Home Insurance

How Much Does Renters Insurance Cost?

If you live in a rented home, a renters insurance policy can help protect you against financial losses dues to property damage, theft, and personal liability. These policies are also more affordable than you may think. The following guide explains the details of how renters insurance works, how the costs are calculated, and some important things to consider when choosing a renters insurance policy.

Renters Insurance

Renters are often surprised to learn that renter’s insurance is more affordable than they may have thought. The average cost of renter’s insurance is between $15 and $30 a month. Nonetheless, if you rent your home or apartment, you may wonder if renter’s insurance is worth having. After all, the property owner will take care of broken appliances or damages to your rental unit, and that $15 to $30 premium each month could go towards your utility bills or dinner instead.

But once in place, your policy can help cover the cost of personal belongings that are damaged or stolen. It can also provide personal liability coverage if someone hurts themselves in your home, as well as help pay for expenses if your home or apartment is damaged to the point that you need to live elsewhere while it’s being repaired. Learn what a renter’s insurance policy could do for you before deciding if it is worth the cost.

Is Renter’s Insurance Worth It?

Some landlords or property management companies require renters to carry renter’s insurance. Your landlord’s property insurance policy covers damages caused by a covered peril, such as fires, storm damage, or plumbing malfunctions. However, the coverage only extends to the building, including its walls, ceilings, and flooring. It does not offer coverage for your items inside your home. Without a renter’s insurance policy, you would be responsible for replacing your furniture, electronics, clothing, and other damaged items out of pocket.

Your renter’s insurance can also cover stolen items and damage from vandalism. Considering that there are over 1.1 million burglaries in the U.S. each year and the average dollar loss per burglary is around $2,660, this risk is worth considering.

When considering whether a renter’s insurance policy is worth it, keep in mind that it can protect you from significant financial damage for a relatively low cost.

What Goes Into the Cost of Renter’s Insurance?

Several factors go into determining renter’s insurance costs. These may include:

  • The state where you live: Renter’s insurance typically costs more in states where natural disasters are more likely to occur.
  • The location of your rental home: Renter’s insurance may cost more in areas with higher crime rates.
  • The amount of coverage: The more high-value belongings you have, the more coverage you need, which can result in a higher premium.
  • The type of coverage you choose: Replacement cost coverage offers more protection than actual cash value coverage, but it also costs more.
  • The amount of your deductibleA larger deductible may lower your premium, and vice versa.
  • Your insurance carrier: Different carriers may offer different rates for comparable policies.

What You Cover With Renter’s Insurance

While renter’s insurance offers some of the same protections as homeowner’s insurance, it is also less expensive. Unlike home insurance, renter’s insurance does not cover damage to the home’s structure or detached structures located on the property. Instead, your landlord’s property insurance covers your rental unit’s walls, flooring, and ceilings. These coverage limitations allow renters to purchase policies for a lower premium than homeowners.

These three primary coverages provided by renter’s insurance are personal property coverage, personal liability coverage, and loss of use coverage.

Personal Property Coverage for Renters

Personal property coverage helps pay for your belongings if they are damaged due to a covered peril, such as a fire or a tornado. It may also cover stolen items, whether the theft occurs on or off the rental property. For example, your renter’s insurance may help replace a television stolen from your living room or a gaming system stolen from your car.

The inventory of everything you own and their estimated value determines the amount of rental insurance coverage you need. To create this inventory, you may consider going through one room at a time, writing down each of your items and researching to estimate the cost to replace them at today’s prices. Whenever possible, also collect photos, videos, and receipts to back up your inventory list. Your insurance company may request this documentation if you need to make a claim, so be sure to keep it in a safe place.

It is also important to note that your policy may have exclusions or limitations for certain items, such as high-value art, jewelry, collectibles, and electronics. If you need higher limits or coverage for specifically excluded items, talk to your insurer or agent about purchasing additional coverage or adding scheduled personal property coverage. Scheduled personal property coverage allows you to insure specific high-value items.

Personal Liability Coverage for Renters

The personal liability coverage included in your renter’s insurance policy can help pay for medical costs and legal fees resulting from accidents, injuries, and property damage that you cause. You may need this coverage for incidents such as a guest slipping in your bathroom or your dog biting someone while you are out on a walk. Liability coverage applies to incidents away from home too, such as if your child accidentally hurts another child on the neighborhood playground.

Your personal liability insurance can also cover incidents like a fire starting in your apartment and spreading to your neighbor’s apartment or your pet damaging a visitor’s property. When determining how much renter’s liability insurance coverage you need, consider the following factors:

  • The total value of your assets: Since you can be sued for almost everything you own, having enough coverage can help protect you from financial devastation.
  • How many visitors you typically receive: A higher volume of visitors to your home could equate to more risk.
  • Whether you have a pet: Having pets could increase the risk of property damage or injury to others, such as if your dog bites someone or your cat destroys a guest’s expensive leather coat.
  • Whether you have children: Children can also increase the risk of damage or injury, such as a playground accident or hitting a baseball through someone’s window.
  • Landlord requirements: The property owner may require you to have a minimum amount of personal liability insurance.

You may be able to raise the limits for an additional cost if you do not have enough personal liability coverage included in your policy. 

Keep in mind that there are also some limitations and exclusions. For example, this coverage does not pay for injuries that happen to you or others who live in your home. It also does not cover damage or injuries that occur through intentional acts of violence committed by you or anyone living in your home.

Loss of Use Coverage for Renters

Loss of use coverage — also called additional living expenses coverage — helps pay excess living expenses if your apartment or rental home is inhabitable because of a covered peril. For example, a pipe may burst and flood your home, or a fire could severely damage your apartment.

Loss of use coverage typically only pays for expenses above and beyond your normal living expenses from being displaced from your home. For example, you may need extra money to pay for a hotel room, storage, and restaurant meals. If you usually spend $100 a week on meals and are now spending $300, this coverage would pay the $200 difference.

Your renter’s insurance policy may restrict the types of costs it covers and limit the total amount of coverage. Check with your insurer to confirm reimbursement expectations before making any big purchases.

What the Landlord Covers

There are some things a renter’s insurance policy does not cover because they are typically covered under the property owner’s insurance policies. These include:

  • Landlord’s property: This includes any of the landlord’s personal property kept on the premises, such as the washing machine and dryer.
  • Structural damage to the building: Structural damage includes damage to the roof, foundation, or interior and exterior walls.
  • Damage to other structures on the property: This includes damage to fences, sheds, or detached garages.
  • Liability for injuries incurred by renters: This includes incidents like if you slip on the icy walkway outside your apartment building and break your leg.

What to Look For When Buying Renter’s Insurance

When comparing renter’s insurance policies, it is common to want the policy with the lowest premiums. However, there are other important things to consider. For example, it is important to review your home inventory and liability risk to make sure the policy you are considering has enough coverage to meet your needs.

Also, check for policy limits or exclusions and consider how they may impact you. For example, if you have a dog breed that is excluded from coverage or you own multiple high-value items, you may find that a specific policy or carrier is more suited to your needs. Also consider the insurance company’s rating and whether it has a reputation for providing high-quality customer service. Evaluating each of these factors may help you choose the right renter’s insurance policy for you.