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Do I Need Renters Insurance?

Row of brick apartment buildings in Boston.
Jorge Salcedo/Shutterstock

You may scoff at the idea of renters insurance, thinking you’re covered under your landlord’s policy, or that you don’t own enough to warrant that level of protection. There are plenty of misconceptions about renters insurance and what it offers. Here’s what you need to know.

You may be surprised at what renters insurance covers, such as temporary living expenses if you have to unexpectedly vacate your apartment due to water damage or a fire.

In the end, the price is less than you think, roughly the cost of a pizza or two a month. That’s not too bad for some peace of mind. First, let’s talk through the ins and outs—then you can decide for yourself.

Is Renters Insurance Required?

Many landlords and property managers require their tenants to get renters insurance. This is to protect against tenants or guests coming after them for personal property damage or liability expenses.

Landlord and property managers have what’s called a “rental policy,” which differs from a regular homeowner’s policy in that it only covers the structure of the building or apartment. So if all your belongings are lost in a fire, it’s entirely up to you to replace them. That’s where having renters insurance can come in handy.

There are plenty of landlords who don’t require renters insurance. In this case, many people decide to forgo it. However, you may want to weigh out the benefits and consider purchasing a policy, even if it’s not required.

Here’s What Renters Insurance Covers

It’s a common misconception that renters insurance only covers your belongings. If you don’t own much or are an avid thrift store shopper, you might think it’s a waste of money. However, renters insurance offers so much more.

Let’s break it down so you can consider your options.

  • Personal property damage: With renters insurance, your personal belongings will be covered if damaged by an incident listed in your policy, such as power surges, water damage, fire, and theft. Some plans even cover your personal items when you’re away from home, such as your backpack (with your expensive laptop inside!) getting stolen while riding the bus.
  • Personal liability: This helps cover expenses related to an accidental injury that occurs on your premises, such as your dog biting a child or someone falling down your stairs. Renters insurance will help cover some of these medical bills, as well as legal fees if they decide to pursue legal action again you.
  • Temporary living expenses: Let’s say your apartment is uninhabitable due to a pipe bursting or after a fire. You may think your landlord will put you up in a hotel, but they aren’t actually responsible for this. Renters insurance, however, will cover any additional living expenses, such as hotels, meals, and transportation costs that are above and beyond your regular living expenses. This only applies during the time it takes to get your place repaired, but it can definitely lift some of the financial burdens that come with being put out of your home.

Shopping For Your Policy

Each person and living situation is unique. You’ll have to assess what your individual needs are and go from there.

Having any policy, even if it’s a basic one, will offer some financial assistance in the case of personal property damage or liability expenses. But without a policy, you’ll have to pay out-of-pocket to replace your belongings or to pay for an injured person’s medical bills. All of these bills could add up to a lot.

Here are some specifics to consider when shopping around for your policy.

Property Coverage Limits

The range can be broad, with coverage starting as low as $5,000, and going beyond $100,000 or more. We suggest making a list of your valuable items and assigning an estimated replacement price for each one. But also think about the costs involved with replacing everything—such as after a fire. You might not believe you own that much, but when you consider the cost of buying all new kitchen gadgets and appliances, plates, silverware, furniture, towels, sheets, food, shoes, and clothing, as well as electronics, the costs add up.

In general, apartments are considered to have around $30,000-$50,000 worth of belongings, and homes around $100,000.

If you struggle to assign a value to your belongings, consider taking pictures of your most important items. This way, you have a clear record of these valuables in case damage or theft occurs.

Keep in mind that there are limits to specific categories for your belongings. For example, electronics may be covered up to $2,500, with jewelry having another limit price. You can raise these limits if you have expensive items in that category, it’ll usually add a couple of dollars extra per month.

Most importantly, you have to decide between actual cash value versus total replacement cost. Not sure what these mean? Here’s a quick breakdown:

  • Actual Cash Value: This method will pay you for what your item is worth today. So if you bought a fancy laptop five years ago for $2,000, it might only be worth $50 today. If it gets damaged or stolen, the insurance company will pay you $50, which is the current depreciated cash value.
  • Total Replacement Cost: With this method, you’ll get the value of what that item is priced at today. For example, you’ll get money to go towards buying a brand-new laptop, regardless of how old your previous laptop was when it was damaged or stolen. Usually, this method costs a bit more, but it’s worth it if you want to quickly and easily replace all your possessions with similar (or even better) items.

Most policies don’t include flood, earthquake, mudslide, or nuclear hazard coverage. If you think your place and belongings are at risk of these dangers, talk to your insurance agent about getting a special policy or adding specific riders.

Liability Coverage

Even if you’re extra careful and rarely have any guests over, you never know when an accident will occur. Let’s say you forget to turn off the kitchen sink, it overflows and floods into your neighbor’s apartment, ruining their expensive silk Isfahan rug (worth $22,000!). You’ll be glad you don’t have to fork over that kind of cash since renters insurance usually covers incidents like this.

You may be willing to take your chances, figuring you’ll pay out-of-pocket if an unlikely accident happens. And that’s okay if that’s what you decide to do. But remember, a basic renters insurance policy can be as low as $10-$20 a month. That’s a small price to pay to keep yourself, your belongings, and your savings account protected.

Not sure how much to get? Most landlords require a minimum of $100,000, so this is a good place to start. If you’re nervous about accidents and want more protection, it’s always worth checking on higher coverage amounts. You can sometimes get double or triple the coverage amount for just a few extra dollars a month.

Bundle Your Policies

We suggest looking into policies with your existing auto insurance company. Most insurance companies will offer a discount—sometimes as big as 10% or more—by bundling policies.

If you want to shop around, most companies offer free quotes online. Play around with entering different coverage amounts and compare prices. Usually, a basic policy with $30,000 for personal property coverage, $100,000 for liability, and a $500 or $1000 deductible, will cost you around $10-$20 a month. That’s not bad for some peace of mind.

Even if renters insurance isn’t required, it’s worth checking it out. The monthly cost is reasonable, and you get so much with it. Your belongings will be covered, you’ll have personal liability protection, and you won’t have to worry about footing the bill if you have to evacuate unexpectedly.

Jill A. Chafin Jill A. Chafin
Jill A. Chafin is a freelance writer, aerialist, dancer, food enthusiast, outdoor adventurer, and mama, based in Chapel Hill, North Carolina. Read Full Bio »
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