Renters insurance is essentially homeowners insurance for those that rent an apartment or other properties like a duplex. These types of insurance policies exist to first and foremost protect your property. In addition, renters insurance also covers personal liability if someone else is injured in your place or if their property is damaged. Another notable aspect of renters insurance is that it can cover living expenses if the property listed on the policy is uninhabitable for a period of time.
Many tenants find value in being insured for their cost of living and possessions. If any property is damaged or lost, the renters coverage will then provide a payout for replacements. Additional endorsements and extensions are also available for more expensive or valuable possessions that may not be as easily covered by standard renters insurance. Some landlords require it while others may not.
Regardless, it can never hurt to carry at least one replacement policy with your renters' insurance. You never know what can happen to your property, and you don’t want to be buried up to your neck in replacement costs. This post covers the types of renters insurance and policy types along with costs, covered damages, and what isn’t covered. With this information, you’ll be able to wisely gauge how much renters coverage will suit your budget and the right policies for you.
Renters Insurance And What it Covers
Renters insurance is coverage reserved for renters of apartments, condos, and any other landlord-run lodging. The main idea behind it is that the renters are insured for everything within their rented space. This includes belongings, furniture, electronics, and anything else within the space that you would have the receipt for. Renters insurance is offered by both national and local insurance providers at different rates, so shopping around for multiple renters insurance quotes is easy. We’ll get into the specifics later on, but renters insurance doesn’t cover structural damage to the building as a whole. The landlord or owner will carry their own insurance for structural damage coverage. Renters insurance is quite literally only for tenants.
Now, What Does Renters Insurance Provide Coverage For?
Let’s get into the specific coverage types for which renters insurance provides Some coverage is required by landlords, while others are optional add-ons. However, it’s always a good idea to carry one of each renters coverage to ensure maximum protection.
Renters Coverage Includes The Following
- Personal property damage - At this point, it’s repeatedly been stated that renters insurance covers any and all personal property within the policyholder’s rented space. More expensive and rare items can be insured with additional coverage like an umbrella policy.
- Personal liability/medical payments - Medical and legal responsibility are a regular part of any kind of insurance. Often liability is required in every field like auto and business. Renters and homeowners often carry personal liability insurance should anyone be injured on their property. The average liability policy includes coverage up to $100,000.
- Additional living expenses (ALE)/ loss-of-use-coverage - Temporarily relocating due to something that has made your rented space uninhabitable for a period of time can compromise the day-to-day living expenses that you were so accustomed to. ALE coverage covers any expenses above like hotels and meals.
What Kinds of Damage Does Renters Insurance Specifically Provide Coverage For?
Renters insurance refers to the disasters or events that can cause your property damage or harm as “perils.” The list of covered perils seems vast and specific, but it’s not without its limits. Mainly, perils are due to weather, crime, or structural damage. Perils that are covered by renters insurance are:
- Fire - A fire can be caused by lightning, explosions, and even volcanoes. Whichever way it started, renters insurance will cover the damage.
- Crime - Criminal acts such as theft, vandalism, or willful destruction of property are insured for replacement.
- Water - Damage caused by water is more serious than it looks. It can lead to lasting issues like mold. Water damage caused by weather like snow, ice, and hail is covered along with any internal plumbing issues. A good way to remember it is that if the water came from inside the building, you’re more than likely covered.
- Collateral damage - Damage due to falling objects and debris from powerful storms are covered by renters insurance. When it comes to storms and natural disasters, coverage becomes limited.
- Credit card and bank fraud - Here are a couple of lesser-known coverages that your renters' insurance provides. If a thief were to break into your apartment and steal your credit card or bank info, you would be covered for any fraudulent charges while in their possession.
- Borrowed property - If your friend lends you their air fryer or a book to read, then it is covered by your renters' insurance as long as it remains in your apartment.
- Belongings in storage - It’s common for renters' policies to cover property kept in a storage unit or elsewhere. As long as you have the storage space in your name, it is your property and therefore entitled to insurance.
- Food - Some renters list and claim their groceries on their insurance policy in case their fridge stops working unbeknownst to them and their food spoils.
What Does Renters Insurance Not Cover?
Limits on how much disasters renters insurance covers were mentioned early. Usually, these exceptions are heavily state-based, while others are purely circumstantial. The following usually aren’t covered by standard renters insurance and may require insurance of their own:
- Natural disasters - More specifically, disasters such as wildfires, flash floods, and earthquakes aren’t covered by renters insurance or even homeowners insurance. These tend to be state-specific circumstances as California is more prone to wildfires while Louisiana faces flooding and tropical storms.
- Damage caused by pests - Vermin or pest infestations is not covered by renters insurance. In addition to the extermination services, you’ll also have to cover repairs for any damage the pests left behind. Many ask if bed bug damage is covered in renters coverage -it is not.
- More expensive items - There may be some things you own that are just too precious, rare, or expensive for the insurance company to replace. Antiques, heirlooms, and jewelry are just a couple of examples of such valuables. Standard replacement policies for electronics go up to $2,500 and $1,500 for jewelry reimbursement. Items that are worth more require their own policies beyond renters coverage, like jewelry coverage.
- Terrorism or acts of war - Protection against damages done by acts of terrorism or war require their own standalone policy that usually landlords carry. This only covers your rented space in a building and not the structure as a whole. That depends on if the landlord or owner has their own terrorism or war policy.
- Car and vehicles - Auto insurance exists for a reason and is a mandatory practice in most states. Renters insurance will cover your belongings if they are stolen from your car but not if the vehicle itself is stolen or damaged.
- Roommates’ property - Likewise, any roommates or cosigners on the rented property will have to take out their own policy for their belongings. At the same time, joint renters insurance coverage is also available for roommates to share the responsibility of a claim.
What Are The Different Types of Renters Insurance Policies?
Insurance coverage, which we have been discussing in the past couple of sections, refers to what damage is covered by renters insurance. Insurance policies refer to how the coverage is given by the insurance company. Tenants can get coverage for their rented spaces in the following ways.
You Can Choose From The Following Renters Insurance Coverages
- Replacement cost policy - This policy costs more but offers higher payouts. As the name suggests, tenants are covered for the cost of replacing lost or damaged items.
- Actual cash value policy - This policy is cheaper, but the payout is less because you are paid the “actual cash value” of your items. This accounts for the depreciated value over the years. So, you’ll have to pay that difference when purchasing a replacement if it has several years of use on it.
- Named perils policy - You have the option to list specific perils on your renters insurance. These could range from fire damage to theft if you so choose. This is a good way to save without paying for coverage you feel like you wouldn’t need.
- All perils policy - This is sometimes called an all-risk policy as well. This is the more pricey policy which includes coverage against damage from all perils except the usual exceptions.
What Does Renters Insurance Cost?
With all this coverage and policy details, you may be inclined to believe that renters insurance can be a pricey ordeal -it’s not, actually. Renters insurance is naturally cheaper than homeowners insurance and saves thousands. At the same time, only 37% of people who rent living space carry renter’s insurance. Renters' insurance coverage usually costs an average of $15 monthly or $195 annually.
How to Shop Smart For Renters Insurance
The quest for the right renters' insurance doesn’t begin online at insurance providers’ websites or at their storefronts, rather right in your apartment or condo. In order to estimate how much personal property you have to lose, you’ll have to take a detailed inventory of your belongings -electronics, furniture, clothes, and anything else you have filled your rented space with. It helps to go from room to room in an organized fashion when doing so. The average amount of property coverage most renters carry is $20,000 worth.
Once you have an idea of how much property insurance you can begin shopping with multiple insurance companies to see how they provide coverage for your property value. It helps to pay attention to their deductibles and premiums since these tend to differ the most between insurance providers.
How Much Renters Insurance Should Tenants Carry?
Also, ask yourself whether high premiums and low deductibles or vice versa are right for you when it comes to renters coverage. Many policyholders set a high deductible, so their monthly premiums are significantly less. If you feel your rented space is high-risk, then low deductibles would be the wise move since you would have to pay them every time you file a claim.
Lastly, the most you can do to shave some cost off your renters' insurance is some old fashion discount hunting. Many insurance companies bundle their coverage options together and give discounts based on an apartment’s safety features like a security system or certain door locks. Auto insurance providers similarly do this with vehicle safety measures.
What is The Additional Renters Insurance Coverage?
By now, you’re aware that standard renters insurance may not cover 100% of your property. Sometimes, a possession like a wedding ring is too valuable to replace. Not only that but there are a couple of perils that go uncovered, like earthquakes and hurricane flooding. You can be covered in these instances by having add-on policies, also known as endorsements, tacked onto your renters' insurance for certain cases such as these:
- Scheduled or specific property endorsement - Specific valuable property like jewelry or antiques can cost well beyond your coverage limits. What most people do is take out a specific endorsement policy on these particular items so that they can be fully insured. Many people insure their wedding rings this way.
- Earthquake, flood, or wildfire endorsement - State-specific perils like hurricanes, earthquakes, and wildfire often require their own endorsement or add-on.
- At-home business endorsement - Running a business from home is its own reward, but if you make at least $2,000 in a year, then you’ll have to add on an insurance endorsement to cover any equipment used for work. This is usually a given coverage in homeowners insurance.
What Are Claim Limits For Each Renters Insurance Claim?
With all the types of possessions and property, you can insure with renters insurance, the question of how much these coverage limits still remain. Again, these are the amounts that the insurance provider will pay out for replacements after a claim is filed.
Tenants' Possessions That Are Often Limited in Renters Coverage
- Jewelry - Typical insurance limits for jewelry can run from $1,000 to $2,000.
- Computers - Typical insurance limits for personal computers can run from $1,000 to $5,000.
- Appliances - Typical insurance limits for electrical appliances can run up to $1,000.
- Firearms - Typical insurance limits for firearms and ammunition can run up to $2,500.
- Vintage collections - Typical insurance limits for collections of things like sports cards, comic books, or albums can run up to $1,000.
- Silverware - Typical insurance limits for silverware can run up to $2,500.
- Boats and trailers - Typical insurance limits for boats or trailers can run up from $1,000 to $1,500.
- Sports and music gear - Typical insurance limits for sports gear and musical instruments can run up from $500 to $2,000.
- Credit card fraud - Typical insurance limits for credit card fraud can run up to $1,000.
How Are Renters Insurance Claims Filed?
All there’s left to discuss is the “how-to” of filing a claim when you need to. The sooner a claim is filed for specific damage, the sooner it can be resolved. This usually takes two to three days after the damage. Claims that are filed a considerable amount of time after damage occurs are more likely to be denied, so it’s best to get on the claim process as soon as possible.
File a Renters Insurance Claim by Doing The Following
- Report situation to management - The first step is to bring the damage to the attention of your landlord or building management to begin the maintenance process.
- File police report if necessary - In the event of criminal damage like theft, you’ll have to report the damage to the police. This will also be included in your claim.
- Assess rented space safety features - At this point, you would relocate temporarily if the damage was too great or repair any safety features like locks your rented space has and keep the receipts of any recent repairs after the damage.
- Give initial report to insurance providers - This is officially informing your insurance company that you will file a claim, and they will give you a time frame. This also helps them start the payout process.
- Document damage - You shouldn’t throw out or get rid of any damaged or destroyed belongings; they should be kept and documented as evidence for your insurance provider. Also, remember to update your inventory since some items may not be a part of it anymore.
- Complete claim filing - With all the information, you should be able to finalize the claim with your insurance company and recieve a payout in the near future.
More Renters Insurance Resources For Tenants And Landlords
If it’s your first time renting an apartment, make sure to read our First Time Renters Guide for all the tips and tricks before moving into your new place.