What Is Renters Insurance and Who Needs It?
- Expertise: Auto insurance, home insurance and renters insurance
- Education: Sonoma State University (BA in English)
Aaron Besson has worked at LendingTree for more than seven years and has been a staff writer for the last five years. He specializes in producing research-backed content about auto, home and renters insurance. Aaron enjoys the deep dig into insurance data to get the right answers to hard questions. His work has been cited by CBS, iHeart Radio, the Sacramento Bee and Yahoo.
Renters insurance is like homeowners insurance: Both cover your personal property, liability and (usually) additional living expenses.
However, renters insurance does not cover damage to the structure of your rental home — that’s handled by your landlord’s insurance.
What is renters insurance?
Also known as an “HO-4” or “tenants insurance,” renters insurance covers personal property damage and liability issues. It also often pays for relocation costs if something happens to the rental home.
For example:
- If your rental home is damaged by a fire, renters insurance would pay to replace your damaged items.
- If someone is injured at your rental home and it’s your fault, renters insurance liability would cover any medical and legal costs.
- Medical expense coverage can also take care of medical costs, regardless of who is responsible.
- If additional living expenses coverage — also called “loss of use” — is part of your policy, it would also handle extra costs to live somewhere temporarily while your rental home is repaired.
What does renters insurance include?
Renters insurance coverage takes care of accidental damages due to “covered perils” on your policy, usually including:
- Fire and smoke damage
- Wind, snow, hail and ice damage
- Damage from burst pipes
- Explosions
- Theft and vandalism
Renters insurance policies are usually “named-peril,” which means only damages listed in writing in your policy are covered.
However, some renters insurance companies offer “open-peril” coverage. This means that unless something is excluded in writing, it’s covered. Open-peril coverage is more expensive than named-peril, but it also covers more.
There are usually four types of coverage in a renters insurance policy:
Personal property
Personal property coverage handles replacing your belongings if they’re damaged or destroyed by a covered peril up to your policy limit.
This includes:
- Clothing
- Furniture
- Electronics
- Stand-alone appliances
Expensive items such as art or jewelry may be covered at a lower limit than your regular policy limit. Make sure to check with an agent about your actual limits before buying a policy.
Liability
If you are responsible for injuring someone or causing someone property damage, the liability portion of your renters insurance policy covers the legal, medical and item replacement costs.
Medical payments
If someone is injured at your rental home, this coverage handles the medical expenses, as well as associated expenses like lost wages and physical therapy.
Loss of use (LOU)
Also known as “additional living expenses,” LOU covers additional costs that can occur when you have to relocate while your rental home is repaired.
LOU coverage includes:
- Extra rent costs
- Restaurant meals
- Furniture rental
- Laundry
- Extra commute costs
Note that LOU only covers costs that are over your regular standard of living. For example, if your standard grocery bill is $500 a month, but it is now $600 a month due to relocation, LOU coverage pays out on the remaining $100.
What does renters insurance not cover?
A renters insurance policy only covers “sudden and accidental damage.” If you file a claim on something that could have been avoided if you had been more careful, it may likely get denied.
Renters insurance doesn’t cover the structure of your rental home. Structural damage is covered under the owner’s landlord insurance policy.
Also, renters insurance will only cover damage up to your policy’s set limit. Any costs over the limit will have to be paid out of your own pocket.
Events that renters insurance does not cover include:
- Flood, earthquake and sinkholes (add-on coverage may be available)
- Mold damage is covered if caused by a covered peril; otherwise, it is not. Mold testing and inspection are not covered.
Renters insurance and roommates
Be aware that renters insurance doesn’t cover a roommate’s belongings — only yours.You can share a renters insurance policy with a roommate, but it’s not advised. Sharing a policy means sharing the personal property limit as well. If both of you own a lot of stuff, the limit can be hit quickly, and you might not be able to replace all belongings.It’s also difficult to get someone off a renters insurance policy if they move out.
Does landlord insurance cover tenants?
Landlord insurance doesn’t cover a tenant’s personal property or liability. It only covers the structure of the rental home, lost rental income and liability if a tenant or a guest is injured due to a maintenance issue in the home.
How do I buy renters insurance?
The best way to buy a renters insurance policy is to compare quotes from several companies.
Standard renters insurance policies are very similar in their coverage, but the premiums differ because different renters insurance companies will use different risk weights when calculating your quote. These include:
- Claim history
- Credit history
- Coverage limits and deductible you choose
- Your ZIP code
For example, one renters insurance company may consider your claim history to be a higher risk than another company does, and it will then raise your rate to offset a potential payout.
Comparing quotes from various companies side-by-side can help you to get the best combination of cost and coverage for your situation.
How do I file a renters insurance claim?
When filing a renters insurance claim, you should first take pictures of the damaged items. Your renters insurance company will probably ask for this when you start the claim process, so having the images available for them helps the claim go smoothly.
If you have multiple items that have been damaged or destroyed, the best way to speed up the process is to have a home inventory list you can refer to. Make sure that this list includes a description of each item, its cost and any serial numbers available.
This list may take some time to compile, but it’s easy to add to it after that. If you’re filing a claim for multiple items, you can just copy them from the list onto your claim form. Not only does this save you time, but it also may speed up your payout.
Once you have the list of items you need to make a claim on, contact your insurer. Most renters insurance companies have websites and smartphone apps you can file a claim through, but you should be able to start the process by phone as well.
Do I need renters insurance?
Renters insurance is not required by any federal or state law, although landlords often require you to carry it as part of any rental agreement. The main reason is renters insurance policy can prevent the landlord from getting dragged into court if the rental unit is damaged or destroyed.
In the rare instance that your landlord does not require renters insurance, it’s still worth considering.
According to the Insurance Information Institute’s most recent data, a renters insurance policy costs $170 a year, or $14 a month, on average. The amount of coverage you get for the price is usually a worthwhile investment.
Then again, renters insurance policy prices can vary, so you’ll want to make sure the cost is reasonable compared to the value of your possessions.
Factors that can affect your renters insurance quote include:
- Your ZIP code
- Your claim history
- Which deductible and policy limits you choose
A good way to get the best deal on the renters coverage you need is to compare quotes from several renters insurance companies. Take into account any differences in coverage to get an idea of which policy is the best renters insurance for you.