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How much renters insurance do I need?

Fact-checked with HomeInsurance.com

Renters insurance is one of the most affordable types of insurance. It’s also one of the easiest policies to get. 

If you rent your home or apartment, having renters insurance is important. It covers your personal property from certain losses, like fire or weather damage. It also protects you in a lawsuit if someone gets injured in your home or you accidentally damage someone else’s property.

Like all insurance policies, renters insurance has certain coverage limits. If you have a covered loss, the insurance company will only reimburse you up to the coverage limit. The amount of coverage you get is a personal choice. However, understanding the different types of coverage will help you settle on an appropriate amount for you.

What does renters insurance cover? 

Renters insurance coverage is divided into three categories—personal property, liability and loss-of-use. These coverages have individual coverage limits, which can be increased or decreased. The table below includes more information on these coverage areas.

What it covers
Personal property coverageYour personal items, such as furniture, appliances and electronics. Your policy will reimburse you for either actual cash value (ACV) or replacement cost value (RCV). ACV factors in depreciation, whereas RCV pays you for what the item originally cost.
Personal liability coverageLiability coverage protects you in a lawsuit if someone gets injured in your home or if you accidentally damage someone else’s property.
Loss-of-use coverageLoss-of-use coverage pays for your restaurant and hotel fees if you are unable to live in your home due to a covered loss, such as a fire.

Cutting back on coverage in one of these areas won’t drastically change your rate. Renters insurance is inexpensive to begin with. Additionally, basic renters insurance policies usually have relatively low levels of coverage by default. Therefore, reducing your coverage isn’t advised.

Renters insurance perils 

Your renters insurance covers a long list of perils, which are events that could potentially damage or destroy your belonging. These tend to be consistent between insurance companies. Below is a list of common covered perils:

  • Fire and lightning
  • Windstorm and hail
  • Explosions and eruptions
  • Riots
  • Damage from cars or planes
  • Smoke damage
  • Vandalism
  • Theft
  • Falling objects
  • Weight of snow, ice, sleet
  • Overflow of water or steam
  • Freezing pipes or HVAC system
  • Accidental damage caused by electrical appliances

When you purchase renters insurance, you will either have a named perils policy or an open perils policy. With a named perils policy, you are covered by specific events that are listed in your policy. With an open perils policy, you are covered from any event that is not explicitly excluded from your policy.

However, an open perils policy doesn’t cover your belongings from any situation imaginable. In most cases, things like wear and tear, pet damage, insects, pests, mold and rust are excluded from open perils policies.

How much personal property coverage do I need? 

The amount of personal property damage coverage you need depends on the value of the items you own. Someone who owns $10,000 worth of belongings will need more coverage than someone who only owns $4,000 worth of personal items. Keep in mind that your personal belongings include everything you own, such as furniture, clothing, electronics and appliances.

To determine the value of your belongings, conduct a home inventory. Start by writing down a list of everything you own. It can be overwhelming, so pick an easy spot to start and work room by room. Remember to record things that might be in your car, at work or being held in a storage unit. 

Write a description of each item and the price you originally paid. If you aren’t sure of the exact amount, make an estimate. If you have receipts for your items, make a photocopy or keep them in a file folder. For larger items, like appliances or electronics, write down the serial number. You can use this resource from the Insurance Information Institute to get started.

After you’ve completed your home inventory, tally up the total value of all the items you own. That is the number you should use to determine how much renters insurance coverage you need.

Do I need additional personal property coverage? 

Some people will need coverage beyond what their renters insurance policy offers. This will be determined by your home inventory. It will also depend on your policy’s coverage limit. A limit is the highest amount of money that the insurance company will pay you after a covered loss. If the value of your personal items is significantly above your policy limit, you should consider adding coverage.

For example, let’s say your apartment building was destroyed in a fire and all of your items were lost. If the total value of your items is $10,000 but your policy limit is $5,000, you would have to pay out-of-pocket to replace half of what you owned. In this case, it would be worth it to raise your coverage limit to $10,000, or even slightly below, so you’re paying less towards your losses.

If you own valuables, you will probably not be sufficiently covered by your policy’s default coverage limits. Getting added coverage is a good option for people who own things like art, electronics or jewelry. Often, these categories have separate coverage limits.

Who should consider this? Anyone who owns expensive items that have separate coverage limits or own more expensive items in general might want to consider additional coverage to make sure their belongings are financially protected.

How much liability do I need? 

Liability coverage protects you from common risks you might experience as a renter. Specifically, it covers you from a lawsuit if someone gets injured in your home, or if you accidentally damage someone else’s property. In the event that you get sued, your insurance company would pay for your legal fees. 

When considering liability coverage, you should get as much coverage as you can afford. Without enough liability insurance, you would have to pay out-of-pocket to cover your legal fees, repair damaged property or pay for someone’s medical expenses if you’re found at-fault. Those expenses can add up quickly and could drain your savings or even put you in debt. 

The takeaway

Renters insurance is cheap and easy to get, so all renters should have it to protect their belongings and finances. Before you get a policy, you should know how much coverage you need. Start by creating a home inventory of all your belongings and their value. Based on that number, you can figure out an appropriate amount of coverage for you. Also look into your policy’s coverage limit to determine if you need to raise the amount.

Elizabeth Rivelli

Elizabeth is an insurance writer for coverage.com, where she covers insurance providers and reviews policies to help consumers find comprehensive and affordable coverage for every area of their life. She has more than three years of writing experience for top online insurance and finance publications.

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