What’s included on a renters insurance policy?

What’s covered and what’s not is thoroughly explained in the policy that the renters insurance company has you sign before coverage goes into effect.

Zack Sigel

Zack Sigel

Published May 4, 2018

When you rent an apartment, renters insurance protects you from the financial risk of damage to or the loss of your personal property, the liability of someone getting hurt in your home, and the loss of use of your home due to a covered condition. What’s covered and what’s not is thoroughly explained in the policy that the renters insurance company has you sign before coverage goes into effect. Your renters insurance company will pay you to replace a loss caused by an eligible condition in the policy.

In addition to the “renters insurance policy declarations”, a separate document that itemizes your premiums, deductibles, and premiums, the renters insurance policy describes the conditions under which you can make a claim for financial loss. The policy will be extremely thorough, narrowly distinguishing between damages for different types of situations, such as the distinction between rain damage and flooding. It will also state exactly how much you can receive back for a covered loss as well as the conditions under which that loss is eligible for reimbursement.

At its most basic iteration, renters insurance policies are divided up into three coverage provisions: personal property loss or damage, which covers your possessions and the myriad (as defined by the policy) ways they can be destroyed or removed from your use; liability protection, which covers the financial risk of being sued by someone who is injured in your home, or otherwise having to pay for this person’s resulting medical expenses; and the loss-of-use provision, where you can no longer live in or use your home and need to pay for alternative accommodations.

Your renters insurance policy will also describe the extra coverages you purchase, including such unexpected provisions like identity theft protection. When you sign up for coverage, you’ll most likely receive a brochure that describes your renters insurance policy in broad strokes, but it’s the policy itself that fills in the fine details. The renters insurance policy will leave little up to interpretation.

Read on to learn more about the renters insurance policy.

Renters insurance policy declarations page

Every renters insurance policy comes with a policy declarations page, which is essentially a cover sheet describing the person who is insured and what his or her financial obligations are in relation to the rest of the policy. The policy declarations page will resemble a bill or an invoice, containing a list of items and a corresponding numerical representation of the item.

On the policy declarations page, you’ll find your name and address as well as that of your agent at the renters insurance company. You’ll also find information like your policy number and the policy period, which tells you the span of time (usually one year) that the policy lasts.

The policy declarations page will include the amount you pay in premiums, the monthly or annual fee you pay to keep the renters insurance policy in effect. It will also list your deductibles, the amount of which you have to pay out of pocket for most loss categories before the insurance company picks up the rest.

Coverages, the various aspects of each renters insurance policy, will be outlined. Next to each coverage line will be each one’s limit of liability, the total amount the renters insurance company will pay out for a given claim under that provision.

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If you’re eligible, you’ll also find any discounts you received, which include modest percentage amounts for things like company loyalty, being a safe driver, or switching to paperless billing. More generous discounts can sometimes be had for installing safety features in your home, like fire alarms or sprinkler systems.

The policy declarations sheet may state how you opt to receive a payout for a loss. One option is for the actual cash value of an item, meaning its value minus depreciation. You may also choose the replacement (or reimbursement) provision, which lets you receive a payout equal to the current market value of the same or a similar item.

What’s covered in the renters insurance policy

The renters insurance policy will go into point-by-point detail to explain what’s covered and what’s not. Its descriptions will be nuanced and narrow, such as making a distinction between loss due to nuclear action (not covered) and loss due to a fire caused by nuclear action (covered). It will explain the type of property covered, sometimes explicitly naming common valuable items, like trading cards, jewelry, manuscripts, and guns. One sample renters insurance policy excludes coverage for “aircraft and aircraft parts” while making an exception for “model or hobby craft not designed to carry people or cargo.”

Most renters insurance policies allow for similar or identical coverage. You may purchase additional protections, such as flood or earthquake protection, depending on your needs.

The renters insurance policy will also go into the renters insurance company’s own rights, including how it appraises the value of a loss, its rights to attempt to salvage any property, and how it handles lawsuits against it. All the terms the renters insurance company uses to explain your coverage will be defined, such as “deductible”, “bodily injury”, and “insured premises.”

Personal property coverage

The renters insurance policy will divide your personal property coverage into several sections that make clear what items are covered and the limits of coverage for each item.

Type of loss

The policy will explain the conditions under which losses are covered, but with some limitations. For example, theft and vandalism will be covered and probably also damage caused by rioting, but not acts of war.

Your policy will cover damage due to fire, lightning, hail, and many other types of weather conditions. It may also cover damage due to an explosion or a power surge that ruins your electronics. Water damage should be covered, but not flooding, unless you purchase additional flood protection.

The types of loss include coverage for when the condition happens away from home. Check your policy to confirm the actual details, but you may have personal property coverage when you stay in a hotel, or your college student moves into a dorm, or for items you leave outside your home, like a bike.

Limits of liability

The renters insurance policy will spell out the maximum amount that the company will pay for the loss of specific items, which is called the limits of liability and refers to the the company’s liability. One sample policy will cover a maximum of $2,500 for the theft of silverware and goldware or up to $10,000 for the theft of rugs, carpets, and other tapestries, with a maximum of $2,500 per item.

Although the limits of liability are very clear, it should be possible to buy additional coverage for highly valuable individual items. This is called extended coverage. Such property that falls under extended coverage provisions includes items like watches, jewelry, gemstones, and furs. Some policies may already cover business property, but you can buy extended coverage if your limits of liability for business property coverage are too low.

Attachments to the home, like a dock, pier, or hot tub, may not be covered by the policy, but you can get extended coverage for that type of property, too.

Liability and medical expenses coverage

Liability coverage makes a payout to you when you’re responsible for someone’s injury in your home. This can be either from a legal decision, such as when you get sued, or from medical expenses that arise from the injury. As with personal property protection, your policy’s coverage for liability and medical expenses explicitly details when the renters insurance company is obligated to pay out and when it isn’t.

The liability coverage section of the policy is meant to cover accidents, like a dog bite or a slip-and-fall, so the renters insurance company won’t pay out if you intend to hurt someone in the home or to profit from the injury. Certain other types of injuries are excluded, like some injuries caused by cars, with some important exceptions for the type of vehicle or its usage.

The renters insurance policy also defines what “reasonable” or “necessary” medical expenses it will cover. These include everything from surgical, X-ray, dental services to prosthetic devices and even funerals.

The policy should state what types of liability and medical expenses it will cover outside the home. The insured person may make a claim if he or she, or one of his or her insured family members or employees in residence, causes an injury or damages property off the insured premises. Check your policy to see what limits of liability and conditions apply.

Loss-of-use coverage

If one of the conditions covered by your policy results in your home becoming uninhabitable, the renters insurance company may give you a payout to find alternative accommodations. Check the policy under a section about additional protection for a more thorough look at how your living expenses will be covered.

The policy should explain how long the renters insurance company will pay such expenses, which may be the shortest time period between repairing your own home or permanently relocating to a new one. Your renters insurance company may also cap the payment period at 12 months.

If you rent out a section of your home that becomes uninhabitable due to one of the covered conditions, you should be able to receive a payout to replace rental income you lose as a result of no longer having a tenant. Your policy should state how long you’re allowed to receive such payments.

Additional coverage

Many renters insurance companies offer additional coverage that may appear to be out of the purview of that which is associated with renting a home. Your policy will describe these additional coverages, which may include protection from identity theft or check forgery.

Some policies may include other additional coverage like the loss of refrigerated food during a power outage or for the emergency removal of some dangerous property. You could even receive a payout for information leading to the arrest and conviction of someone who has committed arson against your insured premises.