Renters Insurance Explained: What Is It and Why It’s Important

The number of people renting their homes is now higher than at any point since 1965. If you’re one of the nearly 40% of adults who rent rather than own, you know that renting comes with its own benefits and drawbacks.

As a renter, you don’t need to worry about covering the cost of major structural repairs or paying property taxes, but you do still need insurance. Renters insurance offers essential protections that your landlord’s insurance policies cannot.

What is Renters Insurance?

Renters insurance is designed to protect renters living in an apartment or house owned by a landlord or property management company. While your landlord is required to maintain insurance that protects the structure of your home from storms, fires, and other disasters, your landlord’s insurance doesn’t cover your personal possessions.

Renters insurance fills this gap by protecting your own assets. You can select a policy that pays for the actual cost of your replacement possessions, or a policy that provides “actual cash value” for the value of your belongings at the time of the loss. Coverage for replacement is often more expensive since the insurance company will pay more for your new possessions than they would to cover the depreciated costs of your lost possessions.

Who Needs It? What Does it Cover?

Just like a homeowner’s or auto insurance policy, renters insurance covers unexpected events (“perils”) that pose a risk to your wallet. Most reputable renters insurance policies reimburse you for the losses experienced during any of these specific events:

  • Fire or lightning
  • Smoke
  • Explosion
  • Civil unrest
  • Windstorm/hailstorm
  • Vehicle damage
  • Aircraft damage
  • Vandalism
  • Theft
  • Falling object
  • Volcanic eruption
  • Weight of ice, sleet, or snow
  • Accidental appliance overflow, freezing or other damage

 

 

 

This means that renters insurance does not typically cover earthquakes or floods without a separate “rider” or additional policy.

Beyond covering the costs of unexpected physical damages to your belongings, renters insurance also protects you from liability. If somebody is injured in your home and alleges that your negligence caused the injury, the conflict could result in a lawsuit that forces you to personally cover the associated medical bills, lost wages, and other costs. Renters insurance provides protection and coverage in such situations.

The liability protections offered through renters insurance may also cover dog bites, libel, slander, and the cost of legal representation.

Getting a Good Rate

Fortunately, renters insurance is known as an affordable investment. Unlike health insurance or auto insurance that probably cost you hundreds of dollars a month, most renters insurance premiums fall between $130 and $250 annually.

Use these tips to make sure you get the very best renters insurance rate possible:

  • Bundle your renters and auto insurance policy for a discounted rate
  • Ask about discounts for security systems, smoke detectors, sprinkler systems, and deadbolt locks
  • Raise your deductible (the amount you pay per claim) to lower your monthly insurance bill
  • Evaluate the total worth of your belongings to make sure you don’t pay for too much coverage

It always helps to shop around as well. Many insurance companies offer promotions to new customers, especially if they bundle renters insurance with auto, boat, or another policy.

The bottom line? Disaster can strike at any time. It’s worth the $25 or $35 a month for the peace of mind that your clothes, electronics, furniture, and other valuables are protected. After all, it’s much easier to afford a monthly renters insurance payment than to pay out of pocket to refurnish your apartment and restock your closet.

Read More: All the Types of Insurance You Definitely Need