Everything You Need to Know
About Renters Insurance

By: Beth Krietsch Urban living
interior of empty room with parquet floor

When living in a home or apartment you do not own, renters insurance is a must. A good insurance policy protects you and your family against personal property loss if your home and belongings are damaged in a fire, natural disaster, or other incident beyond your control, and also protects you from liability in the event of an accident or damage.

Here are some of the most frequently asked questions about renters insurance.

Do I need renters insurance?

It’s pretty simple—anyone renting an apartment or home ought to invest in renters insurance. Many landlords will even require renters hold a policy.

“The importance of renter’s insurance is underestimated by a lot of people, and failure to properly insure your belongings can have devastating consequences,” says Gary Malin, president of NYC real estate brokerage Citi Habitats.

“While most homeowners wouldn’t even think of going without insurance, many tenants—especially younger ones—fail to purchase coverage.”

Except for young people who may be covered under their parents’ policies, most need to get their own policy or risk facing thousands in replacement costs should an incident occur. In nearly all cases, your personal belongings are not covered under your landlord’s insurance policy.

What does renters insurance cover?

The most common reason renters purchase insurance is to cover the cost of personal belongings—clothing, furniture, jewelry, electronics, sporting equipment, appliances, and more—in the event of damage or loss as a result of events beyond your control, like fire or theft. Malin offers his thoughts on the subject.

“Many tenants are under the false impression that their landlord’s insurance policy would protect them in the event of theft—or even worse—catastrophe in the building.  Unfortunately, that’s never the case. The building owner’s insurance company will pay to rebuild or repair the physical structure (the walls, roof, etc.) of your apartment, but will not cover replacement of any belongings that were lost or damaged. So, if your next door neighbor starts a fire that spreads to your living room, the cost of replacing your destroyed furniture and TV would be your responsibility.”

Most policies offer $20,000 or more in personal property coverage. You can determine the amount of personal property coverage you need by assessing the value of your belongings. When purchasing a policy, you’ll need to decide what type of personal property coverage is best for you—replacement cost or actual cash value.

  • Actual cash value—This type of policy will cover your belongings based on the current market value less the depreciation of your property.
  • Replacement cost—This type of policy will cover belongings based on current retail prices. This is typically the more expensive option, but you’ll be able to replace your items at full market value.

Many people don’t realize that aside from personal property, your renters insurance policy may also cover:

  • Living expenses (hotels, meals, etc.) incurred if your home becomes unlivable for any given length of time. The length of time covered by the policy will vary.
  • Liability and legal expenses if you’re sued for causing damage to others, and medical costs if someone is injured in your home. Most policies provide $100,000 in liability coverage and can usually be expanded by paying a slightly higher premium.
Washington D.C., USA - May 2, 2015: White building pictured in Georgetown district Washington D.C., United States of America. The city was approved by the signing of the Residence Act in 1970 and in 1801 it was organized. City did not belong to any state.

How much does renters insurance cost?

Renters insurance is more affordable than most people realize, with most plans charging around just $200 per year. Many insurance providers will lower the cost of renters insurance if bundled with other policies like auto insurance. For just $20–$30 (or less) a month, you’ll get peace of mind knowing your belongings are protected.

Prices will vary depending on:

  • The amount of personal property and liability coverage you want
  • Where you live—policies may be more expensive in a high-crime neighborhood
  • Type of coverage—replacement cost or actual cash value

Malin provides insight as to why renters insurance is worth the price.

“The good news is that renters insurance is relatively inexpensive and will protect you from life’s ‘what ifs.’ Remember, not all plans are created equal. Find one that is tailored to your needs. Choosing the least expensive policy you can find could be the most expensive mistake you ever make. Good coverage often costs around $20 per month—that’s a small price to pay for a good night’s sleep.”

How to get a renters insurance policy

The first step to getting a renters insurance policy is to search around for a quote. Already have an insurance company? Contact them first.

If you don’t already have an insurance provider, a simple next step is to conduct an online search. Many insurance companies will be able to produce a quote after you answer a few quick questions online. Alternatively, you can call around to a few different insurance companies to get an idea of how much a policy will cost.

When it comes time to purchase a policy, pay attention to the details, like overall cost, overall coverage, what specifically is covered, and the deductible. With that information and a sturdy grasp on your own priorities, you’ll be able to decide which policy is best for you.

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