Is Renters Insurance Worth It? Why It’s a Must for Tenants

If you’re a renter, here’s how to make the most of this vital coverage.

Daria Kelly Uhlig
Written by
Daria Kelly Uhlig
Daria Kelly Uhlig
Written by
Daria Kelly Uhlig
Daria Uhlig is a freelance writer and editor with over a decade of experience creating personal finance content. Her work appears on USA Today, Nasdaq, MSN, Yahoo Finance, Fox Business, GOBankingRates and AOL. As a licensed Realtor and resort property manager, she specializes in real estate topics, including landlord, homeowners and renters insurance. In her spare time, Daria can be found photographing people and places on Maryland's Eastern Shore. Connect with her on LinkedIn.
Chris Schafer
Edited by
Chris Schafer
Chris Schafer
Edited by
Chris Schafer
Senior Editor
Chris is Insurify’s Senior Editor for home insurance. He’s a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more. He is passionate about breaking down complex subject material to make important information accessible to everyone. Chris began his career as a journalist, managing two weekly newspapers, then moving into marketing and content marketing roles. Before joining Insurify, Chris served as the content strategy manager at Siteimprove and as the content manager at Brandpoint, where he managed a team of content creators. Away from work, Chris is an active hockey player and proud father of two rambunctious little girls. Chris holds a Bachelor’s degree in English with a minor in mass communications from the University of Minnesota. 

Updated January 20, 2023

Reading time: 6 minutes

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Renters insurance covers your losses when your personal property is damaged unexpectedly, such as in a fire or after a theft. It’s similar to homeowners insurance in that it covers belongings stored in your home as well as offsite, and it also provides liability coverage.[1]

But unlike homeowners insurance, renters insurance doesn’t cover the structure of the home or the property owner’s belongings.

What does renters insurance cover?

Renters insurance typically provides similar protection to homeowners insurance — minus dwelling protection — and guards against specific events named in the policy. This could include a wide range of unexpected events, including:

  • Fire and lightning

  • Wind and hail

  • Smoke

  • Vandalism and theft

  • Weight of snow or ice

  • Frozen plumbing

Policies typically provide four types of coverage:

  • Personal property damage is the type of coverage that reimburses your loss if a named peril, such as a windstorm, damages your roof and destroys your furniture.

  • Personal liability covers your legal expenses if you accidentally injure someone or damage their property and they sue you. In addition to paying your attorney and court fees, liability coverage will pay a judgment against you, up to the policy’s limit, which is usually at least $100,000.

  • Medical coverage is a type of liability coverage that pays the medical bills if someone who doesn’t live in your household is accidentally injured in your home. The typical coverage limit is $1,000 to $5,000.

  • Additional living expenses coverage pays your living expenses if your home is damaged so severely that you have to move out while it’s being repaired or rebuilt.

Learn More: What Is Renters Insurance and How Does It Work?

Applying real-world examples

Here are a couple examples that illustrate how renters insurance coverage works.

Example 1

Say a tornado blows off a portion of the roof, exposing your clothes, furniture, and other belongings to the elements and destroying them. You’d file a personal property claim with your insurance company for the cost of replacing your ruined possessions.

Because you can’t live in a home that doesn’t have a roof, you’d also claim additional living expenses. This coverage pays for your hotel bill, the cost of meals, laundry services, and any other additional living expenses resulting from the displacement.

Example 2

Imagine a friend visits your home, and your pet not only destroys the belongings they brought with them, but also bites them while they try to rescue their things. You could submit their medical bill to your insurance company, and the medical coverage would cover their costs, up to your limit.

However, if the friend were to sue you, perhaps for pain and suffering and the cost of replacing their damaged property, your liability coverage would cover your attorney and court fees. And if the friend were to win their suit, your liability coverage would also pay their award, up to the policy limit.

See Also: Does Homeowners Insurance Cover Dog Bites?

What does renters insurance exclude?

As a named-perils policy, renters insurance only covers disasters named in the policy. And it has limits on what property it covers.

Here are some examples of exclusions:

  • Floods: Renters insurance, like homeowners insurance, excludes flood damage. But you can purchase flood coverage through the National Flood Insurance Program. Some private insurers also carry it.

  • Earthquakes: Your renters insurance won’t cover earthquake damage, but you can purchase earthquake coverage as a separate policy or as an endorsement to your existing policy.

  • The structure of the home: Renters insurance doesn’t cover the dwelling, which is the property owner’s responsibility. If, for example, a hail storm damages the roof and causes a leak, your landlord’s insurance would be responsible for the repair, not you.

Read Further: What Does a Renters Insurance Policy Cover?

How much does renters insurance cost?

Renters insurance might be the least-expensive coverage you’ll ever encounter — $15 to $30 per month, according to the National Association of Insurance Commissioners.[2] Compare that to $109 for the average homeowners insurance policy and $100 for car insurance.[3] [4]

However, renters insurance claims are subject to a deductible.[5] The deductible is the amount you’re responsible for paying before the insurance company will pay on your claim. A typical policy has a $500 deductible.

See Also: How Much Is Renters Insurance? (2021) Discounts and Savings by State

How much renters insurance do you need?

How much renters insurance you need depends on several factors, one of which is the value of your belongings. Consider taking an inventory of your personal property and estimating the value of each item in its current, used condition and how much it would cost to replace.

This distinction is important because your reimbursement depends on whether you have actual cash value or replacement cost coverage.[5] Actual cash value reimburses the depreciated value, which is often less than the amount needed to replace damaged items. Replacement value reimburses the cost of replacing damaged items with new ones.

However, coverage for expensive items, such as jewelry and electronics, is limited in a standard renters insurance policy. You might need an additional “floater” policy to ensure that you could replace them if they were damaged or destroyed.

It also makes sense to think about your liability and whether the typical $100,000 in coverage is enough. It might not be if it’s lower than the value of your assets.

Check Out: Actual Cash Value vs. Replacement Cost: Which Is Best?

Is renters insurance worth it?

In most cases, renters insurance is well worth it. Premiums are low compared to other insurance coverages, and you get a lot of protection for your money.

Here are some good reasons to purchase renters insurance:

  1. Personal property coverage ensures that you’ll be able to replace your belongings if they’re damaged or destroyed.

  2. You’ll avoid instant homelessness in the event your home is damaged so badly you have to leave it.

  3. Medical coverage can prevent a lawsuit by paying the injured party’s medical expenses.

  4. Liability coverage can protect you against a devastating financial loss in the event of a lawsuit.

  5. The policy can almost pay for itself if you purchase it through your auto insurer and get a bundle discount.[5]

How to buy renters insurance

The easiest way to shop for renters insurance is to go online to request quotes, even if you plan to talk with an agent or schedule an in-person appointment before you buy. This way, you can compare multiple policies to make sure you get the coverage you need at the best rate possible.

Once you’re on an insurer’s website, you’ll need to provide any or all of the following information to get a quote:

  • Personal details, such as name, age, gender, marital status, and contact information

  • Employment information

  • The address of the rental property, how long you’ve been there, and how many people live there

  • Property details, such as protective devices, proximity to a firehouse, and whether the home is your primary residence

  • Whether you’ve filed a property insurance claim in the past

  • Whether you’re currently insured

The next step is to select coverages, limits, and a deductible from the form you see on your screen. You’ll receive a quote after you’ve submitted the form.

Many insurers allow you to purchase your coverage and pay your first month’s premium immediately, while the quote is on the screen.

Learn More: Best Renters Insurance Companies

Renters insurance FAQs

Here’s more information about renters insurance and what it covers.

  • Insurers often offer discounts on premiums for customers who have another policy with the company.[5] You can also get discounts for having safety equipment, such as smoke detectors, security devices, and deadbolts on exterior doors. Older customers and those with good credit might also receive better rates.

  • The law doesn’t require renters insurance. But some rental property owners and property managers require their tenants to purchase it.

  • That depends on where they live, according to the Insurance Information Institute.[5] You should be covered under your parents’ homeowners or renters insurance if you stay in a dorm but still live in your parents’ household. If you have a year-round off-campus apartment, you’ll need your own renters insurance.

  • Renters insurance doesn’t cover flood damage. But you can purchase flood insurance through FEMA. Some private insurers offer it as well.

  • Landlord’s insurance protects rental property owners against losses from covered emergencies. It covers the structure, the property owner’s personal property, and property used to service the rental. Landlord coverage also provides liability and loss-of-income coverage. But it doesn’t cover tenants’ personal belongings.

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Sources

  1. Insurance Information Institute. "Renters Insurance." Accessed January 17, 2023
  2. National Association of Insurance Commissioners. "Renting Your Home? Protect Your Belongings with Renters Insurance." Accessed January 17, 2023
  3. National Association of Insurance Commissioners. "Dwelling Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/ Cooperative Unit Owner’s Insurance Report: Data for 2020." Accessed January 17, 2023
  4. National Association of Insurance Commissioners. "NAIC Releases 2018-2019 Auto Insurance Database Report." Accessed January 17, 2023
  5. Insurance Information Institute. "Your renters insurance guide What to look for when shopping for renters insurance." Accessed January 17, 2023
Daria Kelly Uhlig
Written by
Daria Kelly Uhlig
Linkedin

Daria Uhlig is a freelance writer and editor with over a decade of experience creating personal finance content. Her work appears on USA Today, Nasdaq, MSN, Yahoo Finance, Fox Business, GOBankingRates and AOL. As a licensed Realtor and resort property manager, she specializes in real estate topics, including landlord, homeowners and renters insurance. In her spare time, Daria can be found photographing people and places on Maryland's Eastern Shore. Connect with her on LinkedIn.

Learn More
Chris Schafer
Edited by
Chris Schafer
Linkedin

Senior Editor

Chris Schafer
Edited by
Chris Schafer
Senior Editor
Chris is Insurify’s Senior Editor for home insurance. He’s a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more. He is passionate about breaking down complex subject material to make important information accessible to everyone. Chris began his career as a journalist, managing two weekly newspapers, then moving into marketing and content marketing roles. Before joining Insurify, Chris served as the content strategy manager at Siteimprove and as the content manager at Brandpoint, where he managed a team of content creators. Away from work, Chris is an active hockey player and proud father of two rambunctious little girls. Chris holds a Bachelor’s degree in English with a minor in mass communications from the University of Minnesota.