A renters insurance policy, also known as tenant insurance, is a home insurance policy specifically designed to protect people who rent. It protects your personal property from a long list of risks.
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.
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 additional living expenses if you are forced out of your home due to a covered loss.
Read on to get the details on what renters insurance covers, how to get renters insurance and what you can expect to pay for a policy.
- 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.
What is renters insurance?
Renters insurance is a policy that covers your personal property in a home you are renting. 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 renters 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. You could get a multi-policy renters and auto bundling discount.
What does renters insurance cover?
Renters insurance offers three primary coverages:
Let's look at the details of each.
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 a broad form policy. That means it’s a named perils policy – it covers you for the perils listed, and anything not listed is excluded.
Some of the perils covered by a broad form policy include:
- Fire
- Lightning
- Explosion
- Smoke
- Vandalism
- Theft
- Water-related damage from sudden and accidental discharge
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, also known as loss of use, 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 rules.
Renters insurance replacement cost vs. actual cash value
Most types of renters insurance use 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.
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. Actual cash value is calculated as the replacement cost of the item new minus depreciation. So, if you have a 10-year-old TV that is stolen, the insurance company would pay for the replacement cost of a similar TV minus 10 years worth of depreciation.
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 much renters insurance coverage do you need?
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?
Yes, most companies offer a multi-policy discount when you by car and renters insurance together.
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.
