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Renters Insurance

Just like owning a home, there are certain risks you face when renting, including loss of or damage to your personal property.

Renters insurance, sometimes referred to as “apartment insurance,” can help provide you with financial protection against these risks.

What Does Renters Insurance Cover?

Your actual apartment will not be covered by renters insurance. Your landlord’s homeowners insurance will typically cover this. However, there are other different risks to renting that are covered by a renters insurance policy.

While not all renters insurance policies are exactly the same, most will cover the following:

  • Personal liability – Provides you with financial protection if someone sues you after being injured at your rented home.
  • Medical payments – This will help with medical costs if a guest of yours is injured in your home or apartment.
    • NOTE: This coverage will typically not extend to you or anyone living with you.
  • Personal property – If your belongings are stolen or damaged due to incidents such as fire or inclement weather, your renters insurance can help you replace them.
    • Such belongings often include:
      • Electronics (computers, televisions, etc.).
      • Furniture.
      • Clothing.
      • Jewelry.
  • Reimbursed living expenses – If damage occurs and your rental is deemed uninhabitable, this coverage can help with living expenses for items such as food and shelter until you are able to return home (or until you’ve exhausted your policy’s limits).

These are only the most commonly offered renters insurance coverages. Your insurance company may have different offerings. Speak with your agent to learn about how they can help protect you when you get your renters insurance quote.

Incidents Covered

As stated above, if your property is damaged due to certain covered incidents, your renters insurance will help you replace it.

Covered incidents will vary from company to company, however, the average renter’s insurance policy will provide coverage for the following incidents:

  • Fire.
  • Lightning.
  • Windstorm.
  • Hail.
  • Explosions.
  • Smoke.
  • Vandalism.
  • Theft or burglary.
  • Falling objects.
  • Freezing.
  • Volcanic eruption.
  • Water damage (does not include flood damage).

Actual Cash Value vs. Replacement Cost

Actual Cash Value

When you purchase a renters insurance policy, your belongings covered under that policy are typically covered at actual cash value.

This means that if your belongings are damaged in a covered incident, your renters insurance will pay to replace those belongings up to their current estimated cash value, taking depreciation into account. One way to think about the actual cash value is to consider how much you could expect to get if you sold your item in its used state.

Replacement Cost

Most renters insurance companies will allow you to opt into replacement cost coverage.

This is different from actual cash value as it will help replace your belongings at the cost of buying those belongings new. Depreciation is not factored into replacement cost.

If you choose to have replacement cost coverage, you can expect to pay a higher premium.

Item Categories

Insurance companies will typically group your belongings into different categories, such as furniture or electronics. Within those categories, they will set limits on how much they will pay to replace your items.

If you have exceptionally valuable items (collectibles, jewelry, etc.) you may work with your insurance company to create different item categories for these items, which will have higher than standard limits.

Work with your agent to create a renters insurance policy that will work best for you.

Purchasing Renters Insurance

Renters insurance is offered by most of the major insurance companies. You can even get renters insurance quotes online to help you with your comparison-shopping.

Remember, in order to get the best policy at the best price, you should compare at least 3 different quotes.

Renters insurance is one of the cheapest types of insurance. You should not have to pay a very high amount to get a high level of protection against the risks of renting.

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