Renters Insurance Basics: What It Covers and Why You Need It

The myth that costs renters the most

Many renters think their landlord's insurance covers them. It doesn't. Your landlord's policy covers the building. If there's a fire, a burst pipe, or a break-in, their policy won't replace your couch, clothes, or laptop. That's what renters insurance is for.

What renters insurance covers

1. Your things. It pays to fix or replace your stuff after a fire, smoke, theft, a windstorm, some water damage, and other things listed in the policy. It often covers your things when they're away from home too, like a laptop stolen from your car.

2. Liability. If someone gets hurt in your home, or you accidentally damage someone else's property, it helps pay. It also pays for your legal defense. It can even cover some damage your pet causes. Most policies start at $100,000 of liability coverage.

3. Extra living costs. If a fire or other covered event means you can't live at home, it helps pay for a hotel and extra food costs while it's fixed.

Is it covered? Common examples

• Someone breaks in and steals your TV: usually covered.
• Your bike is stolen from outside a coffee shop: often covered, since coverage can follow your things away from home.
• A kitchen fire damages your furniture: usually covered.
• Your upstairs neighbor's pipe bursts and soaks your stuff: usually covered, since it's sudden water damage.
• Heavy rain floods your ground-floor apartment: not covered. That's flood, which needs separate flood insurance.
• Your dog bites a guest: often covered under liability, but some policies exclude certain breeds. Check yours.
• A guest slips on your wet floor and sues: usually covered under liability.
• You get bedbugs: usually not covered.
• Your roommate's laptop is stolen: not covered unless they're named on your policy.
• Someone breaks into your car: the damage to the car isn't covered, but your stolen things inside often are.

Coverage depends on your policy, so read yours or ask your provider.

What it usually doesn't cover

• Floods. You need separate flood insurance.
• Earthquakes. You need an add-on or separate policy.
• Your roommate's things, unless they're named on your policy.
• Your car. That's car insurance, though things stolen from your car are often covered by renters insurance.
• Pests, like bedbugs.

How much coverage do you need?

Most people are surprised by what their stuff is worth. Try this:

1. Walk through each room.
2. Add up what it would cost to buy everything new: furniture, clothes, electronics, kitchen items, shoes, bedding.
3. Round up.

Many renters find they own $20,000 or more in stuff. Pick a coverage amount that matches.

Two choices that matter

Replacement cost vs. actual cash value. Actual cash value pays what your things are worth used. Your 5-year-old laptop might be worth $150. Replacement cost pays to buy a new one. It costs about 10% more, and it's usually worth it.

Your deductible. This is what you pay before insurance kicks in. A higher deductible lowers your price. Pick an amount you could pay tomorrow without stress.

Special items

Jewelry, bikes, cameras, and collectibles often have low limits. If you own anything valuable, ask to add extra coverage for it.

How to save

• Bundle with car insurance. It's often cheaper together.
• Ask about safety discounts for smoke alarms, deadbolts, and security systems.
• Pay yearly instead of monthly if you can.

Make a quick inventory

Take a video walking through every room. Open drawers and closets. Save it online. If you ever file a claim, you'll be glad you did.

Ready for the steps? Read how to get renters insurance, or see how much renters insurance costs.

Related pages

More home insurance guides: Homeowners insurance cost · Condo insurance · Renters insurance · Landlord insurance · Mobile home insurance · Flood insurance · Umbrella insurance · How much homeowners insurance you need · How to get renters insurance · All insurance