Katie OrmsbyRenters Insurance Expert

Katie enjoys helping readers make sense of Renters Insurance options. She's previously written business and shopping features for The Seattle Times and Seattle Met magazine. She has a degree in journalism and political science from the University of Washington.

How Renters Insurance Works

If you’ve recently been shopping for an apartment, condo, or any other type of rental, you probably already know that many places require tenants to carry renters insurance. Although it isn’t always required by private landlords or property management companies, understanding how it all works will make you see why it’s worth having the protection.

When you know what each part of a renters insurance policy means, you make sure you won’t leave a discount or extra coverage on the table. Compared to the costs of replacing your belongings, renters insurance is relatively inexpensive — let’s take a look at everything it covers.

What Is Renters Insurance?

Protecting your belongings is just as important for renters as it is for homeowners. Just like homeowners insurance policies, a good renters insurance policy can give you liability protection against an accidental injury that occurs in your home. It can also help with expenses related to emergency relocations, and it’s meant to help to replace belongings that have been stolen or damaged. Unfortunately, no one knows when loss or accidents will occur, but renters insurance can give you peace of mind that extends outside your home.

What Does Renters Insurance Cover?

There are three standard types of coverage:

Liability Coverage Explained

Liability coverage is a standard part of both renters and homeowners insurances. This portion of a policy protects you against any accidental damages to a rental property. It also covers the medical bills of anyone who may become injured while visiting your rental.

Personal Property Coverage Explained

The personal property portion of a renters insurance policy covers the costs of your belongings. In the event that you experience theft or damages, possessions like clothing, electronics, and furniture are insured up to the limits you’ve chosen.

Loss of Use Coverage Explained

If damages to your rental property leave it in an uninhabitable state, loss of use coverage will help with temporary or permanent relocation expenses. Loss of use usually pays the difference between what you’d spend on a normal day and the extra you’re spending during the relocation.

Pros and Cons of Standard Renters Insurance

Pros
Cons
Affordable premiums
Out-of-pocket deductibles
Protection against theft & fire/water damage
Limitations on coverage events
Easily bundled with other types of insurance
Flood & earthquake coverage are add-ons

Why Do You Need Renters Insurance?

When something goes wrong on a rental property, a landlord will claim the damages with their insurance company. However, a landlord’s responsibility generally doesn’t extend to include your belongings. A rental insurance policy is the best way to make sure that you’ll be able to recoup the cost of replacing your belongings or to cover the cost of an unexpected move caused by damages.

There are other reasons you should carry renters insurance, though. It’s one of the few types of insurance that covers your belongings when you travel, experience theft at home or abroad, or cover losses you may experience from identity theft. Tenants insurance, or renters insurance, can fill in the gaps where other policies leave off. It can even extend to your pet.

How Much Does Renters Insurance Cost?

Many factors like your location and your credit score can affect the cost of renters insurance premiums. From the amount of coverage you need to the size of your deductible, the cost of a policy can vary depending on the number of add-ons you choose. You’ll be able to lower costs by comparing renters insurance rates and asking about discounts.

Average Annual Renters Insurance Premium

The average annual premium of renters insurance in the least and most expensive states:

5 Cheapest States
Average Annual Premium
5 Priciest States
Average Annual Premium
North Dakota
$126
Mississippi
$252
South Dakota
$127
Oklahoma
$236
Minnesota
$140
Louisiana
$234
Wisconsin
$143
Texas
$225
Iowa
$144
Alabama
$222

Source: National Association of Insurance Commissioners

How To Get Cheap Renters Insurance

Whether you’re looking for renters insurance in Texas or in Ohio, there are a few simple steps you can take to get the best price. Take your time, and make sure that policies are a good fit for your situation. Most importantly, remember that you are in a position to negotiate.

1. Shop around yearly.

Rental markets and your credit score can change from year to year, and it’s a good idea to shop around before you renew your next rental insurance policy. Even slight changes can affect your rates, and it never hurts to check.

2. Bundle your policies.

Insurance bundling is a great way to save a little money, and many insurance companies encourage the practice. Check with other types of insurance you have, and see if you can combine the policies. It may result in a lower premium.

3. Take full advantage of discounts.

If you see a discount you think you deserve, contact your insurance agent and speak with them. There’s a good chance that they may know of hidden discounts you haven’t yet discovered.

4. Look into security systems for renters.

Renters insurance offers protection against theft, and there are often discounts for having a security system. Affordable security systems are easy to find now, and many companies offer rates just for renters.

5. Consider raising your deductible.

Raising your deductible can be an easy way to lower your premium. Of course, you should be sure it’s a move you want to make. On the one hand, you’ll save on your premium. But on the other hand, you’ll be responsible for a higher deductible if you make a claim.

Frequently Asked Questions

Does your landlord’s insurance cover your personal property?

Generally speaking, landlord’s insurance doesn’t extend coverage to your personal property. While landlord insurance does have a liability provision, your belongings aren’t included. In other words, your landlord will have to cover the cost of a leaky ceiling repair, but you’re probably out of luck on the gaming system the leak ruined.

Can roommates share renters insurance?

As long as both roommates are listed on the lease and have a joint insurance policy, roommates can share a policy. But if it’s a short-term living situation, separate coverage may be the better route. Then you won’t be left without a policy if either of you moves out.

What’s the difference between replacement cost and actual cash value?

When you sign up for tenant insurance, you’ll be given the option to choose the actual cash (ACV) or the replacement cost value (RCV) of your belongings. Choosing ACV means that you’ll get the current, usually depreciated value, for your damaged or stolen property. If you choose RCV, you’ll be reimbursed the original amount you paid for your things.

What doesn’t renters insurance cover?

Damages from things like floods and earthquakes generally aren’t covered under standard renters insurance. They require specific peril add-ons like flood insurance or earthquake coverage. Most policies don’t cover things like bed bugs or pest damage either.

Why is renters insurance cheaper than home insurance?

While home insurance offers protection to both belongings and a structure, renters insurance only covers belongings, emergency relocation, and liability. It’s cheaper because there simply aren’t as many assets being insured.

Too Long, Didn’t Read?

No matter what sort of structure you call home, renters insurance can protect you and your possessions. Landlords aren’t always responsible for damages that happen in a rental property and it can leave you on the hook. With a good policy, you’ll be prepared for accidents or events that are beyond anyone’s control.

Although renters insurance is not yet mandated, it’s becoming more and more popular for agencies and landlords to require it. Regardless of your rental situation, having an affordable policy offers liability protection and safeguards the costs of your belongings. There’s certain to be a policy that suits your needs.