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Many tenants assume a landlord's insurance policy will cover their belongings if there’s a fire, a burglary or any other loss. In truth, your landlord isn’t responsible for anything you own. Their policy covers the building itself and things like the appliances, but your personal property isn’t covered at all. That’s why buying renters insurance is important.

A renters insurance policy, also called tenant insurance, is a home insurance policy specifically designed to protect people who rent. It protects your personal property from a long list of perils. Renters insurance coverage also includes liability protection in case you’re responsible for injuries to someone else or damage to their property, and it will pay for living expenses if you are forced out of your home due to a covered peril.

Read on to get the details on what renters insurance covers, how to get renters insurance and what you can expect to pay for coverage.

KEY TAKEAWAYS
  • Renters insurance is a policy that protects the personal property of tenants, which is not covered by the landlord’s insurance.
  • A renters insurance policy will also cover personal liability and additional living expenses if you can’t live in your home during covered repairs.
  • A renters insurance policy costs $347 a year or $29 a month on average in 2022, according to Insurance.com data.

What is renters insurance?

Renters insurance is a policy that covers you if your personal property is damaged while you are a tenant. It also protects you from liability claims for injuries or damage to someone else or their property and provides additional living expenses coverage.

The main difference between renters insurance and homeowners insurance is that it doesn’t include coverage for the dwelling. Insuring the building itself is the landlord’s responsibility, and that makes renters insurance a lot cheaper.

A renters insurance policy may also be called tenant insurance, and insurance companies refer to it as an HO-4 policy.

Most insurance companies sell renters insurance, so it’s a good idea to start shopping with your current car insurance company and compare rates from there.

What does renters insurance cover?

Renters insurance offers three primary coverages:

  1. Personal property coverage
  2. Personal liability coverage
  3. Additional living expenses coverage

Personal property coverage

Personal property insurance covers all of your belongings, from your sheets to your big-screen TV. Without a renters policy, there is no coverage for anything you own.

Renters insurance will cover your belongings anywhere in the world, not just in your home. If your laptop is stolen from your car, car insurance won’t cover it – but renters insurance will. However, there are limitations to coverage outside the home, usually 10% of the overall personal property coverage.

A standard HO-4 renters policy is what insurance companies call “broad form.” That means it’s a named perils policy – it covers you for the perils listed, and anything not listed is excluded.

A broad form policy covers:

  • Fire
  • Lightning
  • Explosion
  • Smoke
  • Vandalism
  • Theft
  • Water-related damage from property utilities

Like all home insurance policies, there are special limits on certain types of personal property, like jewelry, art, musical instruments and cash or valuable papers. These have a specified limit of up to $2,500, depending on the type of property.

If you have high-value items that fall into these categories, you can purchase additional coverage, called a scheduled personal property endorsement (floater) that will cover individual items for their appraised value.

Personal property coverage is subject to a deductible, which you can select when you purchase the policy.

Personal liability coverage

Personal liability insurance for renters covers you when you’re at fault for injuries to someone else or for damage to their property. If someone slips on your kitchen floor and is injured or if your child throws a ball through a neighbor’s window, liability insurance will pay the bill.

Tenants insurance liability coverage is included with your policy. The standard liability limit is $100,000, but you can choose coverage of up to $500,000. Experts recommend at least $300,000.

In addition to the liability coverage in your insurance policy, renters insurance also has no-fault medical coverage called medical payments coverage.

"If someone gets hurt in your home, [they] can submit medical bills directly to your insurance company,” says Angi Orbann, vice president of property, personal insurance property at Travelers. “This way, expenses can be paid without a liability claim being filed against the renter. It should be noted that this coverage does not pay the medical bills for the renter's own family."

Typically, coverage amounts are between $1,000 and $5,000.

Additional living expenses coverage

Renters insurance also includes additional living expenses (ALE). This coverage pays living expenses if a covered claim forces you out of your home during repairs.

"Additional living expenses on an HO-4 would cover costs associated with hotels, meals, laundry and other expenses that the tenant incurred while their apartment was being repaired, says Travis Biggert, chief sales officer with Hub International, an insurance brokerage.

ALE coverage could also cover costs associated with moving should the apartment not be habitable for an extended period, he says.

What isn’t covered by renters insurance?

Renters insurance has some exclusions you should be aware of. First, anything that isn’t listed as a covered peril is automatically excluded. But there are a few other things that are more specifically excluded. They include:

  • Floods
  • Earthquakes
  • War and nuclear disasters
  • Pests, including bugs and animals
  • Intentional damage

You will need a separate policy if you live in an area prone to flooding or earthquakes. Flood insurance is available from the National Flood Insurance Program, and earthquake coverage can usually be added as a rider to your policy.

It’s also important to note that while family members living with you are covered by your policy, roommates are not. You can choose to share a policy with your roommate, but it depends on the insurance company’s policies.

Renters insurance replacement cost vs. actual cash value

Most types of renters insurance use the actual cash value to calculate how much the company will pay for your items if they’re stolen or destroyed. However, you can choose to upgrade your policy to replacement cost coverage. Keep reading to learn the difference.

Actual cash value policies consider depreciation when calculating the value of your possessions. Your insurer will only pay out the equivalent of the belongings' value at the time of the loss. This means that if you have a 10-year-old TV, the payout amount will be for the value of a TV that is 10 years old. In most cases, it will not be enough to cover the cost of a new TV.

These policies are less expensive, but remember that you will have to cover the difference between your policy pays and the cost of replacing your possessions with new ones.

Replacement cost coverage reimburses you for the actual cost of replacing your possessions. As an example, if your TV is destroyed, your insurer will replace it with a brand-new TV of a similar size and quality. These policies ensure that you will receive the full cost to replace your possessions, rather than the depreciated value.

You will pay a little more for this coverage, but since personal property can take a huge hit from depreciation, it’s a worthwhile expense.

How much does renters insurance cost?

How much does a renters policy cost per month for an apartment or a house? Surprisingly, not much – it’s less than $30 a month.

Based on a 2022 Insurance.com rate analysis, the national average yearly cost for a policy with coverage levels of $40,000 for personal property, a $1,000 deductible and $100,000 of liability protection is $347, or about $29 a month.

Renters insurance rates will vary depending on the amount of personal property coverage you need. They’re also affected by where you live.

How to get renters insurance at the right coverage level

Coverage needs vary from person to person. There is no minimum coverage amount that is right for everyone. If you have a lot of personal property and valuables, you may need more coverage than someone with a more minimalist lifestyle. A larger home has more rooms and thus more contents than a one-bedroom apartment.

If you’re not sure how to choose renters insurance coverage, creating a home inventory – a detailed list of your belongings and their estimated value – can help you calculate the right number.

You should also consider what you need in terms of personal liability coverage. Anyone with a lot of assets to protect should consider an increased liability limit.

Frequently asked questions about renters insurance

Is renters insurance required?

There is no law requiring renters insurance, but your landlord can require it as part of the lease agreement.

Can I get an auto and renters insurance bundle?

When you buy more than one type of insurance policy from an insurer, you often will get a discount on both policies. This is known as “bundling” your coverage.

Although the discount might not be as substantial as with homeowners insurance policy, most insurance companies will offer a bundling discount when you buy both auto and renters.

You’ll get a discount on both the auto and the renters policy. Make sure you’ve compared the cost of buying them separately to the bundled price because it’s not always the best deal.

Should I share a renters policy with my roommate?

Most experts don't recommend sharing renters insurance for apartments or homes with a roommate. The cons can be substantial. All of your roommate's claims will end up on your insurance record, and if your roommate's possessions have a higher value than yours, a 50/50 split on the bill may not be fair.

Can college students get renters insurance?

Almost all homeowners policies will extend coverage to college students living in a dorm or campus housing.

"Most homeowners policies include coverage for a college student's personal belongings while they are living on campus. Typically, the student's property is covered up to 10% of the amount on the parent's policy for personal property," Orbann says.

However, if the student has permanently moved out, renters insurance will be needed.

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