Why You Should Buy Renters Insurance: 5 Things to Know

If there’s damage to your rental, whether from, say, a fire or a break-in, your landlord is responsible only for repairs to the building, not for the cost of fixing or replacing your personal property.

Renters insurance will pay for your personal belongings up to the policy limit. It can also cover your possessions if loss or damage occurs outside your apartment, such as items stolen from your car or while traveling.

If disaster or damage to your home forces you to move elsewhere temporarily, such as a hotel or another rental unit, the coverage can pay for those additional living expenses, including the cost of meals, for a certain period of time or up to a dollar amount.

Renters insurance also provides liability coverage, often up to $300,000, in the event you’re sued for injury or damages by someone visiting you, perhaps as a result of a fall or a dog bite. (If you have substantial assets, you should also consider umbrella liability coverage, which can give you a higher amount of protection than a renters policy.)

As with homeowners insurance, renters insurance won’t cover damage caused by natural disasters, such as floods or earthquakes. If you’re at risk for these events, you’ll need to purchase separate policies for that coverage.

It’s easy to shop for renters insurance. You can compare quotes at online insurance brokers or you can work with an independent insurance agent, who can get quotes from several carriers.

Be sure to check the policy carefully to understand what’s covered and what losses may be excluded. Although the policies are fairly standardized, the coverage may vary depending on the insurer and the regulations in your state.

“Make sure the policy will provide the protection you want, whether it’s coverage for your electronic equipment or reimbursement for a stay in a hotel if your rental unit is damaged,” says Bach of United Policyholders. “If you’re confused by the wording in the policy on these items, ask your agent or the insurance company to clarify what it will and won’t cover.”

The typical premium is $15 to $30 per month, according to the National Association of Insurance Commissioners. But your cost will depend on such factors as the neighborhood you live in, the condition of your building, and the amount of coverage you need.

You have the choice of buying coverage for the full replacement cost of your items or their cash value, a cheaper option that will reimburse you only for their depreciated value. Go for the full replacement value if you can.

“It’s worth a few extra dollars to have full replacement coverage for property that could be worth thousands of dollars,” Bach says.

You may be able to get a discount on your premiums by taking certain safety measures, such as adding a deadbolt to your front door or installing a burglar alarm. Bundling a renters policy with your auto insurance can sometimes lower the cost, perhaps by 10 percent. But be sure to first compare the premiums of stand-alone policies, Bach says.

To figure out how much personal property coverage you really need, do a home inventory. You may be surprised. For the average renter, the cost of replacing all of their belongings—including clothes, cookware, and computers—could easily exceed $35,000, according to State Farm.

Aim on the high side for your coverage amount. “You won’t know what you actually have till you lose it,” says Maria Polio, account manager for the personal life department at Rust Insurance Agents in Washington, D.C.

A policy that provides $50,000 in personal property coverage and $500,000 in liability coverage, with a $1,000 deductible, may cost around $300 per year, Polio says.

If you own a large number of high-cost items, such as expensive jewelry or art, their value may exceed the typical policy’s personal property limit for such categories, which may be just $1,000 or $2,000. But you can add a rider, also known as scheduling an item, which will provide a higher level of coverage. You’ll pay a bit more, however.

For renters who are living with roommates who are not family members, your policy will not cover their possessions. It’s best if your roommates buy their own policies, says Yael Wissner-Levy, vice president of communications at Lemonade, an online insurance broker.

Be aware that if you’re running a business from home, renters insurance might not cover your equipment. It might be best to purchase a separate business insurance policy.

Homeowners policies might not automatically cover students away at college, particularly if they live off-campus. The amount of coverage may also be limited. But some carriers offer a basic renters coverage specifically designed for college students, with deductibles as low as $100.

For Eyerusalem Kuma, a student at San Francisco State University, her $100-per-year policy was a financial lifesaver when a laptop was stolen from her dorm room in 2019.

“I was so upset because I didn’t have the money to replace it, and then I remembered that I had renters insurance,” says Kuma, 21, who purchased the coverage through the school.

After she filed a claim, she received a check for $900, enough to replace her laptop. Kuma moved into an apartment off-campus the following year and has kept up her renters insurance.

You can check with your college to see if it offers student renters insurance or you can purchase it individually. GradGuard is one company offering this coverage.

Another low-cost option is dorm insurance, which is designed to protect the student’s personal property, such as computers, cellphones, and textbooks.

First, be prepared in case something happens. Make sure you have a record of your possessions, as well copies of receipts for high-cost items, in the cloud or a safe place outside your home.

If you do suffer a loss, take pictures or videos of the damage, and call the insurance company to get the claims process started. If there’s a theft, file a police report, which you’ll need for your claim.

To avoid overlooking high-cost purchases, review your credit card statements and online shopping accounts, says Matt Fizell, a fee-only certified financial planner in Madison, Wis.

Fizell went through this process himself last year, when the Texas freeze caused pipes to burst in an apartment he was renting in Dallas. His property losses totaled about $8,300, plus about $1,750 in hotel costs, which were covered by his $126-per-year renters policy.

“I was glad I had replacement value coverage, since the actual cash value would have been only $6,800,” Fizell says. 

The insurer will assign a claims adjuster who will assess your damage and determine the amount you’ll receive in reimbursement. Most carriers will let you send in documentation of your losses via email or online, Polio at Rust says.

And don’t forget to notify your landlord. Many leases require it. That way, you’ll have a record that you reported the damage—and repairs can start quickly.