Renters insurance is a type of insurance policy that covers tenants who live in rented properties. It protects your personal belongings, shields you from liability claims, and helps pay for your living expenses if you’re displaced from your home.
While renters and home insurance both protect an individual and their belongings, there are some major differences between the two. The first is that homeowners insurance not only covers the contents of a home but also the building itself, as well as other structures on the property like a garage.
Another major difference is the cost. The average cost of renters insurance is around $173 per year, whereas homeowners insurance costs around $1,428 annually.
Renters insurance protects tenants and the things they own but offers no coverage for landlords. For example, if a property burns down, renters insurance covers the tenant’s belongings in the home, not the building itself.
Having renters insurance is a great idea for several reasons. Firstly, it helps protect your belongings from fire, theft, vandalism, hail, explosions, and other perils. It’s relatively affordable, only costing a few dollars a month in some cases. This is a small price to pay for the peace of mind insurance provides.
In many cases, you won’t even be able to rent an apartment in the first place without renters insurance. While it’s not against the law not to have renters insurance, most landlords and rental companies add it as a condition on the rental agreement.
Now that you know about what renters insurance is and why you should have it, let’s take a closer look at how to get a policy and how it works.
To get a policy, you generally start by asking for a quote online and filling out an application. You can also apply in person or over the phone in many cases. It should only take a few minutes to apply, and you’ll need to provide some personal information and details about your residence.
But before applying for a policy, make sure to know how much coverage you’ll need. Go through your belongings and take inventory of what everything is worth to get an accurate understanding of a coverage limit that’s suitable for your property.
Also, make sure to compare different providers to ensure you end up with one that works for you. Look at pricing, perks, covered items, and more. Don’t hesitate to get multiple quotes and shop around before making a decision.
Renters insurance covers a variety of different things, and they’re broken down into three categories: personal property , liability , and additional living expenses .
Personal property coverage refers to covering the actual contents of your home such as furniture, clothing, technology, collectibles, and any other things you own and keep in your house or apartment.
Liability coverage protects you if you damage someone else's property or are found responsible for a guest’s injuries suffered while in your home.
Coverage for additional living expenses helps pay for your living expenses if your home is uninhabitable for some reason. It will cover a hotel or temporary rental, as well as meals, transportation, and other costs you may incur.
Some things renter insurance doesn’t generally cover include: earthquake damage, flood damage, damage from pests, and damage to your vehicle. You’ll generally need to purchase additional coverage if you want protection for/from these things.
If you’re negligent or intentionally damage your own items, this won’t be covered by tenant insurance, either.
Also, keep in mind that each policy is different and not every one covers the same things in the same amounts. So be sure to read through your agreement and understand the limits, what’s protected, and what isn’t.
The process for filing a claim varies depending on your provider. Generally, you can do it over the phone, online, or by visiting a physical location. The first step is to document the incident in detail. You should take photos of the damage and note everything that was damaged, how it got damaged, and what its value is.
Next, reach out to your renters insurance provider to file the claim. You’ll need to describe what happened and when it happened, as well as list the damaged items. You’ll likely have to submit evidence to support your claims, so provide photos, receipts, and other documents that can back up what you’ve said. Have your policy number on hand, too.
After submitting your claim, make sure to track it and respond to any questions or requests from the company. You might be able to track your claim online, or can just reach out to the company for updates throughout the process. Once the insurance company has approved your claim, you’ll be paid.
If you’re claiming due to things being vandalized or stolen, don’t forget to report the crime to the police. It’s a good idea to let your landlord know you’re filing a claim as their property could have been impacted, too.
A key aspect of getting the most out of renters insurance is knowing the value of the different things in your home. This helps you choose the right coverage limit and allows you to make the most detailed claim possible. If you don’t keep photos or an inventory of your belongings and what they cost/are worth, you may not know how much to claim.
When you get renters insurance, your belongings will either be insured for the replacement cost or their actual cash value.
Replacement cost coverage reimburses you for the full cost of the item so you can buy a new one of similar quality. For example, if you paid $1500 for a couch and it was destroyed in a fire, replacement cost coverage would pay you the entire $1500 to replace it. This type of coverage is normally the more expensive option.
On the other hand, actual cash value coverage reimburses you based on what your belongings are actually worth at the time. It will look at what your items cost to replace, minus the depreciation.
For example, instead of getting $1500 back for the couch, actual cash value coverage may only give you $800 if that’s what it was worth when it got destroyed. These are more affordable policies but generally provide you with a lower reimbursement if you file a claim.
Landlords may require proof of renters insurance to ensure a renter actually has it. Also, if the tenant damages the landlord’s property, the liability portion of the renters insurance covers it.
As far as what constitutes proof of insurance, it can generally be anything from a copy of the policy itself to adding the landlord as an “interested party” on the policy. Being an interested party means that they’ll get a notice when there’s any change to your policy, such as it being canceled, expired, or renewed.
While renters insurance covers a variety of things including the contents of your unit, it won’t cover the building or property itself. Instead, that’s covered by landlord insurance. Let’s take a closer look at the differences between renters insurance and landlord insurance.
In renters insurance, the renter and their belongings are protected. On the other hand, landlord insurance covers the landlord and the home or building itself.
As we touched on earlier, renters insurance covers a variety of things including personal belongings, liability, and additional living expenses. Landlord insurance covers the physical building itself, other structures like fencing or a garage, equipment like snow blowers or lawn mowers, and loss of rental income.
In many cases, it will also cover appliances and other fixtures within the home like a fridge, stove, and furnace.
There are some things to think about regarding renters insurance and living with roommates.
Yes, you can get renters insurance if you live with a roommate. Both you and your roommate can get individual coverage, or you can get a single policy for the two of you. You need to ensure both names are on the policy for it to cover you both.
Keep in mind that not all companies offer both options, and some may require each person to have their own coverage.
While shared renters insurance is technically cheaper than having two policies, you should consider carefully whether it will be of actual benefit to you.
If your roommate is someone you just met, it’s risky to have a single policy that covers you both. You don’t know how careful they are around the home, and they may not have the same respect for their items and space as you do.
You’d hate to have one of their mistakes hurt your renting reputation going forward. Even if a claim is 100% your roommate's fault, it will still go on your record as your name’s on the policy, and could raise your insurance costs in the future.
Also, if you and your roommate are on the same policy, the coverage limits are shared, which may not be suitable for your needs. This is especially true if you both have relatively expensive items in the apartment.
It’s important, then, to have a discussion with your roommate in advance and make sure you’re on the same page about expectations and how to treat things in the home. Ultimately, if there are any concerns, or you just want to have your own name on the policy, having individual tenant insurance makes more sense.
In most cases, you’ll be able to transfer your renters insurance from one apartment to another. The process begins with finding out if your policy is transferable, either by referring to the policy itself or reaching out to your insurance provider.
Next, you'll have to speak with your insurance agent about the transfer. You’ll need to provide some details, such as when your new lease begins and your new address. This is when you can adjust your coverage limits or make other changes to your policy, too. You can generally transfer your insurance over the phone or online.
Finally, you’ll receive an updated policy with your new address that outlines your coverage in detail.
Keep in mind that your insurance premium could change depending on where you move to. Also, if you move to a state where your current insurance provider doesn’t operate, you may not be able to transfer your policy.
Renters insurance protects tenant’s property, offers liability protection, and provides living expense coverage. While it’s not legally required, it’s a good idea to have for peace of mind, and several landlords include it as a condition in their rental agreement. It’s easy to apply for in most cases and is very affordable for almost any budget.