If you don’t own a home, you may wonder why you should get renters insurance. While it’s not pleasant to think about, if there’s a fire or a break-in and your belongings are damaged or stolen, the cost of replacing those items can add up fast. And though your landlord’s property insurance protects the building, it doesn’t protect your possessions. That’s where renters insurance comes in.
There are several options available, and you want to be sure you have the coverage you need to keep your stuff safe. An independent insurance agent can help you get set up with the right coverage, but first, we’ll look at how renters insurance works, why you should have it, different coverage options, and how comparing quotes can help you choose the policy that’s right for you.
What Is Renters Insurance?
Renters insurance is similar to homeowners insurance, but since you don't own the building where you live, your landlord’s insurance doesn’t protect your personal contents. One way to help understand what’s considered part of the structure and what are considered your personal items is to imagine flipping your place upside down and shaking it. Anything that would drop out is usually considered personal content, while anything that stays would be part of the house. There may still be exceptions, however, such as certain appliances, so it's important to read through your rental agreement in full detail and ask your independent insurance agent to answer any questions you might have.
What Does Renters Insurance Cover?
On a basic level, renters insurance will cover your contents and give you liability coverage. However, you can customize your policy to include many additional types of coverage options, like:
- Personal contents: This is the backbone of a renters policy. It covers your personal belongings, like clothes, furniture, and electronics. There’s typically a minimum coverage amount, such as $20,000, but this can be increased.
- Personal liability: This provides coverage for lawsuits that could be brought against you, including both defense costs and settlement amounts. Personal liability coverage typically starts at $100,000 in coverage.
- Loss of use: This is usually an automatic coverage that reimburses you to temporarily live somewhere else if your house or apartment is uninhabitable due to a covered claim.
- Cyber insurance: Many insurance companies offer cyber protection on a renters policy, which will generally pay for things such as online extortion, cyberbullying, and online fraud attacks.
- Valuable articles: If you have expensive or valuable jewelry, firearms, computers, or other items, you can add these separately to your policy and obtain increased coverage. Your independent agent can go over your options.
- Medical payments: Typical coverage is between $1,000 and $5,000. This pays for smaller injuries that occur in your household, but only to people who don’t live there.
Keep in mind that if you file a claim, the insurance company will want to know what items you had in your rental and what the value was, most likely with some type of proof, such as pictures or receipts.
Is Renters Insurance Required?
While no state law requires that renters purchase renters insurance, every state requires that tenants abide by their lease agreement. So your landlord may require that you show proof of having renters insurance before you sign or renew your lease. The exception is in the state of Oklahoma, where landlords cannot require that you purchase renters insurance.
Landlords may require renters insurance to absolve them of any business financial responsibility for your contents or lawsuits brought against you in their rental units. It can also show a level of personal financial responsibility that indicates a good tenant since you’ll have to be responsible for purchasing the coverage.
Coverage for Vacation Homes, Airbnbs, & Short-Term Rentals
This type of insurance can be requested in all sorts of rental transactions, such as when you rent an apartment, townhome, or single-family residence. But it may also be required when you are renting a vacation home, Airbnb, and the like. Typically, renters insurance isn't required when you're renting a condo on the beach for a week, because most insurance companies won't write a short-term renters policy like that.
However, the primary homeowners or renters insurance that you have on your place back home may have coverage that extends to you while you're on vacation. In fact, most policies have liability that extends to you while you travel, as well as a percentage of personal property coverage off-premises. But if you're traveling out of the country, that's usually when your coverage won't follow you. It's best to discuss this with your independent insurance agent so you know when and how you're covered while renting a short-term vacation home.
Is Renters Insurance Worth It?
You can easily make the case that renters insurance is always worth the cost for the peace of mind alone. If you lost all of your belongings in an apartment fire, you could be left in financial ruin trying to recoup and get your life back to the way it was. The average annual premium for renters insurance is a small price to pay in comparison, especially to avoid tens of thousands of dollars in liability claims.
Beware of Certain Online Renters Insurance Quotes
Most insurance companies allow you to buy a renters policy online by yourself, just like you would with car insurance. While the process is simple and fast, you can easily overlook certain coverage options or your limits just for the sake of the low price. Don’t shortchange yourself. Getting the right protection will generally only cost a few dollars more.
In many cases, folks expect that $20,000 of coverage would be more than enough coverage for the contents of their rental unit. While this may be true for some, $20,000 wouldn't go all that far if you had to replace clothing, appliances, kitchenware, electronics, and other possessions. Creating an itemized list of all your belongings is a good way to help you find the right amount of coverage.
It might be tempting to go as low as possible on your liability coverage, but liability is one of the least expensive options on your policy. A typical renters policy offers $100,000 in liability coverage. Increasing your coverage to $300,000 or $500,000 might only cost you another $5 or $10 a year.
Questions Your Independent Insurance Agent Should Ask You about Renters Insurance
When you obtain renters insurance, or any insurance for that matter, your independent insurance agent should ask you a few questions to make sure you're covered properly, and all of your assets and belongings are accounted for. If they're not asking about this, you may want to look for a more detail-oriented independent insurance agent.
- What address will you be renting?
- Is this coverage for a long-term rental or a short-term rental?
- What dollar amount do you want listed to replace your personal belongings?
- What dollar amount will you need in coverage for personal belongings while traveling?
- How old is the property you will be renting?
- What limit of personal liability do you want?
- Do you want to bundle your renters and auto insurance for added savings?
- Does your landlord have adequate coverage on the property?
- Is there anything that your landlord is not covering with insurance that you would need coverage for?
A knowledgeable independent insurance agent will be prepared with an appropriate set of questions designed to help you find the right type and amount of renters insurance for you.
Certificates of Insurance as They Pertain to Renters Insurance
You may receive a request form from your landlord if they require it to get proof of renters insurance. This proof of insurance is called a certificate of insurance. It will give an insurance preview of what coverage you have, your policy term effective dates, and the carriers that write your policies. Your insurance company should provide you with this form, or you can ask your independent insurance agent to get it for you.
Renters Insurance FAQs
Though renters insurance isn't legally required in any states, your landlord may still require you to purchase coverage as part of your lease. But if they don't and there is no contractual provision in your lease that you have to have renters insurance, the decision is up to you.
While not mandatory, it's generally beneficial to purchase renters insurance for peace of mind should your personal property get damaged or you're found liable for injuries or property damage to another person.
Although renters insurance isn't legally required, a landlord can still require that you purchase coverage as part of your lease. Ultimately, it's at the landlord's discretion whether renters insurance is a condition on your lease. However, if you live in Oklahoma, it's against the law for a landlord to require a renters insurance policy.
Occupants generally need their own coverage. Most insurance companies and some states don’t permit unrelated roommates to share renters coverage.
In the event of theft, fire, or another covered event, renters insurance protects your personal property in a rented apartment, condo or home up to the policy limit (minus any deductible you have to pay).
Renters insurance also provides coverage if you're responsible for personal property damage or destruction or the accidental injury of another person while on the rental property premises. Basically, you can think of renters insurance as personal property and liability coverage.
Renters insurance provides coverage even when you aren't at home. If someone steals your laptop while you're traveling, renters insurance covers a portion of that personal property.
A typical renters insurance policy includes coverage for personal property and liability, as well as medical and legal coverage if someone gets injured while visiting you in your unit. Renters insurance provides protection for your personal possessions in the following cases:
- Fire, lightning, windstorms, and other natural disasters
- Theft or vandalism
- Appliance or system damage
- Certain types of water damage
To get a full list, discuss your policy options with your independent insurance agent.
Most renters insurance policies do not cover damage caused by floods. Like homeowners insurance, renters must purchase flood insurance separately to be covered for damage from flooding.
However, you're likely to be covered if there is a water leak within your rental unit that causes water damage to your belongings. Be sure to read your renters insurance policy carefully so you know what is and is not covered.
First, it's important to understand the value of your belongings, which is probably a lot more than you expect. In fact, the average person has more than $20,000 in personal belongings once you add up everything. Creating an itemized list is important for your application when determining coverage and when filing a claim.
Next, when it comes to liability, be aware that legal fees and medical bills can be expensive and can add up fast. A typical renters policy offers $100,000 in liability coverage, which is a good starting point. Depending on your needs, you may wish to purchase additional coverage.
Last, think about additional riders you may need to help cover your collectibles, personal items of value such as jewelry, and outdoor toys like snowmobiles or ATVs. An independent agent can help you assess your needs and risks and choose the coverage amounts that are right for you.
A key part of renters insurance is coverage for personal possessions. If your new laptop computer or smartphone is stolen, you’re covered. Renters insurance also protects your items when you’re home or away. So, if a new laptop is stolen from your car, your renters policy, not your auto insurance, would cover it.
You’ll want to have enough insurance to replace all your personal belongings in case of a burglary or other covered event. You have a couple of coverage options:
- Actual cash value: Reimbursement is based on the depreciated value.
- Replacement cost: This coverage is generally more expensive but will give you enough to buy a new replacement.
The simplest way to figure out the value of all your possessions is to make a home inventory. This is a detailed list of all your belongings with the estimated value. If you have expensive jewelry or other high-priced items, you should consider getting additional coverage, as most typical renters policies have a relatively low limit of liability for theft, which is generally about $1,500.
Your renters insurance policy will cover you against losses from fire or smoke. Let’s say there’s a fire that destroys $5,000 worth of furniture. If you have a $500 deductible, you’ll be responsible for that amount, and your insurance company will cover $4,500. When you get your policy, you’ll want to make a detailed inventory of your furnishings and belongings to accurately determine their value in the event of loss or damage.
Renters insurance is not tax deductible except in the following situations:
- You use a part of your residence regularly and exclusively to operate a business: You then may deduct a portion of your renters insurance, based on the dimensions of the space where you operate your business.
- You are an employee and work in both your employer’s office and your rented premises: In this case, you can deduct a portion of your renters insurance in the same manner as a home office. Check with your accountant for complete details.
An independent insurance agent can also advise on whether your renters insurance policy qualifies as tax-deductible.
Your Independent Insurance Agent Has Answers for Your Renters Insurance Questions
Whatever your needs, your independent insurance agent can help. Independent insurance agents shop and compare policies and quotes from multiple insurance companies for you. They will ask you all about your renters insurance needs and help find the perfect blend of coverage at the right cost for you.
June of Medina, NY