What Is Renters Insurance?

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Renters insurance is a form of property insurance that covers losses to personal property and protects the insured from liability claims. This includes injuries occurring in your rental that aren’t due to a structural problem. Injuries due to structural problems are your landlord’s responsibility. Renters insurance protects anything from a studio apartment to an entire house or mobile home.

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Even if you’re just starting out or living in a place for a year, getting a renters insurance policy—probably the least expensive and easiest-to-obtain insurance you’ll ever own—could be a smart investment. You may not think you’ve got anything of great value, but you probably do—more than you could comfortably afford to replace in the event of a bad burglary or fire.

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In addition, no matter how careful you may be with your own apartment (the sort of residence most renters have), you can’t control your neighbors. They can leave your security gates open, buzz ill-intentioned strangers into your building, or fall asleep with a cigarette in hand and start a serious fire.

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What Renters Insurance Covers

 

Renters insurance has three basic coverage components: personal possessions, liability, and additional living expenses.

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Personal Possessions

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This coverage is for the contents of your rented dwelling. Typically, named perils include fire, theft, vandalism, plumbing and electrical malfunctions, certain weather-related damage, and other named hazards. More specifically, a standard HO-4 policy, as it's called, is for renters and covers losses to personal property from events such as hail, explosion, riots, damage caused by aircraft or vehicle, vandalism, and volcanoes, among others. Floods and earthquakes, however, are not covered and require separate insurance policies.

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Liability

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Liability coverage protects you up to a certain amount in the event that you get sued for an injury or other damages incurred at your home by other people. It also pays for damage that you, your family, or your pets cause to others. It pays any court judgments as well as legal expenses, up to the policy limit, which usually starts at $100,000 and can go up to $300,000. For coverage higher than that, you need to buy an umbrella policy.

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Additional Living Expenses

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This coverage means that if your unit becomes uninhabitable due to one of the covered perils, you’ll be provided with some money to pay for temporary housing. Hotel bills, restaurant meals, temporary rentals, and other expenses incurred while your dwelling is being rehabbed are all included.