What is Renters Insurance & What Does it Cover?

Renters insurance is a type of insurance policy that covers tenants’ personal property and provides personal liability coverage. It’s generally affordable and anyone who’s renting should consider buying a policy, because your landlord’s property insurance doesn’t benefit you.

If you want to learn more about how renters insurance works and what it covers and doesn’t cover, CNBC Select has the details.

Renters insurance protects your belongings against theft or damage and works like most other types of insurance. You pay the insurance premium and file a claim anytime you experience a covered loss. You’ll be reimbursed up to your coverage limit for expenses that go above your deductible. For example, if you have a $500 deductible and a leaky pipe damages $1,500 of furniture, you could be reimbursed for $1,000.

When shopping for renters insurance, first determine how much coverage you need and what types of coverage you want, and then compare offers to find the best deal. If you focus only on the price of the renter’s coverage, you may end up with a less expensive but limited policy that exposes you to unnecessary risk in a worst-case scenario.

You should also consider the quality of service when shopping for insurance. You want to be able to quickly and easily file a claim so you can get paid promptly. CNBC Select’s best renters insurance for quick claim approval is Lemonade because of its easy in-app claim process. However, Lemonade only provides renters insurance in 28 states and Washington D.C. For a wider coverage area, consider Nationwide, which is available in 44 states and offers discounts for bundling other services.

Renters insurance typically covers three main areas:

• Personal property: Covers the replacement cost or reimburses you for the value of things such as clothing, furniture, electronics, jewelry and other personal belongings
• Personal liability: Pays for legal fees or medical expenses when someone is hurt or their property is damaged (i.e. dog bite or accident).
• Loss of use: Pays for additional expenses (hotel, restaurants, etc.) when you can’t live in the apartment because of a covered event, such as fire, vandalism or water damage from leaky pipes

You can customize almost every renters insurance policy to a certain extent and what is or isn’t covered varies. Before you purchase the policy, pay attention to the coverage limits, exclusions, deductible and other important details.

You can expand what your renters policy covers by paying the company to add a rider to the policy. A rider is an amendment that adds additional coverage, usually for a specific item or type of coverage. For example, expensive items such as art, a wedding ring or collectibles may exceed standard renters insurance policy coverage limits, but you may be able to purchase a rider for that specific item.

To add a rider, you may be required to provide receipts for the items or to get an appraisal to verify the value of the property you want to cover. Depending on where you live, you may want to add a rider for a specific type of event, such as an earthquake or flood. Damage from these events typically isn’t covered by a standard policy.

What a renters insurance policy doesn’t cover depends on the specific policy and what riders you might add. However, a typical renters policy usually won’t cover:

• Earthquakes
• Floods
• Damages to the home
• Pest infestation
• Damage to a roommate’s belongings
• Liability for a home business

When deciding what renters insurance policy is best for you, it’s important to pay attention to the exclusions or incidents that aren’t covered. Your insurance may cover up to $2,000 in medical payments for injuries that occur at your apartment, such as a dog bite. However, the insurance provider may exclude certain breeds, like pit bulls, from the coverage.

There are specific scenarios where your renters insurance may cover belongings damaged or stolen when outside of your apartment — for example, personal property stolen from your car or damaged while it’s in a storage unit. And, as mentioned earlier, you can expand the coverage of your policy by adding riders.

Renters are usually not required by law to have renters insurance, but landlords can require it. Your lease should spell out the type and amount of coverage you need to get. Even if you aren’t obligated to get renters coverage, having basic insurance can protect you when there’s an accident and provide a bit of peace of mind if your belongings are damaged or stolen.

Renters insurance protects tenants by providing coverage for your personal property and personal liability. You can be reimbursed for items damaged during a covered event. And your policy may also cover legal fees or medical bills if someone gets injured in your apartment.

However, some specific events and possessions aren’t typically covered by renters insurance, such as earthquakes or expensive jewelry. If you’re concerned about these situations, you’ll need a rider, which is additional coverage you can purchase.

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