Renters insurance: what it covers, what it costs and how much you need
A landlord’s insurance covers the building. It does not pay for a tenant’s furniture, laptop or clothes after a fire, a burst pipe or a break-in, and it does not protect you if a guest is hurt in your apartment. Renters insurance fills that gap, and it is usually inexpensive: the Texas Department of Insurance puts the average Texas policy at about $20 a month.
The three parts of a renters policy
- Personal property: pays to repair or replace your belongings after a covered event such as fire, smoke, theft, vandalism or water damage from a burst pipe. It usually covers your things away from home too, for example a laptop stolen from your car or luggage lost while traveling, often at a lower limit.
- Liability: covers claims if someone is injured in your home or you accidentally damage someone else’s property, including legal defense. If a bathtub overflows and damages the apartment below, this is the part that pays.
- Additional living expenses: pays for a hotel or temporary rental and extra costs, such as higher food bills, if your home becomes unlivable after a covered loss.
Many policies also include small medical payments cover for guests injured at your home, regardless of fault.
Actual cash value or replacement cost
An actual cash value policy pays what your belongings were worth after depreciation, which can be far less than buying new. A five-year-old laptop might be valued at a fraction of its replacement price. Replacement cost pays to buy new items, usually after you replace them and send receipts. It costs a little more and is worth it for most people.
What is usually not covered
- Floods: most renters policies exclude flood. Renters can buy contents-only flood cover through the National Flood Insurance Program or private insurers; FEMA notes NFIP policies usually take 30 days to start.
- Earthquakes: often excluded or sold as an add-on.
- High-value items: jewelry, cash, watches, cameras and collectibles often have low sub-limits unless you add a rider, also called scheduling.
- Pests and wear and tear: bedbugs, mold from neglect and gradual damage are generally excluded.
- Your roommate’s belongings, unless they are named on the policy.
How much cover to buy
Walk through each room and estimate what it would cost to replace everything: furniture, clothes, kitchen items, electronics, bedding, books and sports gear. Most people underestimate, especially for clothes and small items. For liability, $100,000 is a common floor; more is cheap to add and worth considering if you have savings or a dog.
Choosing a deductible
Common deductibles are $500 or $1,000. A higher deductible lowers the premium, but only choose one you could pay the week after a burglary. Very small claims are often not worth filing because they can raise future prices.
Roommates and pets
- Roommates: some insurers allow two unrelated people on one policy, but a claim then involves both of you. Separate policies keep things simpler.
- Dogs: liability cover usually applies to dog bites, but some insurers exclude certain breeds. Disclose your dog when you buy.
Students and young renters
Students living in dorms may already be covered under a parent’s homeowners policy, usually up to a percentage of the parents’ personal property limit. That cover often ends once the student moves to an off-campus apartment, so check before signing a lease. Young renters with few belongings sometimes skip insurance, but the liability part alone can be worth the price: a kitchen fire that damages neighbors’ apartments can lead to claims far larger than the value of your own things.
Ways to lower the price
- Bundle renters with your car insurance.
- Ask about discounts for smoke detectors, sprinklers, deadbolts or a monitored alarm.
- Pay annually instead of monthly.
- Keep a clean claims history.
If you need to claim
- Report theft to the police and keep the report number.
- Photograph the damage before cleaning up.
- Contact your insurer quickly and keep records of every conversation.
- Keep receipts for emergency costs such as a hotel.
A home inventory with photos or video of each room makes this much easier. Store it in the cloud.
Before you buy
Compare quotes with the same limits, deductible and replacement-cost setting. Some landlords require proof of renters insurance, so check your lease for minimum liability amounts and whether the landlord must be listed as an interested party.
Common questions
Is renters insurance required by law?
No, but many leases require it.
Does renters insurance cover my car?
Damage to the car is covered by auto insurance. Belongings stolen from the car are usually covered by renters insurance.
Does it cover me if I move?
Most policies cover belongings in transit for some perils. Update your address with the insurer before you move.