Renter’s Insurance Explained: What It Covers (and What It Doesn’t)

Here’s the misunderstanding that costs renters the most: assuming the landlord’s insurance covers your things. It doesn’t. Their policy covers the building. If a pipe bursts and ruins your couch, or someone breaks in and takes your laptop, that’s on you unless you have renter’s insurance.

The good news is that it’s one of the cheapest kinds of insurance there is. Here’s what it covers and how to pick the right amount.

The Three Main Parts

• Personal property: pays to repair or replace your belongings after covered events like fire, smoke, theft, vandalism and certain water damage. Many policies cover your stuff even outside your home, like a laptop stolen from your car.
• Liability: covers you if you accidentally injure someone or damage someone else’s property, like a guest who slips or water from your overflowing tub leaking into the unit below.
• Loss of use (additional living expenses): pays for a hotel and extra costs if your apartment becomes unlivable after a covered loss.

What It Usually Doesn’t Cover

• Floods from outside water (that needs separate flood insurance).
• Earthquakes, unless you add coverage.
• Pest damage like bed bugs or roaches.
• Your roommate’s belongings, unless they’re on your policy.
• Very expensive items above your policy’s limits, like jewelry or collectibles, unless you add a rider.

How Much Coverage Do You Need?

Walk through your apartment and add up what it would cost to replace everything: furniture, electronics, clothes, kitchen gear. Most people underestimate this. A one-bedroom often adds up to more than you’d think.

Choose replacement cost coverage instead of actual cash value if you can. Actual cash value pays what your five-year-old couch is worth today. Replacement cost pays what a new one costs.

For liability, many landlords require at least $100,000. It usually costs little to go higher.

What It Costs

Prices depend on where you live, how much coverage you want and your deductible, but renter’s insurance is usually inexpensive compared with other insurance, often in the range of a couple of takeout meals a month. Bundling it with your car insurance often gets you a discount on both.

Tips to Save Money and Hassle

• Take a video of your belongings now and store it in the cloud. It makes claims much easier.
• Pick a deductible you could comfortably pay out of pocket.
• Ask about discounts for smoke detectors, security systems or paying annually.
• Add your landlord as an “interested party” if your lease requires proof of coverage.

Keep Reading

• 17 Hidden Apartment Fees That Could Cost You Thousands
• How to Get Your Full Security Deposit Back
• 30 Questions to Ask Before Renting an Apartment

FAQ

Is renter’s insurance required?

It isn’t required by law, but many landlords require it in the lease, often with a minimum liability amount.

Does renter’s insurance cover my roommate?

Usually not, unless they’re named on your policy. Each roommate should generally have their own.

Does renter’s insurance cover theft from my car?

Personal belongings stolen from your car are often covered by renter’s insurance. The car itself is covered by auto insurance.

Does renter’s insurance cover water damage?

It often covers sudden water damage like a burst pipe, but not flooding from outside water.