Renter's Insurance: Does It Travel With You?

Renters insurance is a type of insurance policy that offers protection to tenants of a rented property. It covers the policyholder's personal property, including clothing, furniture, and electronics, and it also covers legal and liability expenses related to accidents that occur on the property. It does not cover fixtures of the rental unit or damage to the structure of the home. The insurance is relatively inexpensive and easy to obtain, and it can provide peace of mind in case of theft, damage, or other covered events.

What does renter's insurance cover?

Renters insurance is a group of coverages designed to help protect renters living in a house or apartment. It covers personal property, personal liability, medical payments, and additional living expenses. Here is a detailed breakdown of what renters insurance covers:

Personal Property Coverage

Personal property coverage is a standard component of renters insurance. It helps cover the cost of replacing your belongings if they are damaged or destroyed by a covered peril, such as fire, windstorms, lightning, explosions, theft, or vandalism. This includes items such as furniture, clothing, shoes, electronics, appliances, kitchen equipment, home goods, sports equipment, and musical instruments. Certain high-value items, such as jewelry, artwork, collectibles, and specialized computer equipment, may be excluded from a standard policy or have limited coverage. However, you can usually add additional coverage for these items if needed.

Personal Liability Coverage

Liability coverage is another important aspect of renters insurance. It protects you if you are found legally responsible for injuries to other people or damage to their property. For example, if someone is injured in your home or by your pet, or if you accidentally damage your neighbour's property, liability coverage can help cover the costs. It typically includes legal fees and medical bills associated with covered claims.

Medical Payments Coverage

Renters insurance can also cover medical payments for guests who are injured on your property. This includes medical or funeral expenses and may provide protection from lawsuits related to the incident.

Additional Living Expenses Coverage

If your rented home becomes uninhabitable due to a covered loss, such as fire or water damage, renters insurance can provide reimbursement for additional living expenses. This includes costs for temporary housing, hotel bills, additional food expenditures, and other living expenses incurred while you are unable to live in your home.

Other Coverages

Renters insurance may also include coverage for water backup damage, credit card coverage for unauthorized transactions, and building additions and alterations for improvements or installations you make to your rented property.

It is important to note that renters insurance does not cover everything. Common exclusions include damage to the structure of the building, earthquakes, floods, bed bugs, mould, and regular moving costs. Additionally, there may be limits on coverage for certain high-value items or specific types of personal property. It is always a good idea to carefully review your insurance policy to understand what is covered and what is not.

What doesn't renter's insurance cover?

Renters insurance is an affordable way to protect yourself against the financial impact of unexpected events. However, it's important to note that not everything is covered by renters insurance. Here are some things that are typically not covered:

• Property damage due to floods and earthquakes: Renters insurance generally does not cover damage caused by floods or earthquakes. If you live in an area prone to these events, you may need to purchase separate flood or earthquake insurance, or look for a renters insurance policy that includes this coverage.
• Bed bugs and other pests: Most renters insurance policies do not cover damage or infestations caused by bed bugs, rodents, or other pests. These are typically considered a maintenance issue and are not covered under standard renters insurance.
• Damage to your vehicle: Renters insurance does not cover damage or theft of your car. You will need a separate car insurance policy for that. However, belongings inside your car at the time of theft are usually covered by renters insurance.
• Roommate's possessions: Renters insurance is tailored to the individual policyholder, so your roommate's property is not automatically covered. They would need their own renters insurance policy to protect their belongings.
• High-value personal property: Renters insurance has lower limits for expensive personal property such as jewelry, electronics, firearms, and collections. If you own expensive items, make sure to increase the sub-limits or purchase additional coverage to ensure full protection.
• Liability coverage exclusions: Renters insurance liability coverage may exclude specific incidents, such as bodily harm caused by certain dog breeds or exotic pets. Some insurance companies may deny coverage based on the breed of your dog.
• Damage due to neglect: Renters insurance typically does not cover damage caused by neglect, such as ongoing mold problems or pest infestations.
• Certain types of property: Some types of property may not be covered by renters insurance, including motor vehicles, money, bank notes, coins, silverware, goldware, watercraft, and trailers.

How does renter's insurance work?

Renters insurance is a type of policy that safeguards tenants of a rented property. It covers the policyholder's personal property, which includes all of a renter's belongings, such as clothing, furniture, and electronics. It does not cover fixtures of the rental unit, such as built-in appliances.

Renters insurance typically includes three types of coverage: personal property coverage, additional living expenses, and personal liability. Personal property coverage protects your belongings, even items stolen from your car or while travelling. Additional living expenses cover the extra cost of food, rental, and other things if you have to move out of your place for a short time because of damages from a covered loss. Personal liability protects you if someone is injured in your home and pays legal costs if you are liable and taken to court.

Upon enrolling in coverage, you will have to choose between actual cash value (ACV) coverage, which factors depreciation in value into reimbursement, and replacement cost coverage, which reimburses what items would cost at today's prices.

It's important to note that renters insurance policies can vary across providers, and may not cover all scenarios or types of property. For example, renters insurance typically does not cover flood damage, although it may cover other types of water damage, such as broken pipes. Earthquake damage is also generally excluded but is usually available as additional coverage.

To get renters insurance, you can answer some questions about your property and then customize your coverages. You can get a renters insurance quote and buy online, speak with a licensed representative, or connect with an independent agent.

How much does renter's insurance cost?

The cost of renters insurance varies depending on a variety of factors, but it is generally considered affordable for most households. The average cost of renters insurance in the United States is around $15 per month, or $180 per year, according to the National Association of Insurance Commissioners (NAIC) survey. However, the cost can range from as low as $13 to as high as $30 per month, depending on the company, location, and level of coverage.

The cost of renters insurance is influenced by several factors, including the crime rate in the area, the type of structure being rented, and the value of personal property being insured. Renting a single-family home is typically more expensive to insure than an apartment due to a higher risk of theft. Additionally, higher-value items may require additional coverage, known as a rider or floater, which will increase the cost of the policy.

Renters insurance typically includes three types of coverage: personal property coverage, additional living expenses, and personal liability. Personal property coverage reimburses the policyholder for loss, damage, or theft of their personal belongings up to a certain limit. Additional living expenses coverage pays for temporary relocation costs if the rental becomes uninhabitable due to a covered loss. Personal liability coverage protects the policyholder from legal and financial costs if someone is injured on the property or their property is damaged.

It is important to note that renters insurance does not cover damage to the structure of the home, as this is typically covered by the landlord's insurance. Additionally, renters insurance usually excludes coverage for earthquake and flood damage, but these can often be added as additional coverage for an extra cost.

Why do landlords require renter's insurance?

Although renters insurance is not mandatory under federal or state laws, landlords may require proof of insurance under the terms of a lease. Renters insurance offers several benefits to landlords, helping to minimise risks and protect their property. Here are some reasons why landlords often require tenants to have renters insurance:

Reduces Risk of Lawsuits:

A landlord's insurance policy typically covers the building structure and any landlord-owned property. However, it usually does not cover tenant-owned belongings or personal liability for injuries caused by the tenant's carelessness. Renters insurance transfers this risk to the tenant's insurance provider, reducing the likelihood of the landlord being sued for damages to the tenant's property or injuries caused by the tenant's negligence.

Helps Find Responsible Tenants:

Requiring renters insurance can be an effective way for landlords to screen potential tenants. Tenants who are willing and able to obtain renters insurance are often seen as more financially stable and responsible. It may indicate that they are more likely to pay rent on time and take better care of the rental property.

Covers Relocation Costs:

In some states, landlords may be responsible for covering relocation costs for tenants if the rental property becomes uninhabitable due to specific events. Renters insurance can provide temporary living expense coverage, relieving the landlord of this financial burden.

Protects Against Property Damage:

If there is damage to the rented premises, such as a fire or other accident, the landlord's insurance may not cover all the necessary repairs. Renters insurance can provide additional protection, giving the landlord peace of mind that there is a recourse to cover these unexpected costs.

Pet-Related Incidents:

Landlords who want to allow pets in their rental properties may feel more comfortable doing so if tenants have renters insurance. Some renters insurance policies include pet liability coverage, which can help protect the landlord from potential damages or injuries caused by the tenant's pets.

Lower Insurance Premiums:

By requiring renters insurance, landlords can potentially reduce the number of claims made against their own insurance policies. This may help lower the chance of their insurance premiums increasing or their policy being cancelled due to excessive claims.

Frequently asked questions