HomeRenters InsuranceHow Much Renters Insurance Do I Need?

How Much Renters Insurance Do I Need?

Just like you would get insurance to cover the home you own, you can get similar coverage for the apartment, condo, townhouse, or mobile home you’re renting. This can provide you peace of mind knowing that if something happens, you have some financial protections in place.

Key Takeaways

  • Coverage typically includes loss or damage to items in the home caused by fire, electrical malfunctions, vandalism, theft, and plumbing
  • Renters insurance provides financial protection for liability claims
  • Policies are typically inexpensive


  • Protection of property in case of a loss

  • Coverage for personal liability and guest medical bills

  • Money for additional living expenses after a covered peril


  • Personal property may be covered at actual cash value, which factors in depreciation, instead of replacement cost

  • Full replacement coverage may have a higher premium

  • Coverage may have limits on certain items

It’s not hard to make the case for getting renters insurance. If your belongings were damaged by a fire, natural disaster, or you were robbed, would you be able to afford to replace everything? If the answer is no, you may not want to leave yourself vulnerable to a potentially significant financial setback. The personal property coverage in a renters insurance policy helps pay to replace your stuff. If you opt for replacement cost coverage, that will pay the amount that it costs to buy new items that are similar in type and quality.

Personal liability coverage provides coverage if someone is injured in your apartment. The coverage helps cover the costs of their medical fees and legal fees if they sue you. It also covers you if you or someone in your household accidentally damages someone else’s property. If your apartment is so badly damaged that you need to vacate the space while repairs are being done, additional living expenses coverage will help pay for things like a hotel and food.

As for the negatives with renters insurance, be clear on actual cash value vs. replacement cost. Some policies offer actual cash value coverage for personal property loss while offering replacement cost as an option at additional cost. While it is cheaper, with actual cash value you’ll be reimbursed what the item is worth and factors in depreciation, meaning the insurer will pay you less than if you had replacement cost coverage. Another consideration with renters insurance is that some policies have coverage limits, like for jewelry or art. Also, be aware that floods and earthquakes are usually excluded.

When it comes to renters insurance, one size doesn’t fit all. Your needs are different from the needs of your next-door neighbors. There are some key considerations when determining how much coverage you need. For starters, take stock of what you own. Create an inventory that includes everything from furniture, electronics, clothes, linen, and kitchen tools; pretty much everything in your home. Make a list of these items with your best guess at their value. If you have receipts, include those in your record. You’ll want to include facts like how old the item is, how much you paid for it, and the like. It’s also a good idea to take pictures or a video of your items.

The bottom line is you want coverage to equal at least the total value of your assets. It’s not enough to consider what it would cost to replace your things but includes what ifs, like if someone hurt themselves in your house or if you caused damage in someone else’s home. Typical renters insurance policies offer $100,000 in liability coverage. However, if you have a home-based business, art collection, or other special circumstances, you may need additional coverage. Talk to your insurance agent to ensure you adequately protect yourself.

According to the National Association of Insurance Commissioners, an average renters insurance policy runs between $180 and $360 a year. Insurance costs vary based on several factors. One of them is your choice of carrier. For instance, the median monthly cost of a renters insurance premium from State Farm is $13.04, based on our research. At the other end of the spectrum, a similar policy from American Family has a median monthly cost of $30.49.

What else can impact your premium? Where you live counts. Your state, city, and neighborhood all come into play. Low-crime areas will likely have better rates, but if you’re in an older building that could be prone to electrical and plumbing problems, you might get charged higher rates. The size of your unit, and whether security and fire systems are in place, will also be a determining factor.

While you might not have much control over those things, your choice of deductible can make a difference. Generally, the higher your deductible the lower your premium because there is less exposure for your insurer. If you had $3,000 in damages and your deductible is $2,000, your insurer would pay $1,000. But if you had a $500 deductible, the remaining $2,500 is on the insurer. Ask about any discounts you might be eligible for, like if you decide to use the same company for your car insurance.

You may share your place with a roommate, but that doesn’t necessarily mean the sharing should extend to a renters insurance policy. Regulations as to whether you can add roommates to your renters insurance policy will vary by state and company. Some states won’t allow you to share a policy with someone who is not a spouse. You’ll need to find out what your state rules allow.

Even if it is permitted, doing so might not be ideal because things can get complicated. For example, the total value of your combined belongings will factor into the cost of your insurance. You may end up in a scenario where your roommate’s belongings are more expensive than yours, thereby driving up the price of the premiums. Or, what if your roommate leaves before the policy ends and you’re required to reapply or update your policy? This could present an opportunity for the insurer to increase your premium.

There could also be issues with coverage caps. If there is a cap on jewelry and you and your roommate both have jewelry stolen during a break-in, you may run into the coverage limit faster than you otherwise would.

Your roommate’s claims could also impact your future insurance premiums. If the person files multiple claims on your shared policy, those claims will apply to your insurance record which could make your premiums for future insurance policies more expensive.

Talk to your financial advisor about the pros and cons of sharing a renters insurance policy. You might save a couple of bucks by sharing the cost, but it could wind up being a headache.

Before you explore getting a renters insurance policy, see if you are covered under your parent’s homeowners or renters policy while you are away at school and living on campus. Be sure to check that the policy’s coverage limits will be sufficient to cover your belongings. If they only have $3,000 or so in off-premises coverage and you have more than that amount with your clothes, electronics, and other belongings, then you may want to get your own policy.

Likewise, if you’re not staying on campus you will likely want to get your own policy, according to the Insurance Information Institute. You’ll have enough to worry about with your studies, you don’t want to have to wonder about what you will do if your roommate accidentally damages your computer or if the dorm can’t handle an extremely cold winter, with pipes freezing, bursting, and wreaking havoc on your much-beloved belongings.

Think of renters insurance as a three-leg stool of protection – personal belongings, liability, and additional living expenses.

According to the Insurance Information Institute, standard renters insurance protects your personal belongings against damage from fire, smoke, lightning, vandalism, theft, explosion, windstorm, and other stated perils listed in your policy.

  • Personal belongings. Renters insurance includes coverage for your personal belongings such as clothing, furniture, dishes, electronics, and jewelry. Should anything happen to them such as theft or damage from a fire, this would help cover the expense to repair or replace the covered items.
  • Liability. Renters insurance also provides liability protection against lawsuits for bodily injury or property damage that you or your family members cause to other people. It also pays for any misdeeds by your pets to others. Liability limits commonly start at approximately $100,000, though wise counsel from a financial guru would likely have the advice to bump that to $300,000. You can buy an umbrella or excess liability policy to get higher limits and wider coverage.
  • Guest medical coverage. Your policy offers no-fault medical coverage, so if someone is injured in your home, they can send medical bills to your insurer. You typically get $1,000-$5,000 in this coverage.
  • Additional living expenses. If the damage to your home is so significant you need to temporarily go elsewhere, the insurer assists with bills for hotels, meals, and other expenses you rack up because you’re not in your home.

It’s also important to understand what renters insurance doesn’t cover. Floods, landslides, sinkholes, sewer backups, and earthquakes are not covered. You must get a separate policy for these events. Damage to the building you live in – structural things like roofing issues, for example – would fall on your landlord’s shoulders, not yours. Also not covered is water damage caused by flooding or underground water.

If your car is stolen from the driveway, your auto insurance policy would cover the theft, not renters insurance. If your pet bites someone, your liability coverage should take care of the person’s medical bills or legal fees if you’re sued. But know that if your pet is on the vicious dog breed list, you may not be covered.

Renters insurance is not required by law. However, it is not uncommon for a landlord to require you to have a policy. A landlord may even stipulate that you have a certain amount of coverage. You will also likely be asked to show proof of your policy.

You won’t have to jump over any onerous hurdles when it comes to applying for renters insurance. Most likely you can do it online. Be ready to submit information about your home and belongings. A home inventory list of what you have in your home and how much each item is worth will come in handy. It’d be even better if you provide the year in which you purchased it and for how much. You’ll give personal details like birthdate, address, previous addresses, how long you lived at each place, as well as information like your income and employment. Expect that you may be asked about your insurance history, such as whether you recently had claims for insured losses. The insurer typically checks your credit score as well. There may be an application fee. Be prepared too for questions about the type of building you live in, when it was built, what safety features are in place, and other such queries.

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