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Do I have to get renters insurance?

Fact-checked with HomeInsurance.com

Renters insurance protects your belongings should something happen to your rented home (be it an apartment, condo or house), and it also gives you liability protection.

Most landlords require renters insurance before they’ll rent their property to you, but what does renters insurance cover? Keep reading to find out.

What is renters insurance?

Renters insurance, or apartment insurance, is protection for your personal property from an unexpected event such as a fire or robbery. Should something happen to your belongings, your insurance provider will help pay to replace your items.

Renters insurance provides liability protection too. Should someone be injured on your rented property, your insurance provider will pay for the injured party’s medical expenses and any legal fees should you be taken to court.

Depending on your policy and insurance provider, you may also receive compensation for additional living expenses if you are forced to live elsewhere temporarily because your apartment was destroyed or damaged by a covered peril. 

Renters insurance does not provide coverage for the rented dwelling or any other structures that come with lease. This responsibility falls to your landlord.

There are generally two types of policies when it comes to renters insurance: actual cash value (ACV) and replacement cost value (RCV).

  • An actual cash value policy is cheaper than a replacement cost policy, but it doesn’t pay the full price to replace your stolen or damaged items. Both age and condition are taken into account by the insurance provider when determining compensation. Therefore, the final amount is lessened by both your deductible and any depreciation that has occurred. 
  • Replacement cost value is the actual cost to replace your stolen or damaged items if they were to be bought new. This type of policy is more expensive than an actual cash value policy, but outside of your deductible, you are not expected to contribute anything when replacing your possessions. 

The following perils are covered in renters insurance:

Common exclusions with renters insurance are floods and earthquakes. Also, if you run a business out of your rented dwelling, it’s possible any business equipment, such as a laptop, will not be covered. Lastly, any high valued items (such as fine jewelry) may not be covered either if their replacement value exceeds your policy limits.

To protect high valued items, you will need to purchase a scheduled personal property endorsement. Doing so will give you greater protection for your most valued items.  

Is renters insurance required?

You’re not legally required to have renters insurance, but your landlord is legally allowed to require you to have it.

Regardless, renters insurance is smart to have for what it covers. Though you’ve likely Googled “Do I need renters insurance,” the average cost of renters insurance is only $180 a year. That is a small price to pay compared to what you’d need to pay out of pocket without coverage.

What does renters insurance cover?

Renters insurance covers the following:

  • Loss of use: When your residence is damaged by a covered event, loss of use coverage will cover any expenses that exceed your normal living expenses. 
  • Personal liability: When someone is injured on your rented property, liability will pay medical expenses, loss of income and any legal fees for you should the injured person take you to court.
  • Personal property: When your personal belongings are damaged or stolen, your insurance provider will compensate you for their replacement.

You would need renters insurance in the following scenarios.

Dog bites, injuries or accidents that happen at your apartment

If your dog were to bite someone, your renters insurance would cover any medical expenses and legal fees that would result from the injury. If you didn’t have renters insurance, you would be expected to pay everything out of pocket.

Renters insurance also covers you for any accident that might happen at your home. Accidents always happen when you least expect them, but renters insurance protects you regardless of how it happened. 

Renters forced out of their homes

If your home is deemed unlivable after a covered peril, your insurance provider will pay any additional living expenses while you can’t be in your apartment. This is called loss of use coverage, and it covers hotel, transportation and food expenses until your home becomes habitable or you are able to find a new home.

College students living off-campus

Though you’re in college, you could still be held financially liable if someone hurts themselves while they’re at your apartment or home. While you were living on-campus, you were probably covered under your parent’s policy, but the moment you moved off campus, that stopped being the case.

Items in storage or items lost or damaged while traveling

Renters insurance protects your belongings even when something happens to them away from your home. Whether your items are damaged in storage or while you’re at work or on vacation, renters insurance will cover the cost to replace them.

How much renters insurance do you need?

When purchasing renters insurance, your primary focus should be personal property coverage and liability coverage.

Most renters insurance policies have $100,000 in liability coverage, which should be enough should something happen at your apartment. However, if you don’t think that’s enough to pull you through medical costs and a high-cost lawsuit, you can purchase more. The cost to add more liability protection isn’t much. If you’re afraid of something catastrophic happening, you can usually bump up your policy limits to $300,000 or $500,000 for a few more dollars a month.

As for personal property protection, take inventory of your possessions. You can purchase protection with policy limits up to as little as $5,000 to as much as $500,000. Keep in mind that having a high-dollar policy doesn’t mean unlimited protection for all of your things. Most policies are broken up into categories. For example, your jewelry might only be protected up to $2,500, and your computer may only be covered up to $2,000. When reviewing a policy or speaking to an agent, understand what the limits are for each category. You may need less or more protection than you originally thought.

Alternatives to renters insurance

An alternative to renters insurance coverage is to self-insure. When you self-insure, you pay for any calamities or accidents yourself through funds you have put aside. Should your AC drop out of your window and onto your neighbor’s car, you would pay for all repairs and legal fees.

The downside to this is that you need to have a substantial amount of money set aside to cover unforeseen events. Should you not, it’s easy to go into bankruptcy. 

Another option is homeowners insurance. However, this is best used for when you own your home. There’s no need to protect someone else’s property with your money, even if that protection comes with both liability and personal property coverage.

The takeaway

  • Renters insurance protects your personal belongings from a variety of perils.
  • Renters insurance protects your bank account from medical expenses and legal fees if anyone is hurt on your property.  

If you rent an apartment, home or condo, you need renters insurance. Not only does it protect your personal belongings, but it also gives you liability protection.

We never know what is going to happen. Your dog might bite your neighbor, your home could be vandalized or a pipe might burst in the middle of the night. Life can throw curveballs, so you need to be ready.

Lauren Ward

Lauren Ward is a writer for Coverage.com. She specializes in all things personal finance, including insurance, loans, and real estate.

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