Renters insurance is a type of insurance to safeguard you and your personal belongings.
Who gets renters insurance? *crickets* Yeah, no one.
In fact, according to the Insurance Information Institute, only 37% of renters in the United States have insurance. Compare that to 95% of homeowners that have a home insurance policy. And if you drive a car, you have auto insurance. Regardless of whether you are paying rent or a mortgage, we all own things. Your phone. Laptop. Bike. And we all want those things protected.
How does it work?
If there is a fire or a water pipe bursts in your apartment or townhouse, you may end up with soaked carpets, warped wood floors, damaged electronics and more. And your landlord can’t help you financially. You are responsible for replacing any personal property that is damaged. Without using a credit card or applying for a personal loan, it can be hard to get you out of a financial bind. In the event you can't stay in your apartment after a flood, earthquake or fire, having renters insurance could help you cover temporary living expenses as well.
Even if you aren't at home, you could be covered by renters insurance. Many policies include coverage for items that you keep in your car or take with you on a business trip or vacation.
Renters insurance coverage
The standard renters insurance policy will cover three areas: temporary living expenses, personal property, and personal liability/medical bills.
Temporary living expenses
Some situations call for more extreme measures. Imagine an electric outlet sparks a fire, and the damage is so severe you are forced out of your apartment. You have no choice but to get a hotel - and that's not cheap. But guess what? Renters insurance covers that. Check your policy, too, because you may even be eligible to receive extra cash for food and laundry expenses.2.
This coverage helps you recover the cost of lost or damaged items in different situations.
Standard policies cover fire, lightning, windstorms, hail, vandalism, theft, freezing damages from aircraft or cars and even riots.
Let's say there is a fire in your home or if someone breaks in and takes your tv, phone, and camera, you're covered. Any items such as the stove, microwave and even the furniture that belongs to your landlord are not covered under your policy.
It's easy to add extra coverage for other valuables such as expensive jewelry, fine art, watches, and additional electronics. These valuables may need an appraisal or proof of purchase, but adding coverage for them under your policy is simple and often comes at a low additional cost.
Personal liability and medical bills
Debating on hosting a house party? You only live once, do it.
Renters insurance typically covers legal fees and medical expenses.
If you’re sued after your friend slipped on a spilled beer and breaks his leg, your insurance policy may cover their medical bills as well as any legal fees.
Another lesser-known benefit of renters insurance is third-party property coverage.
The scene: You're at the library, you set down all your belonging to save your spot and use the restroom. You come back and it’s all gone, panic kicks in and accidentally knock over your coffee and now it’s all over a stranger’s laptop and books. Oops.
You're in luck, though, if you have renters insurance. Under a typical renters insurance policy, not only are you covered for the stolen items but now the stranger's damaged items are covered as well.
What isn't covered?
Unfortunately, renters insurance can’t cover everything. Here are a few typical items and instances when a policy won't help you.
- Your power, water or heat going out in your condo or apartment in the dead of winter or the heat of summer
- A place to stay when there are bedbugs in your place
- Natural catastrophes such as floods and earthquakes
Still not convinced renters insurance is worth it?
Why do so many people avoid getting renters insurance? There are several common misunderstandings about what and who is covered under a renters insurance policy.
Coverage is applied to anyone in your household related to you by blood, marriage or adoption.
If you have a roommate, their personal belongings aren't covered under your renters insurance. They have to get their own policy.
If your landlord provided any furnishings or appliances when you moved in, those items will be covered by their insurance policy. However, you are responsible for any items you purchased.
Living with your parents? Their insurance might not cover all of your belongings. Check their policy to see what is already covered.
Renters insurance coverage extends beyond the four walls of your apartment. If your car is broken into, your renters insurance will cover any stolen items such as a purse, iPad or clothing.
How to get renters insurance
Getting renters insurance is something everyone should consider. With these four simple steps, you can save money and time in the process.
- Snap a photo or video record everything in your home that you'd like to insure.
- List your most expensive/valuable items, including electronics, and estimate how much they cost.
- List your common household items such as clothing and small appliances, and estimate how much they cost.
- Add up your two lists and now you have an idea of how much renters insurance coverage you’ll need.
- Compare renters insurance rates to get the best deal.
It is best to round up to the nearest $10,000. So, let's say you estimated $18,000 worth of valuables, you should choose a personal property coverage of $20,000.
Overall, renters insurance has massive benefits. With some renters insurance policies starting at the price of less than buying a cup of coffee every day, there's no reason not to get coverage. You will sleep better knowing that your belongings are covered and that you won't encounter a financial emergency that puts you in serious debt.