What is Renters Insurance? • Benzinga

Renters insurance protects a tenant’s personal belongings from unexpected events like theft, vandalism, fire and other occurrences. It repays the tenant the cost of damaged or destroyed possessions and shields them from liability for injuries to others on their property.

Renters insurance is different from landlord insurance, which covers physical damage to the building itself and protects the owner’s financial interest in the property. Both types of coverage are important for rental properties.

What Is Renters Insurance?

Renters insurance provides coverage for tenants renting a home or apartment. It compensates the policyholder for damage or loss of personal possessions and injuries resulting from catastrophic, unforeseeable events such as theft, fire and certain natural disasters.

Important Renters Insurance Terms and Definitions

Here are some quick definitions of renters insurance terms:

• Premium: The cash amount a policyholder pays each month for insurance
• Policy limits: The maximum amount an insurer pays for losses in a policy
• Pre-occurrence policy limit: The maximum coverage for losses that happen before a policy’s effective date
• Aggregate policy limit: The maximum coverage amount for all losses during a given insurance period
• Deductible: The out-of-pocket expenses an insured person must pay before insurance payments kick in
• Inclusions and exclusions: Specific items that are covered and not covered in an insurance policy
• Covered or named perils: Risks or events that are specifically covered in an insurance policy
• Endorsement: An added coverage or provision extending the terms of an insurance policy

How Does Renters Insurance Work?

Renters insurance covers the costs of certain losses in a property that you rent. The reimbursement amount depends on what kind of coverage you have. There are two distinct types of renters insurance:

Replacement Cost Value Policy (RCV): The amount it costs to replace lost or damaged property

Actual Cash Value Policy (ACV): The cash value of an item or property at the time of loss or damage

Do You Need Renters Insurance?

In some areas, renters insurance is required in some rental agreements. Even if it’s not mandated, though, renters insurance is a good idea. 

Renters insurance safeguards your possessions and limits your liability for damages from events beyond your control. Renters insurance can get you through recovery by covering living and replacement expenses following your loss.

What Does Renters Insurance Cover?

Renters insurance covers three general categories of property damage or loss.

Personal Property Coverage

This form of coverage protects your personal belongings and possessions within the space you rent. Items typically covered under personal property coverage include clothing, electronics, appliances and furniture that the tenant owns. Most policies limit the amount the insurer will pay for these losses.

Liability Property Insurance

Liability property insurance protects you if you’re found liable for injury or damage to a third party from an event that occurred on your rented property. It can cover medical expenses, property damage, legal fees and other costs that visitors may incur.

Loss of Use or Additional Living Expenses Coverage

This insurance provides financial aid when your rental property is temporarily uninhabitable due to damage. Depending on the extent of the policy, it may pay for housing, transportation and even food while you’re in short-term accommodations.

What Does Renters Insurance Not Cover?

Renters insurance doesn’t address every loss you may suffer from an event on the property you rent. Typical renters insurance policies exclude:

• Natural disasters (floods, earthquakes)
• Pest infestations
• Mold
• Accidental or intentional damage caused by you
• Physical building damage

Depending on your coverage limits, high-value items may be excluded from a renters insurance policy, including: 

• Jewelry
• Rare art
• Antiques
• Firearms
• Musical instruments
• Damages to your vehicle or the items inside it

If you run a business from your rental property, items related to that business are usually not covered in a renters insurance policy, either, although it’s possible to include them via an endorsement.

How Much Does Renters Insurance Cost?

Renters insurance premiums vary according to where you live, what insurance company you choose, the items protected and other conditions. However, in general, it’s surprisingly affordable.

Forbes reports that renters insurance averages about $157 a year for a $15,000 coverage amount. A policy with a $30,000 limit averages $199 each year, and a $50,000 limit commands an average of $260 annually.

In addition to your policy’s specific limits and deductibles, your premium amount may depend on your credit record and insurance claim history.

How to File a Renters Insurance Claim

To file a claim on a renters insurance policy, take the following steps.

Inform the Landlord or Owner

Inform your landlord about your insurance claim. This step is usually a requirement outlined in your rental or lease agreement. Even if it isn’t, the landlord should be kept up to date on your claim as it may affect other tenants they have.

File a Police Report

If your loss occurred due to theft, vandalism or another criminal act, you should file a report with local law authorities. A police report may also be necessary in case of fires, explosions, and other catastrophic events. The report provides a paper trail that establishes your account of the events. It may not be necessary for minor incidents.

Get in Touch With Your Insurance Company

Notify your insurance carrier of your intent to file a claim as soon as you can. Have your policy information handy for quick reference.

Start a Paper Trail

Document each step you make in your claims process, starting with the above three steps. Make a full accounting of all your property losses, inventory that needs to be replaced, purchase receipts, and other expenses.

Take Pictures or Make Videos of Your Losses

If it’s possible for you to do so, capture physical images of your damaged property. They can help make a compelling case for your claim.

Complete Filing Your Claim

Your insurance agreement should mention how much time you have to file your renter’s insurance claim after the damage or loss occurs. Generally, this period falls between 48 and 72 hours after the incident. 

Take Inventory of Your Belongings

Lastly, make a final record of your belongings in your home. After your claim is fulfilled, update this inventory to reflect replaced items and recently bought possessions you may not have originally included.

Compare the Best Renters Insurance From Benzinga’s Top Providers

Here are the best rates Benzinga found for renters insurance.

Peace of Mind for Renters

Renters insurance protects tenants from the high cost of damage and destruction to properties they live on. Even a basic policy can provide a sense of assurance and relief about the items that mean most to you.

Frequently Asked Questions