable

While your home is undergoing repairs due to a fire or other covered disaster, your insurance company will usually pay for you to maintain your normal standard of living somewhere else. This part of your policy is known as loss of use coverage.

A “normal standard of living” could be broader than you think. For instance, if you live in a rental home with a pool that you use every day, you can ask if your insurer can pay for you to stay somewhere with access to a swimming pool, says Christine G. Barlow, a chartered property casualty underwriter. If you have pets, your insurer should find you pet-friendly accommodations or board the animals where you normally would.

Not covered: Common disasters

Most renters insurance covers your possessions only in the case of specific scenarios, or “named perils” listed in the policy — things like fire, theft and wind. “If something’s not mentioned in that list, then there’s no coverage,” says Barlow, who is also executive managing editor at FC&S Expert Coverage Interpretation, a trade publication.

For example, most renters policies won’t pay for damage from flooding or earthquakes. If you live in a place at risk of either of these scenarios, you’ll need to buy separate coverage. (One exception: USAA, which serves military families, includes flood coverage with standard renters policies.)

Learn more about flood insurance for renters.

Not covered: Brand-new stuff

Many renters insurance policies provide actual cash value coverage for your belongings. That means if someone steals your TV or a fire destroys your furniture, the insurance company will pay you only what the items were worth at the time you lost them. Because older things have depreciated over time, that payout often won’t be enough to buy brand-new replacements.

Instead, consider upgrading to replacement cost coverage. This ensures that you’ll receive enough to replace your lost items with new ones.

Not covered: Expensive valuables

Most renters policies provide theft coverage for jewelry and other costly items only up to a specific limit named in the policy, typically $1,000 to $2,000. So if you have an expensive engagement ring, you may want to add separate coverage for it. An appraisal is usually required.

 Learn more about jewelry insurance.

How to avoid surprises

Evaluate what you own. Before buying renters insurance, take inventory of your belongings. “Most renters underestimate how much stuff they have,” Barlow says, which could leave you without enough coverage.

Barlow recommends using the Encircle app to upload photos of your belongings and estimate their worth. See more of the best home inventory apps and templates.

Read your policy thoroughly. Barlow suggests marking it with what’s covered in green and what isn’t in red. And don’t skip the policy’s endorsements, which are typically add-ons or exclusions to standard coverage.

Turn to an expert. Confused by all the legalese? Talking through your options with an insurance agent or broker can ensure you understand the policy you’re buying. “Unless you really know insurance,” Barlow says, “it’s very easy to miss coverages that you need or to not realize something isn’t covered.”

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