Although you might not be eager to add another monthly bill on top of rent and other expenses, renters insurance could cost less than you think. For only $15 or so per month, you could get a policy that reimburses you in the event of theft, fire, injury or another covered incident.
This story is a part of Moving Tips, a CNET series that helps you simplify the journey to your new home.
Renters insurance can also cover temporary living expenses if you have to stay at a hotel while your apartment is being repaired. By having a policy in place, you can safeguard your personal belongings and protect your finances in the event of an unexpected emergency or lawsuit.
Read on for a closer look at how rental insurance works, what it covers and how to find an affordable plan.
How does renters insurance work?
Renters insurance is a type of insurance policy designed for renters, rather than homeowners. You’ll pay a monthly or annual premium for coverage up to a certain amount. Coverage amounts will vary by plan, and you may have to hit a deductible before your plan offers reimbursement.
Renters insurance generally offers two different policy types, according to Judy Dutton, executive editor at Realtor.com. A policy that offers “replacement cost value” will cover the cost of a new version of the item that’s lost or damaged, and it tends to offer a larger payout for your personal possessions. A policy that offers “actual cost value” tends to be the cheaper option, as it will only cover the cost of the item as it has depreciated over time.
For example, a sofa that cost $2,000 would get reimbursed for the full amount under an replacement cost value plan, while an actual cost value policy may only offer $500 because of the sofa’s current value.
What does renters insurance cover?
Renters insurance can provide coverage from mishaps like fire, vandalism and personal injury. Renters insurance could also cover loss of your belongings away from home or medical and legal bills from injuries to others. Here are a few common scenarios that your policy might cover:
- Personal property: A renters insurance policy can reimburse you if your belongings, such as electronics, furniture and clothing, are damaged or stolen. For instance, you may need to replace your furniture if you have a leaking roof, burst pipe or fire in your apartment.
- Loss of use: If you can’t use your apartment for a time due to damage, renters insurance could pay you back for temporary housing, such as a stay in a hotel. Along with covering your accommodations, your plan might reimburse you for meals, laundry or other expenses you incur while your apartment is being fixed.
- Personal liability: Renters insurance can also protect you in the event of personal injury to yourself or others. If you trip on your stairs or your dog bites a visitor, your insurance plan could cover medical bills, legal costs and related damages.
There are limits to what renters insurance will cover, however. For instance, a policy may not cover all natural disasters, such as floods, earthquakes, wind damage or landslides, especially if you live in an area where these incidents are common. It also may not automatically cover all your belongings -- for example, you might need to pay extra to insure valuable jewelry or antiques.
5 reasons renters insurance makes sense
Having renters insurance in your back pocket can be valuable if you run into an emergency. Here are some reasons why getting a plan could make sense.
1. Renters insurance can protect your finances
Renters insurance can provide major coverage for a nominal fee. Without it, you might have to drain your emergency fund or go into debt to pay for apartment repairs, replace your stuff or deal with an injury lawsuit.
If you’ve been saving for a goal, such as buying a house, having to deal with an unexpected emergency without insurance could derail your progress and set back your timeline.
2. Renters insurance is relatively affordable
Most likely, the cost of renters insurance will be less expensive than the cost of buying all new things. Look around at your apartment and tally up the cost of replacing your possessions. It may be pricier than you think.
“Some renters assume they don’t own enough valuables to make buying insurance coverage worthwhile,” said Jennifer Wilbert, assistant vice president of property for personal insurance at Travelers. “They don’t realize that the cost of replacing clothing, furniture, computers, TVs and books can easily add up to thousands of dollars.”
3. Renters insurance could be required by your landlord
Some landlords require you to buy renters insurance as a condition of their rental agreement. “Just over half of renters have renters insurance, often because their landlords require it,” said Dutton.
Although your landlord will have their own insurance policy, that plan won’t cover your personal property. It will only cover damages to the building, not to your possessions inside.
4. Renters insurance can help cover other incidents outside the home
Some renters insurance policies will cover incidents that occur outside your home. For instance, your plan might offer some type of reimbursement if your laptop or phone is stolen on your way to work or if your items get taken from a storage unit. It might also cover incidents that happen outside the home, such as injuring someone on the golf course or breaking something valuable at a friend’s house.
5. Renters insurance can pay for temporary housing
If your apartment has been damaged by fire, burst pipes or another issue, you might have to stay somewhere else while your landlord makes repairs.
“If your building catches fire, insurance will often cover the cost of the belongings you’ve lost and might also spring for a hotel where you can stay until your home is habitable again,” said Dutton.
How much does renters insurance cost?
A typical renters insurance plan costs between $15 and $30 per month, depending on where you live, the size of your home and the amount of coverage you select. According to the insurance provider Lemonade, you can usually choose coverage in the following ranges:
- $10,000 – $250,000 of personal property coverage
- $3,000 – $200,000 of loss of use coverage
- $100,000 in personal liability coverage
Depending on your plan, you may have a deductible anywhere from $250 to $2,500. You’ll likely pay a lower premium for a high-deductible plan and a higher premium for a low-deductible plan.
What are the downsides to renters insurance?
The main downside to renters insurance is the cost, especially if you end up paying for more coverage than you need. To avoid overpaying, Dutton recommends getting an accurate estimate of the value of your possessions before you select a plan.
Your belongings may need to be worth a minimum amount to be eligible for certain plans. Some companies won’t offer renters insurance unless you have a minimum threshold of valuables, typically $15,000, said Dutton. “That may sound like a lot, but once you start tallying up all your clothes, electronics and furniture, it can add up.”
If you can qualify for an affordable plan, however, the advantages of renters insurance likely outweigh any downsides.
“Considering the broad protection they offer, renters insurance policies are a relatively inexpensive way to ensure peace of mind in the event that the unexpected happens,” said Wilbert.
How to save money on renters insurance
Insurance rates will vary by provider, so it pays to shop around and compare your options. If you already have an insurance provider, it’s also worth contacting them to see if they can offer a discounted plan.
“Bundling numerous insurance policies such as your car and home insurance can cut costs, so if you’ve already got car insurance, it’s smart to call and ask what discount they can offer on renters insurance,” said Dutton.
Installing safety or security equipment on your own or with the help of your landlord might also help you score a discount on a plan. Some examples include deadbolts, video cameras and smoke detectors.
What’s the best way to get renters insurance?
The best way to get renters insurance is to comparison shop so you can find a policy that offers the coverage you need at a reasonable price point. Here are the steps you’ll need to take:
- Start with a home inventory: As you get ready to purchase renters insurance, start by creating an inventory of how much stuff you own and what it’s worth. This step can help you figure out how much personal property coverage you need. Taking photos of your belongings can also come in handy if you need to file a claim in the future.
- Determine how much coverage you need: Consider the maximum amount you need for personal property, loss of use and personal liability in the event of a lawsuit.
- Research renters insurance providers: Read reviews online or ask friends and family about their experience with specific providers. Look for a company that offers reasonable prices and helpful customer support.
- Compare multiple quotes: Many insurance companies offer free quotes on their website, so you can shop around and compare prices. Keep an eye on both the premiums and deductibles as you consider costs.
- Pick a policy and apply: When you’ve found a policy that works for you, you can usually apply online or over the phone. Coverage usually starts once you make your first payment.
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