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Your landlord is responsible for the building you live in, but not for your belongings or for injuries or damage you cause to someone else. That’s where a renters insurance policy comes in. Renters insurance is a home insurance policy that protects your personal property and protects you from liability.

Renters insurance is very affordable, averaging $29 a month nationwide. 

Below, we’ll discuss how renters insurance coverage works, what a renters policy covers, and key renters insurance facts you need to know.

Key takeaways

  • Renters insurance is a type of home insurance that covers personal property, liability, and additional living expenses for tenants.
  • The average cost of renters insurance is $347 a year or about $29 a month for $40,000 in personal property coverage.
  • Although there is no law mandating renters insurance, your landlord may require you to have it.

What does renters insurance cover?

Renters insurance covers most of the same things a homeowners insurance policy does, with the exception of the building itself (your landlord's policy covers the building). It’s also known as tenant insurance or an HO-4 policy.

A renters policy includes three basic coverages:

  • Personal property. This covers any damage or theft of all of your personal property, from your dishes to your laptop.
  • Liability. This covers injury or property damage done to others for which you are responsible, such as a dog bite.
  • Additional living expenses. This covers any extra living expenses you incur while you’re unable to live in your home due to a covered claim, like hotel bills.

Renters insurance usually covers your personal property on an actual cash value basis. This means you’ll be paid the depreciated value of your belongings. You have the option to upgrade your coverage to replacement cost, which will pay the full amount to replace your items brand new.

Renters policies are what is known as broad form coverage. That means they cover damage from a specific list of perils. Anything not listed isn’t covered.

What does renters liability insurance cover?

Perhaps the most underrated benefit of renters insurance is liability coverage. Even if you don’t have costly possessions, an expensive lawsuit could drain your finances for years. Your liability coverage protects you from lawsuits – both the cost of your legal defense and judgments or settlements up to your policy limit.

The low end of the liability coverage is about $100,000, and many experts recommend purchasing at least $300,000 in protection. If you have a high income, you might want to extend this coverage with an umbrella policy – $1 million of extra protection costs $200 to $350 per year.

Your policy also likely provides $1,000 to $5,000 of no-fault medical coverage. So, if a visitor is injured on your premises, you can submit the medical bills directly to your insurer for payment.

What does renters insurance not cover?

Although broad form coverage means anything not listed as a covered peril is excluded, there is also a specific list of excluded perils. These perils are excluded in every renters policy:

  • Flood damage
  • Earthquakes
  • War
  • Nuclear hazards
  • Government action
  • Losses from intentional acts (by the insured) or neglect
  • Mold and rust

In addition to exclusions, renters insurance policies also limit coverage for specific categories of possessions – lost or stolen jewelry coverage, for instance, may be capped at $2,500, and protection for computers and electronics may also be subject to limits.

You can add on a scheduled personal property endorsement to cover specific high-value items outside of the included limits.

Finally, if you do any sort of business out of your home you may need to add incidental business liability or business merchandise coverage.

What is the average cost of renters insurance?

The average cost of renters insurance, based on the most recent data, is $347 a year, or about $29 a month. That’s the national average renters insurance cost for a policy with coverage levels of $40,000 for personal property, with a $1,000 deductible and $100,000 of liability protection.

The cost of a renters policy depends on how much coverage you need, where you live, and personal factors like your claim history. However, renters insurance rates are generally very low and affordable since there’s no dwelling to protect.

Increasing the personal property portion of the coverage will have a greater effect on the cost than increasing liability, which generally only adds a few dollars a month to the premium.

How do I buy renters insurance?

Knowing how much coverage you need and comparison shopping are the keys that will help you find the right renters insurance policy at the best price.

Start by doing an inventory of your possessions and estimating their value. Remember to include things like dishes, linens and clothing, not just big-ticket items like electronics. You’ll also have to decide how much liability insurance you need and choose a deductible

Once you’ve decided on coverage levels, compare rates from multiple companies to see which one offers the best deal. You might want to start with the company that handles your auto insurance. Many insurance companies offer a bundling discount for auto and renters insurance.

Even if you're offered a good deal by your auto insurance company, you should still shop around and compare renters insurance quotes from a few other companies. It's also a good time to compare car insurance quotes; you might wind up saving on both policies.

Is renters insurance required?

Renters insurance is not mandated by law in any state.

Landlords, however, often require renters to buy insurance. Requiring renters insurance protects landlords from facing lawsuits that are due to the renter’s actions, and ensures there is no confusion about what’s covered by the landlord’s policy.

The landlord is responsible in some situations, such as unsafe property conditions, causing an injury. However, if the renter is at fault, such as in a case where their child breaks a neighbor’s window, the landlord’s policy won’t cover it.

Frequently asked questions about renters insurance

How do I file a renters insurance claim?

To file a claim, contact your insurance agent or company. Many insurers also allow claims to be filed online or through an app.

Does renters insurance cover lost items?

No. Renters insurance covers the perils listed in the policy. Losing an item is not a covered peril. However, if you have a scheduled personal property rider for a specific item, that item might be covered for mysterious disappearance.

Can you get renters insurance after you move in?

Yes. You can get renters insurance at any time.

Does renters insurance cover damages when moving out?

It might. It depends on the cause of the damage and the type of damage. It’s best to discuss the situation with your insurance agent or representative.

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