Some renters assume that because they do not own their homes, they do not need property insurance. While it is true that you cannot purchase homeowners insurance as a renter, you can and probably should purchase renters insurance. In fact, some landlords require it as a condition of the lease.

In addition to reviewing the best renters insurance companies, we at the Home Media reviews team have compiled a guide to what a renters policy does and does not cover, whether renters insurance is required, and what the alternative is.

Renters insurance covers personal belongings that are damaged, stolen, lost or destroyed by a covered event. It may pay either the actual cash value (ACV) for these items or the full replacement cost, depending on the policy. ACV coverage accounts for depreciation, whereas replacement cost value (RCV) coverage does not deduct for depreciation.

Common perils covered by renters insurance include theft, vandalism, fire, smoke, explosions, lightning, wind, hail, falling objects and collapses due to ice or snow. Mold and water damage may also be covered, depending on the terms of your policy.

In addition to the personal property coverage described above, a renters insurance policy covers the following:

• Additional living expenses (loss of use): If a covered peril renders your home uninhabitable, your living expenses may temporarily increase. Renters insurance will help cover these additional expenses, such as hotel rooms and takeout meals.
• Personal liability: You can be held liable for bodily injuries or property damage that occurs in your home. A renters policy will help cover the costs associated with these accidents.
• Medical payments: If a guest is injured at your home, your renters insurance will help pay their medical bills up to a predetermined amount.

Most companies offer additional coverage options, also known as endorsements or add-ons, to cover items or perils that would otherwise be excluded. You can also adjust your coverage limits to ensure full protection.

All insurance policies come with certain limitations and exclusions. When evaluating a renters insurance policy, you have two main things to consider: the list of named or excluded perils and the coverage limits.

Non-Covered Perils

The policy documents for your renters insurance will explain what risks the policy does or does not cover. A named perils policy lists the perils it covers and excludes everything else, while an all-risk policy lists the perils it excludes and covers everything else.

Most renters insurance policies do not cover damage caused by the following:

• Earthquakes
• Floods
• Landslides
• Pests
• Rodents
• Sinkholes

Coverage Limits

A policy’s coverage limits determine how much the renters insurance will pay for different items or situations. Your renters policy will have both an overall limit and sub-limits for individual items or categories. If the cost of your claim exceeds the limits of your policy, you will have to make up the difference, so make sure the coverage amounts match the value of your belongings.

Other Exclusions

Renters insurance is meant to cover the personal belongings of the policyholder. This means it will cover the contents of your home, but not the structure. Only the landlord can insure the building and any structural elements or common areas. Although renters insurance may cover belongings stolen or damaged while they are in your car, it does not cover the car itself. Further, it will not cover your roommate’s possessions unless his name is also on the policy.

Renters insurance can save you money in the wake of an accident, robbery or natural disaster. Here are a few reasons to consider renters insurance:

• It’s surprisingly affordable. Compared to other policies, such as homeowners insurance, renters insurance is a bargain. Lemonade offers some of the cheapest renters insurance policies with prices as low as $5 per month depending on your location, the age of the property and other factors.
• It costs less than replacing your belongings. The cost to replace your belongings after an accident, disaster or theft will cost far more than you would spend on renters insurance.
• It can pay medical and legal bills. The liability insurance included in your renters policy will help pay the medical and legal bills you might face after someone else is injured on your property.
• It can help you save on car insurance. Most insurance companies offer a multi-policy discount for those who bundle their auto insurance with renters insurance.
• It often pays for itself. Thanks to generous multi-policy discounts, you may be able to add renters insurance without seeing a change in your insurance premium.
• It protects your savings. After a covered event, your renters insurance policy will help pay for expenses that might otherwise drain your savings account.
• It may be required by your landlord. Some landlords require their tenants to purchase a renters insurance policy as a condition of their lease agreements.

To find the best deal, we recommend gathering renters insurance quotes from multiple companies. If you have auto insurance, checking whether that provider also offers renters insurance is a good place to start. You can also ask about bundling discounts when you get renters insurance quotes to compare.

Most states require drivers to carry car insurance, and mortgage lenders require borrowers to obtain homeowners insurance — but what about renters insurance?

Although renters insurance is not required by state or federal law, it may be required by the terms of your lease. Many landlords require their tenants to get renters insurance. This requirement can help landlords and their tenants avoid costly disputes when a renter’s belongings are lost, stolen, damaged or destroyed. 

Most of all, having renters insurance protects you, the tenant. Even if your landlord has insurance, you will be responsible for your own belongings. Your landlord’s insurance is meant to cover the building itself and items that belong to the landlord. It may also include liability protection for accidents that occur on the property. However, it will not cover your personal items.

The alternative to renters insurance is an emergency savings fund. Instead of paying a company to insure your belongings, you set aside enough money to cover them yourself.

Although skipping your renters insurance premium might sound like a way to cut expenses, make sure you crunch the numbers before choosing to forgo it. You can inventory your belongings and calculate how much it would cost to replace if you lost all your belongings to a fire, flood or theft. 

If you don’t have enough emergency savings to replace your belongings to your satisfaction, you might not have a viable alternative to renters insurance.

Renters insurance coverage is almost always worth it. It is much more affordable than other policies, including home or auto insurance, and provides valuable financial protection. Even if you can save enough money to cover unexpected loss, renters insurance may be worthwhile. For a relatively low monthly cost, you can ensure coverage for all your belongings and liability protection should someone get hurt on your rental property.

If you already have a car insurance policy or other insurance policy, you can save money by bundling it with renters insurance, making it even more affordable. Comparing renters insurance quotes from two or three different insurance companies will help you find the best deal.