Renters Insurance: What Does It Cover?

Ever wondered what exactly renters insurance is and what it covers? Well, you're in the right place. Think of it as a shield against life's unpredictable moments, a protective layer for your personal belongings, and a helping hand in potential liabilities. When you move into a rented home or apartment, it's easy to assume that the landlord has everything taken care of, but that's not entirely true.

In this guide, we'll walk you through the ins and outs of renters insurance –- the nitty-gritty details you might not have considered, the scenarios it covers, and the situations where it might not offer the safety you expect. Whether it's the protection of your cherished items, coverage during displacement due to disasters, or liability safeguarding in unexpected events, renters insurance is here to lend a helping hand. So, let's take a close look at this essential safety measure for renters.

What is renters insurance?

Renters insurance protects the property of tenants who live in a rented dwelling. Policies provide coverage for an insured party's personal property, as well as liability claims that aren't a result of a structural problem with the property. Renters policies also will help to cover displacement costs should the tenant have to temporarily move out of their apartment due to issues. Although renters insurance isn't a legal requirement, some landlords can and do require their tenants to have some form of coverage.

How does renters insurance work?

Renters insurance coverage is designed specifically for tenants who are living on property owned by someone else. The extent of the coverage varies depending on the kind of policy you take out, as well as the total estimated value of all of your belongings.

To make sure you're covered by your renters insurance to the fullest extent, you need to make sure your policy covers the total cost of everything you keep in your apartment. People tend to underestimate the value of their belongings, though, so create a detailed list of everything you own with estimated values to come to an accurate number. In the event of a fire, theft, or other major event, the insurance company will provide you with the funds needed to replace these items.

What does renters insurance cover?

The typical renters insurance policy covers personal property, living expenses, liability coverage, and medical expenses, all of which we'll cover in-depth below.

Personal property

Renters insurance covers your personal belongings that you store at home. These items are often times insured regardless of where they are when damage or loss occurs. For example, if someone steals your laptop while you’re on your way to work, your renter’s insurance policy can cover some or all of the loss. Renters can insure their clothes, shoes, furniture, and other personal items of high value.

Living expenses or loss of use

Large-scale catastrophic events such as fires, floods, and earthquakes can damage more than just your personal belongings. Unexpected disasters could leave your home inhabitable for some time, during which you’ll need to stay somewhere else. Renters insurance covers these kinds of situations, known as loss of use, by paying your hotel bills, meals, and additional living expenses related to your temporary displacement. 

Personal liability coverage

Hosting people in your home is a great way to spend time with friends. However, if an accident were to take place in your rental, you could be held liable in a lawsuit. To protect you in such cases, renters insurance comes with liability protection. 

Although lawsuits of this sort should be covered through the landlord's homeowner’s insurance, there’s no way to guarantee your landlord has adequate coverage. To make sure you have your bases covered, it’s always a good idea to opt for an insurance policy that provides at least some liability coverage. If a lawsuit were to reach the courts, renter’s insurance could cover your legal representation and the money awarded to the other party. 

Medical expenses

In tandem with personal liability coverage, medical coverage comes in handy when someone gets hurt. Unlike liability coverage, though, medical coverage pays for medical expenses, regardless of who is at fault. Liability insurance only covers the opposing party's expenses if you’re found responsible. Having both is ideal because it provides extra protection in the event someone is seriously injured in your space. 

What does renters insurance not cover?

Like any insurance policy, renters insurance has its limitations. There are a few damages that renters insurance normally won’t pay for. Take a closer look at these coverage limits below:

Pest infestations

Renters insurance won’t cover mice, bedbugs, or other kinds of pest infestations. In the eyes of insurance companies, pest issues are the responsibility of the homeowner or property manager.

Flood damage

Unfortunately, you’re responsible for replacing anything that gets damaged by heavy rainfall, burst pipes, or overflowing bodies of water. For many across the country, floods don't pose a threat. But if you want to make sure your items are covered, ask your landlord if the property and your personal items are insured for flood damage under their homeowners insurance.

Earthquake damage

As with flood damage, earthquake damage is not covered by the majority of renters insurance policies. Whether or not you should seek out additional coverage against earthquakes depends on where you live -- for those in states like California or Alaska, earthquake coverage is advisable.  

Conditional renters insurance coverage

Insurance policies can have nuanced conditions to their coverage, which can feel challenging to keep track of, especially as a new renter. You may not be confident in which losses will be covered and under what circumstances. Below, you’ll find a list of losses that are usually covered, as well as the caveats that should be kept in mind when filing a claim. 

Off-site belongings

Renters insurance extends to personal items outside of your immediate living space. You can file a claim for anything that is lost or damaged while you're out of the house as long as the items are included in your renter’s insurance policy. 

It’s important to note, however, that personal property coverage for off-site belongings is limited. Most policies cap out-of-home coverage at 10% of your total personal property limit. You may also have to pay a deductible before the insurance starts to cover costs.

Dog bites

Having a pet is a great way to make your rental feel more like a home. However, dog owners run the risk of their canine becoming aggressive with a stranger while on a walk or even within their home. When this happens, the pet owner will be liable for the medical costs incurred by the victim. Luckily, every renter's insurance policy comes with a minimum of personal liability protection of $100,000, which will aid in covering these costs. 

Renters should keep in mind, however, that some companies won’t insure certain types of canines. Breeds that are traditionally considered to be aggressive (whether rightfully so or not), such as pit bulls or German shepherds, aren’t always covered. Dogs with a history of aggression may also be denied coverage, as they're considered high risk by insurers.

Spoiled food

If your area goes through a major power outage, perishables stored in your fridge could quickly go bad. While your insurance may not be able to do much to get the lights back on, they can help you restock your fridge -- renters insurance usually covers the cost of replacing spoiled groceries in circumstances where your unit experiences issues outside of your control.

One thing to consider when filing a claim for spoiled food is the need to pay a deductible. In some cases, the deductible will be enough to cover losses. However, if you had recently gone grocery shopping or made a bulk purchase that month, losses could extend beyond your deductible. In these cases, replacement cost coverage would pay for the rest.

Broken windows

If you were to accidentally break the windows in your rental unit and your landlord sued you over the damage, your renter’s insurance would likely cover your legal fees. However, if you break a window in your home and your landlord decides to take the cost out of your security deposit instead of taking you to court, your renter's insurance may or may not reimburse you the difference. 

Car theft

Personal items stolen from your car can be covered under renters insurance; however, the car itself cannot. If you own a car, it’s important to purchase separate auto insurance with comprehensive coverage. When renting in an area with a history of car theft or in a poorly lit neighborhood, you're at a higher risk of theft, so finding a quality car insurance policy is imperative.

Water damage and mold

While renter’s insurance won't cover flood damage, it might cover water damage and mold. For example, damage sustained to your belongings from a burst pipe or clogged sink should be covered. The same goes for mold that developed as a result of one of these events. However, mold that’s been growing over an extended period of time due to the landlord's negligence will likely not be covered, because insurance companies consider it the landlord’s responsibility to keep their properties safe and habitable, not the renters'.

What's the difference between rental insurance and landlord insurance?

As the names suggest, rental and landlord insurance cover different groups. While each party represents one side of the property rental relationship, their coverage needs are different.

Renters insurance protects the tenants' individual interests. It usually covers the cost of replacing personal belongings, as well as legal or medical fees associated with lawsuits filed by third parties. Personal damages resulting from fire, theft, power outages, and burst pipes are typically covered under renters insurance. 

Landlord insurance is designed, as you might have guessed, to protect the interests of a property owner. It normally covers the physical structure of a property, as well as legal or medical fees associated with lawsuits filed by tenants. Property damages resulting from a variety of scenarios can be covered under landlord's insurance. Usually, landlord insurance will offer a broader range of coverage than renters insurance. However, it's important to note that landlord insurance does not cover a renter's belongings, making it necessary for tenants to get their own insurance. 

How much renters insurance coverage do I need?

The amount of renters insurance coverage you need depends on how many personal items you have and the monetary value of these items. The more you own, the more insurance you need. If you’re moving into a short-term rental that is fully furnished, you’ll probably only need an insurance plan on the lower end of the spectrum to cover your clothes, shoes, and electronics. 

However, if you’re moving into an apartment that you have to furnish yourself or that you work out of, you’ll need a plan with more coverage. In addition to the personal belongings listed above, you’ll also want to cover your furniture, work gear, kitchen appliances, and anything else you plan to buy for your space. Some renter's insurance policies also come with pet insurance to protect your four-legged family member.

Take stock of all your valuables before purchasing a renters insurance policy. Keeping track of your possessions will come in handy if you ever need to file a renters insurance claim in the future. 

The final word on renters insurance

Renters insurance is a vital safety net for tenants, ensuring the protection of personal belongings, liability coverage, and assistance in unforeseen circumstances. It's a shield against financial burdens, covering losses due to theft, damage, or accidents, offering peace of mind in an ever-changing world. While it doesn't encompass every scenario, it provides a safety net for many common issues, offering relief during times of displacement or legal complications.

Remember, it's crucial to assess your coverage needs based on your possessions and lifestyle. Don't underestimate the value of what you own; creating a comprehensive inventory helps ensure adequate coverage. Ultimately, renters insurance isn't just an added expense; it's a practical investment in safeguarding your everyday life and securing your future against unexpected events. So, before you move into your next rented space, consider the value and protection that renters insurance can provide.