Car insurance covers a car. Homeowners insurance covers a home. Life insurance covers your life (more or less). So, one would assume renters insurance covers the apartment you are renting …
1. Wait … renters insurance doesn’t cover my actual apartment?
Nope, it covers the stuff in your apartment …
Umm, well, accidents happen. And stuff is expensive. So, say, a pipe bursts and the leak destroys your furniture or a thief breaks in and steals your laptop. If you have renters insurance, you won’t have to replace all that stuff out of pocket. You can file a claim and get reimbursed for damaged or stolen possessions.
3. You mean my landlord’s insurance doesn’t cover me?
No, your landlord’s homeowners insurance protects the building. It covers, say, structural damage to the apartment itself. But your stuff is … your stuff. It’s up to you to insure it.
4. OK, I get it. So I just order some renters insurance and all the stuff in my apartment is covered?
No — this is insurance we’re talking about, and, as with all policies, there are coverage limits. With renters insurance, those limits come in two forms. There’s an overall limit, specifying how much money your policy pays out in total and there are individual limits on things that are super-expensive.
5. You mean items over a certain dollar amount?
More like categories of stuff. So jewelry, collectibles, furs, musical equipment, firearms, art, gift cards, checks, electronics — insurance companies generally set limits for those items. You might only get up to $1,000 back on, say, a $5,000 ring — though you can purchase a rider for extra coverage. Oh! — and there’s usually a deductible. That’s insurance-speak for how much you’ll pay before your policy kicks in.
6. OK, but then the policy pays full-price for the covered items?
That depends. There are two types of renters insurance policies. If you have an actual cash value policy, your insurer covers the actual cash value of your stuff, but — and it’s a big but — that’s the actual cash value of the item today, not how much you threw down for it originally. Now, if you have a replacement cost value policy, the insurer covers the cost of repairing or replacing the item at its current price. No depreciation to worry about.
7. So a replacement cost value policy is better than an actual cash value policy?
Well, it pays out more, for sure, but it also costs more (in the form of higher premiums), so you’ll need to assess the value of your things, decipher how much coverage you need and, ultimately, consider the trade-off.
Just so you know, renters insurance is actually pretty cheap. In most states, a basic policy costs less than $20 a month. Again, though, how much you pay is affected by how coverage you need, which is based on how much you own.
8. Oh man. How do I figure out how much my stuff is worth?
That’s actually easier than it sounds, thanks to technology. There are quite a few websites and home inventory apps out there that help you log, price and track the value of your possessions. You can also go ahead and take inventory via an old-school Excel spreadsheet. The method doesn’t matter as much as you actually going through the process.
9. Why do I need to inventory my stuff?
Well, so you know how much coverage to buy. (To give you some context, people commonly opt for $25,000 in personal property coverage and $300,000 in personal liability coverage with a $250 deductible. But PolicyGenius can help you figure out how much renters insurance you need right here.) And also because your insurer will ask for an inventory report when you file a claim. It provides proof of ownership and helps push your claim through.
10. And the insurance company just accept my estimates?
So long as they’re accurate — which really means inventory the hell out of your inventory. Look up prices online and have rare, expensive, or otherwise special items appraised. (In fact, your insurance agent is probably going to ask for an appraisal report on these items, should you ever file a claim.) Save receipts, log serial numbers and take plenty of pics. Again, a solid home inventory app can help, but, if this all sounds very daunting, no worries. We’ve got a full renters insurance inventory 101 right here.
11. Is that all renters insurance covers? Stuff?
No, actually! Some policies also tout additional living expenses, like hotel stays and even meals if you can’t stay at your apartment as a result of a peril.
12. What do you mean ‘a peril’?
Perils are the incidents renters insurance covers. They typically include some weather (hail, wind, lightning), fire, electrical surges, explosions, water damage, theft, vandalism and falling objects, like, say, a plane engine pulled through space and time to stop the primary universe from imploding in 28 days, 6 hours, 42 minutes and 12 seconds.
Or, you know, just a rock.
13. Right. So you’re saying there are incidents my renters insurance won’t cover?
Yes, there are exclusions — and, while that probably gets your goat a bit, the more common ones actually make a lot of sense. For instance, renters insurance doesn’t cover intentional damage or injury …
14. Wait … renters insurance covers injuries?
Oh yeah, we meant to mention that earlier: Most renters insurance policies also cover certain personal liabilities in addition to property. For instance, if someone has an accident at your place, your policy pays for their medical bills or your legal expenses in the event said person sues. Renters insurance can also cover damage you accidentally do to someone else’s apartment. Like, say, you overfill your bathtub and water leaks into the unit directly below. (Whoops.)
15. Ah. How do I know exactly what my renters insurance covers?
By reading the policy closely, of course! Actually, there is a bit of a trick to this: If you have an “all risk” policy, any peril that isn’t specifically listed as an exclusion is covered. If you have a “named peril” policy, only perils explicitly listed in the policy are covered. Got it?
16. Sure. What about bed bugs? Will my renters insurance policy pay if I get bed bugs?
Sadly, no. Vermin infestation — or the damage done to your property as a result — is not covered by renters insurance. That’s considered a standard home maintenance issue, meaning you’re expected to act fast if there are critters in your bed.
Also worth noting: Big natural disasters, like floods or earthquakes, are also commonly excluded from a basic renters insurance policy. (Mainly, because renters insurance policies are cheap and repairs after a flood or earthquake are expensive.) However, you can purchase flood, earthquake, and, yes, even bed bug insurance, as a rider for your renters insurance or a separate policy if you want or need it.
18. Will renters insurance reimburse whatever my landlord takes from my security deposit?
No. Your security deposit is the insurance against any damage you do to your apartment.
19. But wait … my landlord is requiring renters insurance because I have a dog. Isn’t that to cover damages to the apartment?
So most renters insurance policies cover pets under the personal liability portion of your policy — meaning if you disclosed Fido’s existence to your insurer and he bites someone, you’re covered when it comes to medical expenses and legal fees. That’s why many landlords require tenants with pets to have renters insurance. It’s also why owning certain dog breeds jacks up your premiums or even makes it downright impossible (or at least much, much harder) to get a policy.
Now, there’s also something called a pet damage rider offered alongside some renters insurance policies. And while it will pay for carpet Fluffy ripped up or the blinds Socks destroyed, that coverage only kicks in once you’ve exceeded your security deposit (or pet deposit or deductible — whichever is the greatest). So, no, renters insurance won’t help you game the security deposit system.
20. Speaking of gaming the system … say I lose something outside of my apartment. Can I just tell my insurer it was stolen and, you know, call it a claim?
OK, well, lying is wrong. And insurance fraud is, you know, a thing, so it’s always in your best interest to stay honest. Having said that, renters insurance actually covers your stuff when it’s not in your apartment. Say, your tablet is stolen from your car or while you’re on vacation. It also covers items socked away in a storage unit ... up to your coverage limits, of course.
Got some other coverage questions you’ve been meaning to ask for a friend? You could find a few answers in our roundup of 20 questions you’re too embarrassed to ask about life insurance.
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