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Renters Insurance - What you need to know

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Renters Insurance

Nobody likes to spend extra money unnecessarily. So, it’s natural to ask yourself, “What is renters insurance – and why do I need it?”

In truth, most of the time you don’t need it. It’s only important when something bad happens. Unfortunately, bad things are part of life, and renters insurance can protect you and your belongings if the unthinkable – or even something less dramatic, but still costly -- occurs. 

Many tenants assume a landlord's insurance will cover their belongings after a catastrophe, but that's incorrect. That is why you need tenant insurance. So, what does renters insurance cover? Typically, not only your belongings, but your liability in many situations. Plus, it provides things like living expenses if you're homeless after a fire.

Enter your ZIP code in the calculator below to see carriers that offer rental insurance and bundling in your area.

Here are some common questions about tenant insurance:

  1. What does renters insurance cover?
  2. How renters insurance works?
  3. Replacement vs. Actual cash value
  4. Do I need renters insurance?
  5. How much does renters insurance cost?
  6. How much renters insurance do I need ?
  7. Will renters insurance cover my laptop?
  8. How do I buy renters insurance?
  9. How do I compare renters insurance coverage and policies?
  10. Should I share a renters policy with my roommate?
  11. Do college kids need renters insurance?
  12. What isn’t covered by renters insurance?
  13. Can I bundle it with my auto policy?

What does renters insurance cover?

What is renters insurance? The technical name for renters insurance is an HO-4 policy. It's specifically designed to protect people living as renters instead of owners.

A renters insurance policy offers three main types of coverage:

  1. personal property coverage -- for your belongings
  2. additional living expenses coverage – for costs you incur when your home is inhabitable
  3. Liability coverage -- for damages you cause to another person

Personal property coverage:

This part of a tenant policy covers your belongings from loss or destruction.

The National Association of Insurance Commissioners notes that renters insurance is available in two types. The broad form protects your personal belongings against specific events. By contrast, the comprehensive form -- which is typically more expensive -- covers you in the wake of any event not specifically excuded by the policy.

The broad form is the most commonly purchased type. Coverage is limited to 16 specific perils, according to the Insurance Information Institute.

While specifics can vary by policy, the III says HO-4 policies typically cover the following events:

  1. Fire or lightning
  2. Windstorm or hail
  3. Explosion
  4. Riot or civil commotion
  5. Damage caused by aircraft
  6. Damage caused by vehicles
  7. Smoke
  8. Vandalism or malicious mischief
  9. Theft
  10. Volcanic eruption
  11. A falling object
  12. The weight of ice, snow or sleet
  13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance
  14. Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, an air conditioning system or an automatic fire-protective system
  15. Freezing of a plumbing, heating, air conditioning or automatic fire-protective system, or of a household appliance
  16. Sudden and accidental damage from artificially generated electric current (does not include loss to a tube, transistor or similar electronic component)

Additional living expenses coverage

Many HO-4 policies will also cover additional living expenses. That means that your policy will provide you with the funds to live day to day if your apartment is damaged or destroyed and is at least temporarily inhabitable. 

"Additional living expense 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.

He addsadditional living expenses coverage could also cover costs associated with moving should the apartment not be habitable for an extended period of time.

Liability coverage

A renters insurance policy doesn't just cover your possessions. It has a liability component that will protect you in the event someone is injured in your apartment due to your negligence.

The financial ramifications of a lawsuit by an injured party can be devastating. Luckily, the liability portion of your policy will protect you (and your assets) from bodily injury and property damage claims, as well as damages you or your family members accidentally do to others. It's important to remember that rental insurance never covers flooding or earthquake damage. You will be on the hook for the cost to replace all of your possessions if they're destroyed by a flood or earthquake.

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 renters insurance policy. Or, you can purchase a separate earthquake policy.

How renters insurance works?

How does renters insurance work? Once you suffer a loss, your insurance policy coverage will kick in. Here are some scenarios that show how renters insurance works.

Personal property

The apartment building where you rent catches fire, damaging your apartment and some expensive computer equipment, furniture and other belongings. After you file a claim and the insurance company investigates and approves it, renters insurance will reimburse you for the damages, minus any deductible.

You will only be covered for damages up to the limit of your policy. You decide how high to place this limit when you purchase the policy.


You have a party at your apartment and a guest slips and falls in the kitchen, suffering significant injury. The guest sues you. The liability portion of your rental insurance policy covers the cost of any bodily injury or property damage claims against you, including the cost of hiring legal representation.

Dog bites are another liability issue that an HO-4 policy covers. If your dog bites a visitor or neighbor, you can be on the hook for hospital bills or find yourself on the wrong end of a lawsuit.

Some insurance companies exclude dog bites from coverage and other insurers may exclude certain breeds of dogs so be sure to check with your insurance agent if you own a dog.

In most cases, renters insurance will cover costs related to legal representation due to a lawsuit as well as any damages that are awarded, up to your policy limits.

It's up to you to choose your liability limit on a HO-4 policy. Liability limits for renters insurance usually start at about $100,000 and can go up to $500,000. Experts recommend at least $300,000 in liability coverage. If you have many assets, you may want to buy an additional umbrella policy of at least $1 million. 

Finally, most HO-4 policies also include no-fault medical payment coverage. Angi Orbann, vice president of personal insurance property at Travelers, explains this coverage.

"If someone gets hurt in your home, he or she can submit medical bills directly to your insurance company,” she says. “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."

Most policies provide $1,000 to $5,000 of no-fault medical payment coverage, according to the Insurance Information Institute.

Additional living expenses

A tornado whips through town and significantly damages the apartment you rent. Additional living expenses coverage typically will help pay for additional living expenses you incur as a result of having to find a new temporary home.

"Additional living expense 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. It could also cover costs associated with moving should the apartment not be inhabitable for an extended period of time," says Travis Biggert, chief sales officer with Hub International, an insurance brokerage.

Typically, additional living expenses coverage pays out the difference between your additional living expenses and your normal living expenses.

In addition to knowing how the three main types of coverage work, there are some other important details to keep in mind, such as the difference between “replacement” coverage and “actual cash value” coverage.

Replacement cost:

These policies cover the actual cost of replacing your possessions. As an example, if your TV is destroyed, your insurer would replace it with a brand-new TV of a similar size and quality, regardless of its age when it was destroyed. These policies ensure that you will receive the full cost to actually replace your possessions.

Replacement cost polices tend to be more expensive than actual cash value by about 10%, according to III. But they offer the peace of mind that your possessions will be replaced.

Actual cash value:

Insurers take depreciation into account when calculating the value of your possessions. Your insurer will only pay out the equivalent of the value of the belongings 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 the amount your policy pays and the cost to replace your possessions with new ones.

It's important to note that some item values are capped. High-value items, such as jewelry, artwork, furs, firearms and other collectibles, can be subject to a value cap. The cap amount can vary, but it might be around $1,500, according to the III. If you have items that fall into these categories and the value is more than $1,500 you can purchase a policy rider that will increase coverage levels.

Finally, it is important to understand how deductibles work. When you buy rental insurance, you determine the deductible you are willing to pay -- $500 and $1,000 are common deductibles.

If you choose a $1,000 deductible and you suffer insured damages of $2,000, you will be on the hook out of pocket to pay the $1,000 before your insurance coverage kicks in.

Why would you take a higher deductible? Because doing so lowers your premium costs. If you go for an extended period without making an insurance claim, you can save a lot of money overall by raising your deductible and lowering your premium costs.

Do I need renters insurance?

Yes. Because bad days happen. Sometimes they're your fault. Sometimes they just come at you.

Renters insurance is much like homeowner's insurance. It pays for your personal property that's damaged or stolen. And it provides liability protection for any damage or injuries caused by you, your household family members or your pets, either in or outside the apartment.

Sometimes called apartment insurance, it will also help pay hotel expenses if your unit is temporarily unlivable, say due to fire or water damage.

It differs from homeowners insurance in that it does not cover structural damage. This is also why it's much cheaper.

"Everything that you brought on to the structure is your responsibility," says Mike Barry of the Insurance Information Institute (III). "The landlord's responsibility, when it comes to insurance, is limited primarily to the structure."

How much does renters insurance cost?

How much is renters insurance per month for an apartment? Surprisingly, not much – it’s less than $30 a month

Rates vary based on coverage amounts, the renter’s credit history, and where he or she lives. Based on a 2020 rate analysis, the national average yearly cost for a renters policy with coverage levels of $40,000 for personal property, a $1,000 deductible and $100,000 of liability protection is $326, or about $27 a month.

Jersey, Tennessee and Utah are about average for that coverage level. Mississippi, Louisiana and Oklahoma are the highest, at between $540 and $580 a year. Vermont, and Wyoming are the lowest, at about $160 a year.

To boost your liability limits to the recommended amount of $300,000, costs just a dollar more a month -- the yearly average cost is $341, or $28 monthly.

However, surveys show that most renters think it costs more than it does.

"I think a lot of people, they look at how cheap it is and they think I'm going to add $15 a month to the bill, like it's not important," says Ryan Scruggs, a risk advisor with Farmers Insurance Michael Fox agency in the Phoenix area.

Scruggs sells very basic apartment policies for $12 to $20 a month, and home rental policies for $20 to $30 a month. That covers $25,000 in personal property, $5,000 for loss of use, $100,000 of liability, and $1,000 for guest medical.

You may need to pay extra to add flood or earthquake coverage, or to add expensive items that exceed individual limits, such as for jewelry or antiques. These endorsements typically add a few dollars per month.

Here are average rental insurance costs by state, so you have an idea what you'll pay. Enter your state in the search field to get your results. Rates are for common coverage levels of $20,000, $40,000 and $60,000 in personal property coverage, with liability limits of $100,000 and $300,000, all with a $1,000 deductible.

State $20,000/ $100,000 40,000/ $100,000 $40,000/ $300,000 $60,000/ $300,000
North Dakota$133$190$207$258
South Dakota$144$214$231$305
New Hampshire$154$227$247$324
North Carolina$157$288$297$419
New York$209$304$328$430
West Virginia$227$314$328$406
New Jersey$223$322$350$451
New Mexico$243$338$359$458
South Carolina$245$359$381$495
Rhode Island$248$377$392$515
National average$228$326$341$438

How much renters insurance do I need?

Wondering how to get renters insurance? It is easy, particularly if you search for companies using tools such as the one offered on  

But before you shop for insurance, you should have a good idea of how much coverage you need.

There is no magic formula for arriving at this number. So, start by asking yourself a question: Can you name your possessions and the cost to replace each? Agents say this is what most stymies tenants. Answering this question is the first step to  calculating how much insurance you need.

So, on a sheet of paper or in a computer, list your most valuable possessions and how much they would cost to replace. This is known as an inventory, and it gives you a good sense of how much personal property coverage you need. Next, think about how much liability coverage you require. This is a little trickier to determine. Do you have a lot of assets? Do guests frequently visit your home? If the answer to one or both of these questions is “yes,” you likely require more coverage than if the answer to both is “no.”

If someone is badly hurt at your home, they could sue for a lot of money. Make sure your coverage is robust enough that you will be reimbursed for the full amount should you be required to pay out damages. State Farm says $100,000 of liability coverage is adequate for many people.

However, the III says most experts recommend at least $300,000 of liability coverage.

Once you know how much you need -- in property and liability -- you can compare policies. Be careful to consider what each covers. Don't just go by the base rate. Some companies advertise policies for as little as $50 a year with a multiple-policy discount, but they provide low medical limits.

Your current car insurance company is a good place to start, as most of them also sell renters insurance and offer some kind of a bundling discount.

How to get renters insurance: Compare coverage and comparison shop

The absolute best way to save money on your renters insurance is to shop your policy at least every three years. Fortunately, it is easy to find renters insurance online. To do so, you need to compare renters insurance quotes. It's important that you are comparing apples to apples when shopping policies. Here are a few items you should check when looking for a new policy:

All renter policies have coverage levels for both personal property and liability coverage. It's very important that all of the policies you are considering offer the same amount of coverage.

A policy that caps liability coverage at $100,000 will almost certainly be cheaper than a policy offering $300,000 of coverage, but you could end up on the hook for some major expenses if someone is seriously injured in your apartment and their expenses quickly exceed $100,000.

Additional living expenses

This coverage can be a lifesaver if your apartment is damaged or destroyed and becomes unlivable. It will pay for expenses related to temporary housing. Not all HO-4 policies offer this coverage so be sure all of the policies you are considering offer additional living expenses coverage.


HO-4 policies have a deductible amount that you must pay before the insurance company steps up to cover your loss. The average deductible for rental insurance is $500-$1,000. The higher the deductible, the cheaper the policy, so verify that all policies you are considering have the same deductible.

Coverage type

Replacement value policies will usually cost more than an actual cash value policy so make sure all of the policies you are considering offer the same type of coverage.

Sharing a renters insurance policy with a roommate

If you have a roommate, you probably share many of the bills associated with the apartment. However, most experts don't recommend sharing a renters insurance policy.

"If both roommates have the means or if they don't know each other very well, it may be a good idea to get separate policies,” advises Austin.

Here are the pros and cons of sharing a policy with your roommate:


Splitting the cost: This is really the only benefit of splitting a policy with your roommate, and even so, the savings is not much You can buy renters insurance for less than $30 a month,  so the savings are not huge.


Sharing a claim record: All of your roommate's claims will end up on your insurance record. "If your roommate has their bike stolen and wants to make a claim, that could hurt your insurance score and impact your rates in the future," warns Austin.

Moving out: If your roommate suddenly decides to move out, can you afford the balance of the policy?

Value of property: If your roommate's possessions have a higher value than yours, a 50/50 split on the bill may not be fair. Have an honest discussion with your roommate about the value of your possessions and determine a fair way to split the cost of the policy.

This also applies to payouts if you have to make a claim. How will the claim money be divided up? Have a written agreement and a detailed inventory of your possessions in place before splitting a rental insurance policy.

College kids and renters insurance

If you have a child in college who lives on campus, he or she may be covered by your homeowners policy.

Renters insurance for college students

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 parents policy for personal property," explains Orbann.

As an example, if the parent's homeowners policy offers $300,000 in personal property coverage, your student would be eligible for $30,000 in coverage. While 10% is fairly standard, the percentage does vary by policy, so verify coverage levels before assuming you are protected.

"Since a dorm is considered 'temporary housing' most insurance companies do not require the location be listed to afford contents and liability coverage for that location, while other carriers require a 'college student' endorsement," says Biggert.

Once your child moves on to graduate school or just graduates into life, it is probably time forthe child to get his or her own policy.

"In the event your child is a graduate student and maintains their own auto policy, we would advise a separate renters policy be put in place in the name of the student," continues Biggert.

What isn't covered by renters insurance?

What does renters insurance not cover? Plenty of things. Most of these items usually aren’t covered by a standard policy, but you can almost always buy an endorsement to make sure they are covered. Typical exclusions include:

  • Roommates, unless they're named on the policy. Family and guests are covered, people you're in a business relationship with -- someone who sublets, an Airbnb guest -- are not.
  • Expensive jewelry, antiques, collectibles, furs or other high-ticket items might be subject to an individual limit. A few bucks more can buy you additional coverage.
  • Business equipment beyond a small, set amount. There are coverage limits for business equipment inside the home, sometimes to as little as $2,500.
  • Certain dogs. Some insurers exclude entire breeds. Others may only include liability for a dog that's passed a behavioral test.
  • Floods, in most areas. Standard policies cover accidental water damage in the building -- a broken water line or overflowing tub - but not the result of heavy rain and flooding. Check about buying a flood endorsement.
  • Criminal behavior. Although insurance covers negligent acts that may result in criminal fines, insurance does not cover intentional criminal acts.
  • Your own medical bills. Liability protection pays other people's medical bills. Trip over your own rug and it's your health insurance that'll pay to stitch up your head.
  • The difference between what your stuff was worth and the cost to buy a new version, unless you ponied up a bit extra for "replacement cost" insurance. Otherwise you'll be reimbursed only for the depreciated "actual cost value" -- what that 10-year-old, used, leather jacket would have fetched on the market today.
  • Back rent. You will not be reimbursed for any rent you may owe the landlord.

Will it cover my laptop in my car

Yes. Tenant insurance covers your personal property even if it's in transit, like in a moving van, or just parked outside the gym.

The catch is that the limit for loss outside the home is typically just 10% of the total personal property limit. So if you have $2,500 in personal property coverage, you'll only be reimbursed up to $250 for items stolen from your car.

That still beats what your auto insurer would pay: nothing. Car insurance covers only vehicle components -- a built-in GPS or CD player -- not a bike or laptop you've put inside.

Will renters insurance get me a discount on my car insurance?

Buy rental insurance from your auto insurance carrier and, yes, they'll likely cut you a break on the auto. Not because you're suddenly a better driver, but because now you're more likely to stick around, maybe long enough to buy more insurance later, too.

"Insurers know that a customer who has multiple policies with them is less likely to leave to go to a competing insurer," says Chris Hackett, director of personal lines policy for the Property Casualty Insurers Association of America. The multiple-policy discount is a very common means to "reward customers for being loyal, and to try to retain them."

Insurers may give you as much as 10 percent to 20 percent off your insurance by bundling policies. 

"If your premium on auto was substantial," Hackett says, "that companion policy discount could be pretty substantial."

Based on a survey of rates from six major carriers in every state, commissioned by, the average discount for bundling a renters policy with auto coverage was:

State Discount
New Hampshire4.1%
New Jersey3.6%
New Mexico4.6%
New York6.5%
North Carolina2.9%
District of Columbia2.7%
North Dakota7.6%
Rhode Island1.6%
South Carolina3.2%
South Dakota3.9%
West Virginia3.7%

Renters insurance is a necessary part of renting. Make sure you shop around and find the right level of protection for the right price.