How Renters Insurance Works

Create a home inventory, file a claim when needed, get reimbursed for your stuff. Up to your coverage limits, of course.

If you rent your home and that home has your stuff in it, you should probably get renters insurance. Renters insurance covers the cost of replacing your stuff — that means your furniture, electronics, clothes, jewelry and appliances — if it’s destroyed, damaged or stolen. You may think your landlord’s insurance covers your things, but it doesn’t. Your landlord’s homeowners insurance protects the building. You need your own policy to protect your own things.

Before You Buy Renters Insurance

The first thing you need to do is to create a record of everything you own, otherwise known as an inventory. It should catalog anything of value, and include photos, serial numbers and, if you have it, the original cost of the item. If this sounds daunting, there are a number of free websites and apps that make it easier. Many insurers have their own home inventory apps, and there are also standalone apps like iKeepm, Encircle and Sortly.

The inventory can help you figure out what it would cost today to purchase each of your possessions. The total is about how much coverage your renters insurance should provide.

Make special note of any particularly valuable items. Most policies only cover things like jewelry and fine art up to a certain amount. You may want to get these items specially appraised in case you want to buy additional coverage for them.

Once your inventory is done, you can start shopping for quotes. (BTW, Policygenius can help with that. You can start shopping for renters insurance here.

Understanding Renters Insurance

There are two general policy types with renters insurance: Replacement cost and actual cash value.

A replacement cost value policy reimburses you for your stuff based on how much it will cost to repair or replace the items at today’s prices. So if someone steals your couch, this policy will pay for the cost of a new couch.

In contrast, an actual cash value policy pays based on how much your stuff is worth now. So if your stolen sofa was 5 years old, you won’t get reimbursed for a new couch; you’ll get the value of a 5-year-old couch. This type of policy is also known as a depreciated loss coverage.

While an actual cash value policy is less generous, it’s also cheaper. You can go here to learn about the cost of renters insurance.

Policies also talk a lot about “perils.” A “peril” is insurance language for whatever causes any loss or damage the policy covers.

Some policies are “all risk” policies, which cover any peril not explicitly listed in the contract. “Named peril” policies cover only the perils the policy explicitly lists.

Make sure to read every policy closely, especially the perils and exclusions sections, so you know exactly what your renters insurance does and doesn’t cover.

How to File a Renters Insurance Claim

Once you’ve picked a policy, make sure you keep a copy of it, as well as your inventory, somewhere outside of your house. You’ll need them in case something happens at your place. (Which, incidentally, is when you would need to file a claim.)

Now that you’re covered, you can rest easier knowing you’re protected in case something happens. Hopefully nothing does. But something probably will. When it does, your insurer should probably not be your first call, especially if it’s an emergency like you get robbed or your apartment floods.

File a police report. Fix the leaky pipe. (Or have your landlord fix the leaky pipe). However, make sure you keep any documentation in case your insurer asks for it.

When you do call your insurer to file a claim, your police report and repair receipt will come in handy. You will also be asked to provide an inventory report (that’s why you spent all that time photographing your stuff).

Your insurer may also send an appraiser to your home to determine the full scope of the damage. If your claim includes any high-value items like jewelry, your agent might ask for appraisal reports or receipts, so be sure to have them handy as well.

Once you’ve handed over all the information your insurer needs, your agent can submit your claim for approval. If it’s approved, you should get a check or electronic payment for the amount.

Aside from reimbursing you for your stuff, you can also file claims for other apartment-related calamities. A good policy should also cover legal and medical costs if someone is injured in your home. Plus, if you’re forced to stay in a hotel temporarily, it should reimburse you for the bill. Be sure to read the fine print so you know exactly how your policy works.

If you’ve got more questions about renters insurance, well, we have more answers. Check out our renters insurance FAQ.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.


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