What Does Renters Insurance Cover?

Plus, what it doesn’t

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Renters insurance: Can’t live without it, can’t … well, really, that’s about it. If you’re leasing a space, renters insurance is the best way to cover your personal stuff. And yourself, since standard policies also come with personal liability coverage, just in case someone gets hurt in your apartment. Yet close to 60% of renters don’t have a policy.

Why? Probably because renters insurance doesn’t cover what someone might initially assume. Think about it: Car insurance covers your car. Homeowners insurance covers your home. Health insurance covers your health. Renters insurance covers your stuff, plus medical bills and court costs associated with apartment mishaps. Not, you know, the apartment you’re renting (your landlord’s homeowners insurance takes care of that.) It’s a little counterintuitive. Plus, just like with any insurance policy, there are exclusions associated with standard policies, meaning there are some things your renters insurance just won’t cover. Let’s break it down.

What Is Renters Insurance & What Does it Cover?

Renters insurance is essentially asset protection: It covers the cost of replacing personal property and liability for injuries sustained in your rented place. What does that mean specifically? Well, every policy is different and largely based on how much coverage you need or want, but these are things that generally roll under your renters insurance policy:

Your personal property: That includes stuff like your furniture, electronics, clothes, jewelry and appliances. Basic renters insurance reimburses you for the loss of property (up to your policy’s coverage limit) if it’s destroyed, damaged or stolen in 16 different events:

  1. Fire and lightning
  2. Windstorm and hail
  3. Explosions
  4. Riots
  5. Damage by aircraft
  6. Damage by vehicle (not your own)
  7. Smoke damage
  8. Vandalism
  9. Theft
  10. Volcanic eruption
  11. Falling objects
  12. Weight of snow, ice, sleet
  13. Damage from steam-heating/water-heating appliances/systems
  14. Leakage or overflow of water or steam
  15. Freezing of plumbing, heating, air conditioning
  16. Short-circuit damage caused by electrical appliances

Genius tip: Renters insurance even covers property when it’s not in your home. Say your laptop is stolen while you’re on vacation. If it’s considered insured property — or “scheduled” in agent-speak — it’s still protected. Ditto for items stolen from your car or damaged in a storage facility. You can learn more about how renters insurance works here.

Personal liability: That basically means medical bills incurred by a visitor and court costs incurred by you, should said visitor, say, slip on a banana peel in your kitchen, break their leg and decide to sue you for your negligence.

Other people’s property: In cases of liability, at least. If you borrowed your best friend’s … oh, we dunno … Roomba to clean your place and a pipe bursts and kills it. Your policy could cover its replacement.

Temporary living expenses: Let’s say your apartment gets fumigated or the building’s heat bottoms out in the middle of winter. Some renters policies help pay for a temporary place to live. That includes covering hotel bills and the cost of food if it exceeds what you’d normally pay for groceries.

Food: Your policy could also cover the cost of groceries in the event of building failure (see “short-circuit damage” mentioned above). So, say, the power goes out and your refrigerator stops running. You might be able to file a claim for any lost food stuff.

Credit card/bank forgery coverage: Given renters insurance safeguards against theft, some policies will reimburse you if a thief steals your credit card or checkbook from your apartment and goes on a spending spree. Note: You usually won’t have to rely on renters insurance for that, though, given there are federal laws that limit the cost of fraud for consumers. Plus, many credit card issuers specifically have zero liability policies in effect.

What Does Renters Insurance Not Cover?

OK, for starters, there are some perils standard renters insurance pretty much won’t cover as a rule. These include:

Natural disasters: Yes, renters insurance covers certain weather damage, but that doesn’t include the big events, like flooding, earthquakes, tornadoes, hurricanes and even sinkholes. (Two exceptions here: Volcanic eruptions and windstorms are covered.) However, if you live in a flood zone, near a fault line, or in a region prone to big storms, you can buy additional, separate coverage.

Terrorism and nuclear warfare: Following 9/11, it became standard operating procedure for renters insurance (and homeowners insurance) to exclude damage due to acts of war. There is such a thing as terrorism insurance, but it’s typically reserved for commercial building owners.

Vermin: Sorry, but unless you’ve got a bed bug rider (which, yes, is an actual thing), your renters insurance won’t cover damage or losses due to those critters. Ditto for any other bugs, rodents, bugs, pests and vermin.

There are also some things people mistakenly assume falls under their renters coverage. These items include:

Rare or extra-valuable items: It’s not that this stuff isn’t covered, so much as expensive items, like antiques, art, jewelry, vintage family heirlooms, rare collections, premium appliances, etc. tend to have their very own coverage limits. So you might have a $20,000 policy, but only $1,000 of that coverage can be put toward replacing or repairing sporting equipment. Caps on electronics and jewelry (two categories of stuff most people have) are usually around $2,500 and $1,500, respectively. If you need more coverage, you can always add a rider for an individual item or buy a standalone policy, like jewelry insurance.

Security deposits: Your security deposit is essentially the insurance for any damages that happened to the apartment itself. Your renters insurance can’t help you recoup any money your landlord keeps, thanks to Fido, Spot or any snafu by you.

Pet damage: See above.

Your car: You need car insurance for that.

Your roommate’s stuff: Unless you have a joint policy, your roommate can’t file a claim for their stuff with your insurer, and vice versa. That means you shouldn’t forgo a policy thinking their roommate has them covered.

Genius tip: Joint policies among roommates aren’t the best idea. For starters, you can wind up paying for more coverage than you actually need. (Say your roommate wants to schedule a bunch of pricey stuff.) Plus, things get dicey if one person wants to file a claim and the other doesn’t. And then you’ve got to figure out what to do if one of you wants to move out. If you’re worried about paying for your own policy, you should know renters insurance is more affordable than you think. A basic renters insurance policy costs around $20 a month.

How to Know What Your Renters Insurance Covers

Renters policies fall into two major buckets when it comes to exclusions:

A named perils policy only covers damage or theft stemming from the perils specifically named in the policy.

An all risk policy, conversely, covers every kind of peril, except any specifically listed exclusions.

It’s a good idea to ask your insurance agent or broker if you have a named perils or all risk policy — and, even, review everything your renters insurance does or doesn’t cover.

How Much Coverage Comes With Renters Insurance?

Well, how much coverage do you need? Most policies are customizable. You can request a certain coverage limit, individual limits and riders, then get quoted a monthly premium. (Those limits, in case you were wondering, should be based on how much stuff you have and how much coverage you can afford. You can go here to learn how to determine how much renters insurance you need.) But in the interest of covering all of the things renters insurance doesn’t cover, there is something else worth mentioning.

Renters insurance claims get paid out differently, depending on the type of policy you buy.

  • If you have an actual cash value policy, the insurer pays what the item is worth today. So, under an actual cash policy, if you purchased a laptop three years ago, you wouldn’t get back what you paid for it originally. Your insurer would consider depreciation and then pay out the claim.
  • If you have a replacement cost policy, the insurer pays the cost of repairing or replacing the item at its current price — no depreciation factored in.

Replacement cost policies are more expensive than actual cash policies, but that’s because they’re, by nature, more robust. Ultimately, you’ll want to assess the value of your stuff, figure out how much coverage you need and consider the premium trade-off. For more on renters insurance, check out our FAQ here.

Last updated on Oct 16th 2017