Renters insurance basics: What is renters insurance? 

What is renters insurance? 

Renters insurance is specifically designed for individuals who rent a house or apartment. It provides protection for your personal belongings against unexpected events like theft, fire, or water damage. Additionally, it offers liability coverage if someone is injured in your home or if you accidentally cause damage to someone else’s property

Renters policies offer three major types of coverage — personal property coverage, personal liability coverage and additional living expenses coverage. 

How does renters insurance work?

There are many different situations when you might file a renters insurance claim. For example, a renters policy reimburses you for the loss up to your policy’s coverage limits if someone breaks into your rental unit and steals your expensive golf clubs and other items. 

Or, if your rental unit catches fire and is severely damaged, you might need to move into temporary living quarters until the apartment is fully repaired. In such a situation, renters insurance will reimburse you for expenses — such as hotel rooms and restaurant meals — that are over and above your normal costs.

Additionally, renters insurance would reimburse your legal costs – and any damages you owe — if your dog bites someone and the victim sues you.

What does renters insurance cover?

Renters insurance offers key financial protections, making it a smart purchase for almost every renter. In particular, most policies cover damages associated with the following 16 types of perils:

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. Falling objects
12. 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-protection 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 or automatic fire-protective system
15. Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance
16. Sudden and accidental damage from artificially generated electrical current (doesn’t include loss to a tube, transistor or similar electronic component)

What doesn’t renters insurance cover?

Although renters insurance covers some important things, it doesn’t reimburse you for all types of damage.

“Renters insurance does not cover losses caused by the peril of flood,” Boris says. She notes that renters might be able to obtain flood insurance coverage through the National Flood Insurance Program.

Other examples of things your renters insurance won’t typically cover include:

• Earth movement, including earthquakes, mudslides and landslides
• War
• Nuclear hazard
• Neglect, meaning your failure to save your property at the time of loss or after.
• Intentional loss, meaning the deliberate destruction of your property.
• Governmental action, such as seizure of your property.

You might need to buy additional coverage for hurricane-related wind damage in some coastal regions.

How to get renters insurance quotes

Getting insurance quotes is a straightforward process, though it can take time if you approach individual insurers separately. Typically, they’ll ask for personal details like your phone number, address, and desired coverage level before providing a rate quote.

For a quicker and more convenient option, you can use an insurance comparison tool which collects your information once and delivers quotes from multiple insurers, saving you time and effort.

How much renters insurance do you need?

When deciding how much coverage you need, Boris recommends taking an inventory of all the items you own inside the rental unit.

“A renter should think about all the items they own in that unit, such as furniture, clothing, jewelry, artwork, televisions, computers, and sporting equipment,” she says.

If you have relatively few possessions, you might not need much coverage. However, if you have expensive belongings, you should purchase enough insurance to cover them.

Boris says a typical renters insurance policy might not fully cover some high-value items, such as jewelry, artwork or collectibles. In that case, renters should consider purchasing a floater or valuable articles policy for these types of high-value items.

Consider raising your liability limits; it costs very little and provides a lot of protection. Liability insurance covers you should you be resposible for someone being hurt – or even killed – in your rental unit.

If you’re sued, you could end up with high legal costs and may end up paying hundreds of thousands of dollars or more in damages. Having enough renters insurance could protect you from financial ruin.

What factors affect the cost of renters insurance?

Many factors impact insurance quotes. 

• Where you live: If your ZIP code is a high-crime area — where theft of your belongings is a high risk — you likely will pay more for renters insurance. Renting a house instead of an apartment also may raise your rates, as an apartment in a high-rise is at lower risk of both theft and fire damage than a single-family home.
• Your insurance claim history: Similar to home and auto insurance, you may pay more for renters coverage if you filed multiple claims over the past few years.
• Your insurance score: This is calculated from your credit score, so you may pay more for coverage if you have a spotty credit history. 
• Your risk: If you have a dog categorized as being part of an “aggressive” breed — such as a pit bull or rottweiler — the insurance company might quote you a higher rate.

If the rates being quoted to you seem too high, one way to lower them is to raise your deductible. Taking on a higher deductible usually translates to lower premium costs. Just make sure you can pay the deductible should you incur a loss.

How to save money on renters insurance

Shopping around for quotes is the best way to save on renters insurance. Each insurer uses its own formula for determining rates. A renters insurance quote comparison from different companies can help you find the insurer that is the best match for your situation.

Raising your deductible also can save money on insurance quotes.

Other ways to lower your renters insurance costs include:

• Bundle your renters and auto insurance with the same company
• Keep your credit score high
• Make sure your new apartment has safety features, such as deadbolt locks, smoke alarms, and fire extinguishers

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