Key points

• Renters insurance is a type of insurance that includes coverage for personal property, additional living expenses, medical payments and liability.
• Your landlord may require you to purchase renters insurance as part of your lease agreement. 
• Renters insurance costs an average of $15 to $30 per month.

What is renters insurance?

Renters insurance is an insurance policy for renters and tenants. Renters can’t rely on a landlord’s insurance, which covers the building but not your belongings. 

A renters insurance policy can reimburse you for personal belongings, like your furniture and electronics, if they are damaged by a covered scenario in your policy, such as fire, roof collapse from snow or windstorm. 

It also pays for additional living expenses if you need to live somewhere else while your rental is being repaired because it was damaged by a problem listed in your policy.  

In addition to these coverages, renters insurance includes liability insurance, which pays for someone else’s medical and property damage expenses that you’re responsible for. It also covers the cost of your legal fees and settlements if you’re sued over the incident. 

Plus, renters insurance provides coverage for guest medical payments and can pay out small amounts, such as $1,000, for injuries to guests, no matter who’s responsible.

What renters insurance covers

Standard renters insurance includes the following coverages.

Personal property or personal possessions coverage

This coverage pays to repair or replace your belongings, like your clothing, furniture and electronics, if they’re stolen or damaged by a covered event in your policy, such as fire and smoke damage. 

Personal property coverage includes “off-premises” theft coverage, so if your laptop is stolen at the airport or out of your car, you can still file a claim. You’ll need to calculate or estimate the total value of your belongings to determine how much personal property coverage you need. 

Renters insurance pays out the actual cash value of your personal belongings, so deprecation is factored into your claim payout. Consider upgrading to replacement cost coverage so that you’ll be paid out at today’s prices for your belongings. 

There are certain coverage limitations when it comes to theft of expensive items like jewelry and firearms, meaning there will be a maximum amount your renters insurance will pay if your jewelry or other high-value belongings are stolen. 

Additional living expenses

If your rental house or apartment is left uninhabitable after a covered event — like a severe windstorm — additional living expenses can cover costs like hotel stays, restaurant bills and pet boarding services while you’re temporarily displaced. The coverage limit is set at a percentage of your personal property coverage limit. 

Personal liability coverage

Liability insurance pays for someone else’s medical expenses or property damage bills that you’re at fault for. For example, if your dog bites someone and the person needs surgery, your liability insurance can cover the cost of their medical expenses, up to the limit in your policy. 

It also helps pay for your legal defense and settlements if you’re sued over the matter. Personal liability coverage extends off your property, so if your dog attacks someone at the park, it still covers the injured party’s medical expenses and your legal defense — up to your policy’s coverage limits. 

And if you’re found to be at fault for damaging someone else’s property, like if you forgot to turn the bathtub faucet off and it floods your downstairs neighbor’s apartment and ruins their belongings, your liability insurance can pay to repair or replace their things. 

Typically you can get $100,000 to $300,000 in personal liability coverage. 

Medical payments to others 

This coverage pays for a guest’s minor medical expenses, regardless of who was at fault. Typically you can get up to $5,000 in this type of coverage.

Additional coverages available

Your insurer may offer upgrades or coverage add-ons that you can add to your renters insurance policy for an additional cost. Here are two common upgrades. 

• Replacement cost coverage: Pays for your personal belongings at today’s prices, rather than their depreciated value. If you want to be reimbursed as if your belongings were new, ask your insurer if you can upgrade to replacement cost coverage. 
• Scheduled personal property coverage: Certain high-value belongings have coverage limits for theft, like $500 for stolen jewelry. You can add scheduled personal property coverage to your policy to increase your theft coverage limits on certain classes of items. 

Types of damage covered by renters insurance

Renters insurance covers damage caused by these problems:

• Accidental discharge or overflow of water or steam.
• Damage caused by an aircraft (not your own).
• Damage caused by a vehicle (not your own).
• Explosion.
• Falling objects, like trees.
• Fire and lightning.
• Freezing.
• Riots and civil commotion.
• Smoke.
• Sudden and accidental damage due to short circuiting.
• Sudden and accidental tearing, cracking, burning, or bulging.
• Theft (also theft outside of your home, like if your stuff is stolen out of your car).
• Vandalism.
• Volcanic Eruption.
• Weight of ice, snow, or sleet.
• Windstorm and hail.

Your renters insurance may also cover the following: 

• Food spoilage. Your renters insurance policy may reimburse you for some food loss if you lose power due to a covered reason, like a lightning strike. 
• Identity theft. Renters insurance may cover identity theft restoration services.
• Lock replacement. Your insurer may pay to replace your locks if damaged by a covered event, like a home break-in. Your landlord may cover this cost, though. 

What renters insurance doesn’t cover

Unlike homeowners and landlord insurance, renters insurance does not include dwelling coverage, which is the type of coverage that pays to rebuild the structure of the house. That’s because as a renter you aren’t the owner and have no financial responsibility in repairing it.

Here are some types of damage not covered by renters insurance:

• Damage to your vehicle.
• Damage caused by your pets to your property.
• Earthquake damage.
• Flood damage.
• Maintenance issues.
• Pest infestations.
• Wear and tear.

How much does renters insurance cost?

Renters insurance costs an average of $15 to $30 per month, according to the National Association of Insurance Commissioners. Renters insurance is cheaper than most other types of property insurance, like homeowners and landlord insurance. This is mostly because renters insurance policies don’t include dwelling coverage, since you’re not the owner of the home. 

Despite its low monthly cost, renters insurance can offer tens of thousands of dollars in coverage for your personal property and in liability insurance. 

Here are some factors that affect the price of renters insurance:

• Your location.
• The value of your belongings.
• Your credit history.
• How much coverage you purchase.
• Discounts you qualify for. 
• Your deductible — typically set at $500 or $1,000.

Do I need renters insurance?

When deciding if you need renters insurance, consider how much your belongings cost and whether or not you can afford to pay out of pocket to replace them. You should also think about whether you could afford to pay for someone else’s medical expenses and your own legal fees. 

Keep in mind that although renters insurance isn’t legally required, you may need it if it’s a stipulation in your lease agreement.

How does renters insurance work?

Renters insurance works much like home insurance, if your property is damaged or you’re responsible for bodily injury or property damage to someone else, you’d file a claim with your renters insurance company. The insurer will then review your claim, investigate the proof and either accept or deny it. 

Here is an example of how renters insurance works

Let’s say a pipe suddenly bursts and the water damages $5,000 worth of your personal belongings. And let’s say you have a $500 deductible. 

After you submit your claim to your insurer and the claim is approved, you may be reimbursed $4,500 for your personal belongings ($5,000 claim minus the $500 deductible), depending on if you have a replacement cost coverage policy or actual cash value policy.

A replacement cost coverage upgrade will increase the cost of your renters insurance rates, but you’ll be reimbursed for your belongings at today’s prices — up to the coverage limit in your policy — instead of having depreciation factored into the claim payout. 

How to buy renters insurance

You can usually buy renters insurance through insurance companies that sell homeowners insurance. 

Here’s how to buy renters insurance:

• Try to get a rough estimate of the overall value of your personal belongings. It’s a good idea to make a home inventory with receipts and prices of your possessions so you have it to reference if you need to file a claim. 
• Consider how much you can afford to pay out of pocket for a liability claim. You may want to purchase enough liability coverage to cover your assets in the event of an expensive lawsuit. This is especially important if you are at higher risk, like if you own a dog. 
• Decide on a deductible. The higher your deductible is the lower your renters insurance rates will be. Your deductible will be subtracted from your claim payout, so make sure it’s set at a rate that makes the most sense for you.  
• Compare renters insurance companies. Shop around and compare insurers and policies to make sure you’re getting the best deal possible for your coverage needs.