What’s Covered (and Not Covered) By Renters Insurance

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One of the most important things you can do to protect yourself or your family from financial hardship is to be properly insured. 

If you rent, you should strongly consider paying for renters insurance to protect your possessions from theft or damage. Renters insurance can also provide you with liability insurance that protects you if you are sued. 

Renters insurance is a product that you hopefully will never need to use. But it is inexpensive, and it will give you peace of mind, whether you are renting an apartment, a house or a tiny cabin in the woods.

About Renters Insurance

Renters insurance is arguably one of the simplest insurance products. If you are a renter, you can pay to obtain coverage to protect you financially if your belongings are lost, stolen, or damaged. 

Also, most renters insurance policies provide liability coverage in the event that someone is hurt while inside the property you rent. 

Renters insurance is not particularly expensive and is available from most reputable insurance companies. You may be able to purchase renters insurance at the same time you buy auto insurance (and in some cases can get a discount for doing so.)

According to the Independent Insurance Agents and Brokers of America, a typical policy costs about $12 for $30,000 in property coverage and $100,000 in liability coverage. Plus, you can always purchase a broader policy if you believe you’ll need more protection. 

There are two major types of renters insurance: 

  • Actual Cash Value policies pay to replace your damaged or stolen items, minus an amount for depreciation.
  • Replacement Cost policies will pay you for the actual cost of replacing your items. The Insurance Information Institute notes that Replacement Cost policies are typically about 10% more expensive. 

Those renters who wish to get extra coverage can pay for it. The Insurance Information Institute notes that an umbrella policy will provide an additional $1 million of liability protection for between $200 and $350 annually.

A renter should not assume that they are covered simply because their landlord is insured. 

“The landlord’s insurance covers the building and the infrastructure of that building, whether it is the elevators, the air conditioning, or the structure itself,” said Doug Culkin, executive vice president of the National Apartment Association, in a press release.  “That coverage does not extend into the homes of the individual residents and the possessions they maintain in their units.”

What’s Covered by Renters Insurance

You might be surprised by the ways that renters insurance can protect you. From offering reimbursement for stolen items to money for lodging if you are displaced, renters insurance can be a financial lifesaver. 

Here’s a rundown of what renters insurance covers.

Most of Your Stuff

If the item is in your apartment or rental house, it’s likely covered. This includes your TV, iPhone, stereo, furniture, espresso maker and coffee table. Just about everything, save for some items with very high values. 

If it gets damaged due to some problems with the apartment, you are covered. If you are a victim of theft, you are covered. Depending on the policy you have, you’ll receive money for the value of your items minus depreciation, or the full amount to replace the items. 

Your Stuff, Even It’s Off-Site

People may be surprised to learn that your items may be covered even if they are off the premises. Your fancy camera may be covered if it’s stolen while you are on vacation. Any item damaged from a fire in a storage locker or a laptop stolen from your car or may be covered. (Ironically, the car itself is not covered by renters insurance. You’ll need auto insurance for that.) There may be some restrictions on this, so check your policy.

Lodging If You Are Displaced

Many renters insurance policies will cover you for additional expenses related to a loss. For example, let’s say your apartment is damaged due to fire or other disaster. Your renters insurance will cover the cost of a hotel, temporary rental, or another place to stay

It may even cover restaurant meals. In this way, renters insurance can not only protect you financially but give you some peace of mind. 

Personal Liability

Most renters insurance policies include some level of liability protection against lawsuits for injuries or property damage that you may cause. For instance, one day you walk into a neighbor’s ladder when he is on the roof, causing him to fall and injure his back. 

He may sue you to cover the medical expenses, but your renters insurance policy will cover you. (The amount of coverage can vary depending on the policy. However, the Insurance Information Institute suggests getting $300,000 worth of liability coverage.)

Liability insurance can cover you if you damage another person’s home, or if a person is injured inside your home. Also, you may be covered if your dog bites a neighbor (depending on the breed of dog), or if your child causes damage or injury. 

But liability insurance does not cover you for damage that you cause to your own property.

What May Not Be Covered

While renters insurance covers a lot, it’s dangerous to assume that it protects you for everything under the sun. All policies feature exclusions and limits. Here’s a rundown of things that may not be covered by renter’s insurance.

Your Roommate’s Items

No, your roommate doesn’t get to benefit from your renters insurance policy. Don’t assume that just because the person lives with you, their items are covered. Generally speaking, any roommate who is not your spouse or child will need a policy of their own. 

Because of this, it’s vital to have records of ownership of your items. If you shared in the purchase of a piece of furniture or a large stereo, things could get tricky. Insurance companies may not cover an item if they can’t determine who actually owns it.

According to the Insurance Information Institute, some companies may allow people who are unmarried to buy joint policies. But domestic partners are not automatically insured together. Regulations vary depending on where you live, so do your homework. 

Earthquakes and Floods

In a general sense, renters insurance protects you if your belongings are damaged. But it depends on the source of the damage. Fires? Usually covered. But a massive flood? Not always. 

Damage from certain natural disasters—specifically, floods and earthquakes— are not covered under a typical renters insurance policy. You will need to purchase separate flood insurance from the National Flood Insurance Program. Earthquake insurance may be available by purchasing a separate rider. 

Certain Dog Breeds

If a person in your rental home gets bitten by your dog, you may be covered under the policy. But there may be exclusions for specific dog breeds who have a reputation for aggressiveness.

Depending on the company and the state where you live, you may encounter trouble finding coverage if you own Pit Bull Terriers, Rottweilers, German Shepherds, Presa Canarios, Doberman Pinschers or a wolf-hybrid. 

However, there is no such “official” list of dangerous dogs, and policies can vary depending on the company. 

Many dog owners have pushed back against such rules, arguing that the exclusions for certain dogs are unfair and based on reputation rather than reality. Some states, including Pennsylvania and Michigan, make it illegal to exclude specific breeds from coverage. 

Some companies do not have exclusions based on dog breed because any dog is capable of biting. For example, State Farm, which does not exclude specific kinds, said it paid $123 million for 3,280 dog bite injury claims in 2018.

Exotic Pets

Your pet monkey? Your pet cheetah? Your pet poisonous black mamba snake? There’s a good chance that most insurance companies will not insure you for liability related to these animals. However, you may be able to buy a separate policy—at extra cost—for exotic pets.

If you are unsure if your pet qualifies as exotic, it may be worth contacting companies to see if they have specific guidelines. In some cases, a pet is considered exotic if it is found naturally in the wild, requires a unique living space or requires a permit to own.

Very Valuable Items

Renters insurance protects your belongings, but only up to a certain level. The average policy covers about $30,000 in property, according to the IIABA, so you’ll need additional coverage if you have items of great value in your rental home. 

The Insurance Information Institute says that in general, you are covered for up to $1,500 for jewelry or other expensive items. 

Don’t assume that a typical policy will cover the loss of your Rembrandt or Honus Wagner baseball card. Insurance of these items will require a separate endorsement, or “floater” to increase your coverage level. 

Accidents

If your cell phone accidentally slips into the washing machine, that’s your fault, and insurance won’t pay for a replacement. 

The same goes for if you drop your laptop or spill food on your expensive leather sofa. Renters insurance does not cover you for damage that you cause to your own property. 

Renters Insurance and Identity Theft

In recent years, there have been many involving the theft of people’s personal identifying information, and in some cases, their whole identities. Identity theft can create massive headaches and financial hardship for victims.

To protect against the cost of identity theft, you may be able to obtain identity theft insurance through your renters insurance policy. However, policies vary widely. In some cases, this extra insurance is included, while in others, the identity theft is available via a separate endorsement.

Filing Claims

If you have renters insurance and have been the victim of a theft or your personal belongings have been damaged, you can file a claim with the insurance company. 

In most cases, filing a claim will require you to pay a deductible. The amount of deductible depends on the plan that you chose.

Many people select higher deductibles to pay less in premiums each month, while others are willing to pay more in premiums to avoid a higher deductible.

Sometimes, it may not be worth it to file a claim if the size of your loss is greater than the deductible. For example, it would be silly to file a claim for a damaged television if the TV was worth only $100, and your deductible was $200.

If you wish to file a claim, the Insurance Information Institute offers these steps to follow: 

  • If you have been the victim of a crime, call the police right away. A police report will be an essential document that you can share as evidence with the insurance company. 
  • Call your insurance company. Explain what happened and inquire as to whether the claim will exceed the deductible. Ask how long the process will take. 
  • Prepare a list of lost or damaged items. Take photos if you can. 
  • Keep receipts if you must relocate. 
  • Get claim forms from your insurance company. Fill them out and send them back promptly. 

The Bottom Line

If you are a renter, there’s no valid reason to eschew the purchase of renters insurance. It’s relatively inexpensive and provides broad protections in the event of theft or damage to your belongings. It can also protect you against lawsuits and civil liabilities. 

Renters insurance is available through most major insurance companies and should be considered a crucial part of your broader financial planning efforts. 

Do you have renters insurance? Have you ever needed to file a claim? If so, tell us about your experience on our Facebook page.

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