A Beginner’s Guide to Renter’s Insurance - rent, real estate, insurance

If you are renting your home, have you ever considered what it would take to repair or replace your belongings if they’re damaged by accidents such as fire or water damage? A perk of renting compared to owning a home is that the building is the landlord’s responsibility if repairs are needed. However, a renter is not entirely protected. A natural disaster or theft could make you lose your belongings. These are not covered by the landlord’s insurance policy; you will need to get your own renters insurance.

What is renters insurance?

Renters insurance (also referred to sometimes as “tenant insurance”) is a type of coverage that covers personal belongings damaged or lost due to unexpected events or perils. In a sense, it is similar to homeowners insurance, but is cheaper, since it only covers your belongings in the home.

In a poll done by the Insurance information Institute, 95% of homeowners and landlords have taken out property insurance on their homes; on the other hand, only 41% of renters had renters insurance.

What does the policy cover?

Renters insurance often covers three categories:

Personal property

These would include your clothing, appliances, furniture, electronic devices, and other items you personally own.

There are roughly 16 issues that renters insurance covers, much like homeowners insurance:

  1. Accidental overflow of water or steam
  2. Accidental and sudden burning, cracking or tearing apart of home systems
  3. Aircraft
  4. Civil unrest and riots
  5. Explosions
  6. Falling objects
  7. Fire and lightning
  8. Freezing
  9. Hail and windstorms
  10. Power surges
  11. Smoke
  12. Theft
  13. Vandalism
  14. Vehicles
  15. Volcanic eruptions
  16. Weight of ice, sleet and snow

The insurance also covers your belongings when you are traveling, in the office, on the road, or even in a cafe or restaurant. There may be a limit to the coverage amount outside your home (typically around 10% of your total personal property limit). In addition, your insurance deductible will be deducted from the amount covered by your insurance.

Personal liability coverage

The last thing you want is a lawsuit that could set you back financially in case you are liable. However, accidents do happen, and these could cause bodily injuries or property damage. A visitor could trip and fall and injure themselves. Your insurance can help pay for legal fees, including court costs and attorney fees. Typically, this coverage is in the range of $100,000 to $300,000.

Medical payments

Part of the provision of personal liability coverage includes any medical payments you need to pay for the treatment of whoever is injured in your premises. This is a smaller coverage, usually around $1,000 to $5,000. The difference between this and personal liability coverage is that your insurance pays medical coverage regardless of who is at fault while personal liability coverage is paid only if you are found responsible.

Additional living expenses

An incident covered by your insurance policy may make your house uninhabitable, like a fire or massive flooding, and you may need to move out for some time while the house is repaired. Doing so will mean additional cost to you as you may need to stay at a hotel and eat out instead of cooking in. Renters insurance will cover such additional expenses above what you would normally spend for rent and food.

What are the exclusions?

Flood damage

Most renters insurance policies exclude flooding; this is usually a separate flood insurance policy.

Earthquake damage

Like flood damage, earthquake damage is excluded from renters insurance coverage and has to be a separate insurance policy.


Most renters insurance provisions do not include infestations such as mice, bedbugs, termites, and the like. A few do, but this coverage increases the premium significantly.

Your roommate’s belongings

If you are sharing the house with a roommate, your renters insurance normally will only be for your personal property and not for your roommate. There can be an exception if the state or insurance company agrees to a sharing arrangement.

Insurance sharing is not recommended though. While it looks like a cheaper option because you both split the premium, there are hidden negatives. If your roommate makes a claim for damages on the policy, your premium could increase on its next renewal. If your roommate is in charge of paying the premium and they forget, you may suddenly find yourself without coverage. Another drawback is if your roommate has more expensive belongings, it could drive up the premium.

Why would I need it?

If you are still hesitating about renter’s insurance, here are a few reasons why we believe you should not skip getting it.

Your landlord’s insurance does not cover you

It bears repeating that your landlord’s homeowners insurance does not include your personal belongings as the insurance only covers damage to the building. If a water pipe breaks and causes damage to your rental, the landlord’s homeowners insurance will cover repairs to the home but if any of your belongings, like your clothes or laptop, would also suffer water damage, only a renters insurance would cover it.

The premium is affordable

Premiums for renters insurance are considerably lower than those for homeowners insurance. This is because homeowners insurance covers the building while what is being insured by renters insurance is only the contents of the building.

According to this article, the national average premium for renters insurance is $19 per month. The actual premium rate depends on the state you are residing in; it can range between $12 and $37 per month. Southern rates tend to be higher, probably due to the higher risk of hurricanes, while the average in Western states were seen to have the lowest premiums.

Much cheaper than spending to replace all your belongings

If you own home appliances, a laptop, and a smartphone, the value of these three items together would already be worth the annual premium you will pay. Adding in other items like your cookware, linen, furniture, and other items, and you can see that it is worth your peace of mind, knowing that you will be able to start over if a worst case scenario occurs.

How much renters insurance do I need?

There is no hard and fast rule because it will depend on how much your personal belongings are worth and how much of that value you are willing to insure. Usually, the higher the total worth of your belongings are, the higher the coverage you should get.

There are several home inventory apps available that you can use. List down all your important and high-value belongings and their estimated net value. Doing an inventory actually helps you not only to estimate your insurance coverage but will also serve as the basis for filing a claim in case of loss or damage.

Insurance is one of those expenses in life you never fully appreciate until a disaster happens. Having renters insurance protects you financially and gives you peace of mind that what is important and valuable to you will always be protected.