Why Is Renters Insurance Important?
Renters insurance reimburses you for a variety of losses that your landlord won’t cover, and it’s fairly affordable.
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Written byLindsay Frankel
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Lindsay FrankelInsurance Writer
5+ years in auto insurance and personal finance writing
Featured in top personal finance publications
Lindsay is a widely published creator of auto insurance content. She also specializes in real estate, banking, credit cards, and other personal finance topics.
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Edited bySara Getman
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Sara Getman is an Associate Editor at Insurify and has been with the company since 2022. Prior to joining Insurify, Sara completed her undergraduate degree in English Literature at Simmons University in Boston. At Simmons, she was the Editor-in-Chief for Sidelines Magazine (a literary and art publication), and wrote creative non-fiction.
Outside of work, Sara is an avid reader, and loves rock climbing, yoga, and crocheting.
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Table of contents
About 45% of renters don’t have renters insurance, and they’re missing out on some important benefits. A renters insurance policy protects your belongings from a wide variety of risks that your landlord doesn’t cover.[1]
Even if you think your stuff isn’t valuable, renters insurance helps protect your savings in case someone files a liability lawsuit against you. And it pays for a place to stay if damage to your home makes it temporarily uninhabitable.
Before you decide to forgo renters insurance, learn about the benefits and risks of not having a policy.
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5 reasons why you should consider renters insurance
Renters insurance is important for a few reasons. Your landlord may make it a lease requirement, it can provide financial protection, and it can help pay for additional living expenses. It’s also fairly affordable, and you may be able to bundle it with your car or life insurance to secure some savings.
It’s relatively affordable
Relative to homeowners insurance, renters insurance is cheap. The average renters insurance premium is just $170 annually, and some tenants can access a renters policy for as little as $5 per month.[2] Some renters insurance companies also offer discounts to existing car insurance policyholders.
Your landlord may require you to have a renters policy
While states don’t require tenants to have renters insurance by law, you may need renters insurance if your landlord requires it as a condition of your lease agreement. If you violate the terms of your lease, your landlord can legally terminate your rental agreement, which could leave you scrambling to find a new place to live.
It offers protection for your personal belongings, even on the go
Even if you live in a safe neighborhood and you’re careful about locking up, a thief could take your bike from outside a coffee shop or your laptop from your hotel room. Most renters insurance policies reimburse you for these losses, after a deductible.[3]
Renters insurance also protects against damage to your personal belongings from disasters you can’t prevent, like a fire in the building.
It may cover additional living expenses
If a burst pipe causes your apartment to flood, could you afford to stay in a hotel? Renters insurance pays for your additional living expenses while your apartment is uninhabitable, including hotel and meal costs above your typical monthly living expenses.
In most cases, your landlord wouldn’t cover those costs unless their negligence caused the residence to be unlivable, though landlord-tenant laws vary from state to state. In some states, your landlord can even require you to keep paying rent until the repairs are complete.
It can protect your finances
If someone slips on your floor or your dog bites someone while you’re on a walk, renters insurance may cover the injured person’s medical bills. If the injuries are severe and the person files a lawsuit against you, renters insurance may also cover your legal fees. A lawsuit has the potential to wipe out your savings, so liability protection is an important benefit.
What happens if you don’t have renters insurance?
If you don’t have a renters insurance policy, you’ll be vulnerable to losses that your landlord and your other insurance policies won’t compensate you for. Some risks to consider include:
Loss of personal property
A fire in your apartment building could destroy everything you own. Without renters insurance, you’d need to replace your clothing and furniture out of pocket.
Temporary homelessness
If your apartment is unlivable after a natural disaster, you’ll need to find another place to stay until the repairs are complete. If you don’t have friends or family in the area, you might struggle to find affordable accommodations.
Loss of savings
If someone claims you’re liable for their injuries or damage to their property, the legal costs could eat up all the money in your bank account. Renters insurance offers protection for incidents your other insurance policies don’t cover.
What a renters insurance policy covers
Here’s what renters insurance covers:
Personal belongings
If vandalism, theft, or disasters like fire, windstorm, or water damage your furniture, clothing, or other valuables, renters insurance may reimburse you for the loss, up to your policy’s limit.
Renters liability
If you, your family, or your pets cause unintentional bodily harm or property damage to others, the liability portion of your renters insurance policy may pay for the person’s medical bills, up to a limit, and cover your defense if the person takes you to court.
Additional living expenses
Renters insurance pays for temporary accommodations, restaurant bills, and other expenses that exceed your typical monthly living costs should your apartment become uninhabitable.
Additional coverages
Some renters insurance companies offer riders or floaters you can add to your policy if you need extra coverage. For example, you can buy endorsements for valuable items, like jewelry or musical instruments, which may have coverage only up to a sublimit on a standard policy. Another common option is water backup coverage.
Actual cash value vs. replacement cost
Renters insurance companies typically offer two options for reimbursement: actual cash value and replacement cost coverage. A replacement cost policy is about 10% more expensive but provides the most coverage.
Actual cash value: If you choose an actual cash value policy, your insurer pays only the depreciated value of your belongings. Depending on the age and use of your items, you could get far less than you originally paid for them.
Replacement cost: A replacement cost policy pays you the price to replace your belongings with the same or similar new items, up to your policy limits. Your insurer won’t deduct for depreciation, and you’ll be able to afford to replace your damaged or stolen items with new ones.
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What renters insurance doesn’t cover
Renters insurance policies exclude coverage for certain things, such as:
Damage to the building: A renters insurance policy covers your personal belongings. It doesn’t pay to repair the structure of the building, which the landlord’s policy covers.
Floods and earthquakes: Standard renters policies don’t cover floods or earthquakes, so you may want to purchase endorsements or separate coverage for these natural disasters if you live in a high-risk area.
Business liability and business property: If you work from home, your renters insurance won’t cover your business equipment, and if a liability claim results from business activity (for example, if you provide services out of your home and a client is injured), your renters insurance won’t cover your defense. You may need business insurance for these risks. Renters insurance also won’t cover incidents that occur when you rent out your apartment.
Damage to your property caused by your family or pets: If your kid breaks a neighbor’s window or your dog destroys your neighbor’s yard, renters insurance helps pay for the resulting damage. But renters insurance doesn’t cover damage to your own property from the people and pets in your family, nor does it pay their medical bills after an injury. So if your toddler writes on your walls, your spouse falls down the stairs, or your dog chews up your sofa, you won’t be compensated.
Pest removal and pest damage: Most standard renters policies don’t include reimbursement for property damage from termites, cockroaches, or other pests. Renters insurance also doesn’t cover bed bug extermination. Depending on the cause of the infestation and the laws in your state, your landlord may be responsible for footing the bill.
How much does renters insurance cost?
Renters insurance premiums depend on the policy limits you choose and other factors. The table below shows the national average monthly premiums for a few different policy options, based on Insurify data. Consider the value of your property and assets when determining your coverage needs.
Personal Property Limit ▲▼ | Liability Limit ▲▼ | Average Monthly Premium ▲▼ |
|---|---|---|
| $30,000 | $100,000 | $20 |
| $50,000 | $500,000 | $30 |
| $100,000 | $750,000 | $43 |
These are some other factors that influence your premium:
Location: Renters insurance premiums vary by state. For example, Alaska residents pay just $6 per month for renters insurance on average, while Arkansas renters pay $24 per month.
Riders or endorsements: You’ll pay an additional premium if you add floaters or riders to your policy.
Deductible: You can customize your deductible, which affects your renters insurance premium. Your deductible is the amount you’re required to pay toward a covered claim. The most common deductible among renters insurance policyholders is $500. Choosing a higher deductible would reduce your premium.
Credit history: In many states, insurance companies can use your credit history to help assess the risk of covering you. People with good credit tend to file fewer claims, so insurance companies may offer them lower rates.
Why renters insurance is important FAQs
Renters insurance is an affordable way to protect your belongings. Here’s some more information to help your search.
Why is it important to consider getting renters insurance?
You may need renters insurance if your landlord requires it. But even if your lease doesn’t require a renters policy, it’s a good idea to have insurance that covers the cost of damage to your belongings, liability claims against you, alternative accommodations during repairs to the building, and other losses.
Why do landlords want you to have renters insurance?
Landlords require renters insurance for several reasons. Renters insurance reduces the likelihood that renters will sue the landlord for property damage and decreases the risk and potential cost of accepting pets on the property due to dog-bite liability and property damage coverage. Landlords may also view a renters policy as a sign of a responsible tenant.
What does renters insurance actually cover?
Renters insurance covers your personal belongings from theft and damage due to covered perils like burst pipes and fires, and it pays for extra living costs you incur while the landlord repairs a unit that is uninhabitable. It also pays for medical bills and legal costs if you’re liable for property damage or injury to another person.
What are the pros and cons of renters insurance?
Renters insurance comes with many benefits, like coverage for your personal belongings while you travel and peace of mind that you’ll have a place to stay if your home is damaged. It’s also very affordable and easy to obtain a policy. But renters insurance policies contain exclusions that may leave coverage gaps, such as business-related damage and liability claims.
What is the main reason someone would want to have renters insurance?
Most people get renters insurance because their lease requires it. About 75% of renters insurance policyholders have landlords who mandate the coverage. But it’s always wise to have renters insurance, even if you don’t think your belongings are valuable, since it can protect you against costly lawsuits and keep a roof over your head in the event of a disaster.
Sources
- National Apartment Association. "Renters Insurance Premiums Constant."
- III. "Facts + Statistics: Renters insurance."
- III. "Your renters insurance guide."
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Lindsay FrankelInsurance Writer
Lindsay Frankel is a content writer specializing in personal finance and auto insurance topics. Her work has been featured in publications such as LendingTree, The Balance, Coverage.com, Bankrate, NextAdvisor, and FinanceBuzz.
Lindsay has been a contributor at Insurify since October 2022.
Sara Getman is an Associate Editor at Insurify and has been with the company since 2022. Prior to joining Insurify, Sara completed her undergraduate degree in English Literature at Simmons University in Boston. At Simmons, she was the Editor-in-Chief for Sidelines Magazine (a literary and art publication), and wrote creative non-fiction.
Outside of work, Sara is an avid reader, and loves rock climbing, yoga, and crocheting.