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Published: Apr 20, 2023 15 min read
Oversized Umbrella Covering A Person Sitting On A Couch With A Mini Fridge Beside Them
Jose Velez / Money

*Content includes branded mentions of our sponsor Lemonade.

Renters insurance can cover the loss of your belongings in case your rented home is damaged, and can start at just $5 with insurers like Lemonade. It also covers expenses such as hotel bills if your rental home becomes unlivable due to a covered incident. Finally, renters insurance will cover any liability for which you're held responsible as the result of an accident or other mishap.

Read on to learn everything you need to know about renters insurance — from what a standard policy typically covers to common exclusions, additional coverage options, and why you should consider getting this coverage, even if your landlord doesn't require it.

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What is renters insurance?

Renters insurance is similar to homeowners insurance, with one main difference: it doesn't cover the building itself or its structures. It covers only the personal belongings you keep in a property you don't own, such as an apartment, house, condo, or mobile home.

Renters insurance, also known as tenant insurance or an HO-4 policy, can cover the unexpected costs of repairing or replacing your possessions when they're damaged by a covered peril. While landlord insurance covers damage to the apartment complex, it doesn't cover tenants' personal belongings. That's where renters insurance comes in. It also provides personal liability coverage — say, if someone is injured in your home — and can pay for living expenses if your residence is damaged and you're temporarily forced to live elsewhere.

There are a few reasons why having a renters insurance policy might be a good idea. For starters, renters insurance is relatively cheap. In addition, renters insurance covers your possessions wherever you are, not just when you (and they) are at home. For instance, if your laptop is stolen from your car or while you're staying in a hotel in another state, your renters insurance could help you pay for a replacement. And filing a claim can be quick and easy, especially if your insurer is tech-first. Lemonade's app, for instance, allows users to activate a policy in as little as 90 seconds. Nearly half of their claims are handled instantly.

Is renters insurance required?

Although it's not mandated by law, some landlords may require tenants to have renters insurance as a condition of their lease agreement. This allows them to minimize their own liability for accidents that you, as their tenant, may cause.

What does renters insurance cover?

A renters insurance policy typically includes three types of coverage: personal belongings, personal liability and additional living expenses.

Personal belongings

Personal property coverage can help you pay to replace your personal items if they're damaged by events that are specifically included in your policy. This coverage may include possessions such as clothing and jewelry, appliances, furniture, housewares, electronics, collectibles, watercraft, trailers or money.

Insurers may also extend coverage to personal belongings stored in an off-site storage unit or, as noted above, in other locations, such as your car or a hotel room.

Most renters property insurance policies cover damage from the following:

Covered peril Example of what is covered
Fire and smoke A fire — such as a cooking or electrical fire — destroys your personal belongings.
Lightning Lightning sparks a fire or causes a power surge that damages your electronics and/or appliances.
Windstorm and hail Hail or wind (caused by tornadoes or storms) wrecks the roof or walls of your home and forces in rain, snow or sleet, soaking and damaging your property.
Volcanic eruptions A volcano erupts, sending ash, dust and lava toward your home. It first damages the outside, which leads to damage to your personal belongings inside the home.
Falling objects A falling object — such as a meteor, tree branch or space debris — first damages the exterior of your home and, as a result, the property inside your home.
Vandalism and theft Someone vandalizes your property or breaks in and steals your TV, jewelry and other insured valuables.
Water damage A fire protection system or HVAC system malfunctions or a pipe bursts, causing an overflow of water that damages your furniture, art or clothes.
Power surge A short circuit, lightning strike or similar electrical accident damages your appliances, electronics and other property. The loss of contents in your refrigerator in case of long power interruptions may also be covered.
Explosion A gas grill, aerosol can or water heater explodes in or around your home.
Riot or civil commotion Property damage as a result of pillaging or looting during riots or periods of civil unrest.
Aircraft and/or vehicle damage A motorized vehicle, car or aircraft crashes into your home, damaging its contents.
Weight of ice, snow or sleet The roof caves in due to heavy ice, snow or sleet, causing damage to the belongings in your apartment, on-site storage unit or garage.

Personal belongings may be covered in one of two ways: actual cash value or replacement cost coverage.

Actual cash value is the least expensive option. This arrangement takes into account the depreciation of your personal belongings at the moment of a claim. This means it reimburses the current market value of your belongings, which might be less than what you really need to purchase the same item again.

Replacement cost coverage, on the other hand, covers the total amount needed to buy the same (or similar) item, without deducting depreciation. Because the payouts are larger than with an actual cash value policy, the monthly premiums are higher for replacement cost coverage.

It can be extremely helpful to keep a home inventory that details your items, their value, purchase information, location and any other information that can help in a covered event.

Personal liability

Most renters insurance policies include personal liability coverage as well. This coverage may pay for legal fees and medical expenses if, for example, someone gets hurt in your home or if you're found legally responsible for damage to other people's property.

Unlike personal property coverage, which pays only for your damaged items, liability insurance can allow you to avoid paying out of pocket for damages that you (or someone in your household) caused to others and their property.

Some common claims covered by personal liability insurance are:

  • Slips, falls and injuries: A house guest slips on your rug, breaks an arm and sues you for their medical expenses.
  • Accidental damage to other people's property: Your child accidentally breaks your neighbor's window while playing baseball outside.
  • Damage from perils that originate in your property: You live in a multi-unit building and overfill a bathtub, causing water to overflow into the downstairs apartment.
  • Dog bites: You incur lawsuit expenses and medical bills when your dog injures a guest in your home or damages your neighbor's property (bear in mind, some breeds might not be covered).
  • Funeral expenses: Some insurance companies may cover funeral expenses if a guest dies as a result of an accident in your home.

Additional living expenses (ALE)

Additional living expenses (ALE) coverage — also known as loss of use coverage — may reimburse you for the additional costs you incur when your residence becomes inhabitable after a covered loss.

ALE coverage may cover expenses related to:

  • Hotel bills or the rental of another apartment
  • Food expenditures, including restaurant bills
  • Temporary storage of your personal belongings
  • Pet boarding
  • Furniture rental
  • Laundry expenses

Loss of use coverage will reimburse you the amount in excess of what you normally spend on living expenses, up to your policy's coverage limits.

Common additional coverage

Most insurance companies offer additional coverage to supplement your policy and further protect what you own. These add-ons can cover perils that aren’t generally included in your standard policy or let you increase coverage limits.

Common add-ons include identity theft and certain insurance riders.

Identity theft

Insurers may let you add identity theft protection to your renters insurance policy. This type of coverage may help pay for the cost of restoring your identity if you fall victim to identity theft or a cyber attack.

Identity theft insurance may reimburse you for legal or attorney fees, lost wages, the cost of re-issuing government IDs, fraud specialist expenses and other expenses related to identity theft. Some insurance companies may even offer credit monitoring services as part of their identity theft coverage.

Scheduled personal property vs floaters vs umbrella insurance

Compare multiple types of insurance riders below that increase your coverage limits.

Type of add-on What it covers Coverage example
Scheduled personal property This rider increases the liability limit for specific items or categories that might already be covered by your policy but with coverage limits too low to fully reimburse you. Your renters insurance includes personal property protection for collectibles or jewelry up to $1,500 per item. But several of the pieces you own are worth more than that. A scheduled personal property endorsement would raise the $1,500 sub-limit to a higher amount so you’re reimbursed the full cost of the items in case of a covered loss.
Floater A floater increases the policy limit for a specific item but, in most cases, also provides more comprehensive coverage, such as including accidental loss (which most policies don't cover). You want to increase the coverage limit for a specific item, such as a watch or autographed baseball card.
Umbrella insurance This type of coverage can cover the remainder of your expenses once existing policy limits are reached. It can also enhance coverage for other perils you may face in your life, such as liability if you are held responsible for injuries to others in a car accident. You’re the victim of theft, and your standard renters insurance policy doesn’t cover the entire loss. However, your umbrella insurance kicks in and covers what your renters insurance doesn't.

What does renters insurance not cover?

Renters insurance coverage doesn't cover all types of natural disasters and perils. It's typically limited to a specific list of covered losses, such as the ones listed above. This means that you may need to purchase additional insurance coverage, like flood or earthquake insurance, to further protect your property in a rented home.

Common exclusions

Below are some examples of events that renters insurance generally doesn't cover.

Earthquakes and floods

Renters insurance doesn't cover losses due to:

  • Floods
  • Earthquakes
  • Landslides
  • Sinkholes
  • Other earth movements

Additionally, although renters insurance covers water damage as a result of a storm or interior leak, it excludes damage from flooding. If you live in a flood-prone area, you could consider getting private flood insurance or looking into FEMA's National Flood Insurance Program.

And some insurance companies such as Nationwide, Erie and State Farm offer coverage for earthquake damage as an optional add-on to their renters policies.

Pest infestations

Damage to your belongings as a result of pest infestations such as bed bugs, termites, carpenter ants and other vermin is generally not covered by renters insurance.

Some insurers, however, may offer bed bug coverage as an add-on, depending on your location. This extra coverage may cover the expense of removing bed bugs from your home.

Car accidents or theft

Renters insurance won't cover car accidents or car theft, even if it happens at your home, nor will it cover liability expenses such as medical bills or repair costs related to a car accident. These will be covered by your auto insurance policy. (For more information on car insurance, check out our guide to the Best Car Insurance.)

Home business liability

Business property is generally excluded from renters insurance coverage, although you might be able to add an endorsement to cover it. The exclusion may include any item that's exclusively used for business purposes, such as equipment, electronics, furniture, tools and inventory.

Renters insurance won't cover the liability for your business, either. So, if a customer or employee sues you because they had an accident on your premises or as a result of your product, your renters insurance liability coverage won't protect you.

In most cases, covering your business for liability requires getting a small business insurance policy, which can cover commercial property damage, product liability and lawsuits against your business.

Roommates' property

If you live with roommates, you should know that their property won't be covered by your renters insurance unless they're listed in the policy.

If you do go in with your roomie(s) on a policy, make sure the total coverage amount reflects the combined value of your possessions. In most cases, unless you change the coverage, adding a roommate will split the amount of coverage among each insured person in the policy.

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Renters insurance FAQ

What is renters insurance?

Renters insurance is similar to home insurance, except it generally provides coverage for your belongings within a rented space. It also likely includes personal liability protection, which can keep you covered in case there's an accident in your home or you cause damage to another person's property.

Does renters insurance cover theft?

If someone breaks into your place, a renters insurance policy would pay for your stolen personal property — electronics, jewelry, firearms or silverware — but only up to the amount of coverage listed in your policy limits and after the deductible amount is met.

Does renters insurance cover water damage?

Renters insurance covers water damage to your personal property if it's the result of accidental overflow from appliances, heating systems or burst pipes. It won't cover water damage resulting from a flood; for this type of coverage, you need a flood insurance policy.

Does renters insurance cover storage units?

Renters insurance will typically cover the contents of your storage unit should a covered peril — a tornado, explosion or water overflow — ruin the belongings you've stored there.

Does renters insurance cover dog bites?

Renters insurance policy may cover injury from dog bites under your personal liability coverage and pay for any medical bills (and other damage) caused by your dog. However, certain breeds — such as Doberman Pinschers, Rottweilers, Chow Chows, Pit Bulls, Akitas, American Bulldogs, Huskies and German Shepherds — are excluded from certain companies' policies.

Summary of Money's What Is Renters Insurance

Renters insurance provides protection for people who rent living spaces, such as apartments or condos. A standard policy will likely include coverage for your personal belongings, personal liability and additional living expenses. Therefore, if your belongings are damaged in a covered event, you should receive help with the replacement costs.

Renters insurance can also be helpful if someone is injured in your home or if you damage another person's property. Your policy may cover legal fees, medical payments and other costs associated with the accident.

In addition, renters insurance can cover expenses related to housing, food and other care costs if your rental unit becomes unlivable due to a covered peril.

However, renters insurance will generally not include coverage for earthquakes and floods, pest infestations, car accidents or theft, home business expenses or damage to your roommates' property (unless they're on the policy). You need to purchase extra coverage or a different type of insurance to cover these items.