Renters insurance: what it covers and why it's worth knowing
In short: your landlord's insurance covers the building, not your belongings. Renters insurance can pay to replace your things after a covered event such as fire or theft, covers your liability if someone is hurt in your home, and can pay for somewhere to stay if your home becomes unlivable. It is often fairly low-cost, and some landlords require it.
What it usually covers
- Personal property: furniture, clothes, electronics and other belongings, against covered events such as fire, smoke, theft and some water damage. It often covers your things outside the home too, such as a laptop stolen from a car.
- Liability: if someone is injured in your home or you accidentally damage someone else's property, it can pay for their costs and legal defence, up to the limit.
- Loss of use (additional living expenses): the extra cost of a hotel or temporary home while yours is repaired after a covered loss.
What it usually doesn't cover
- Floods and earthquakes. Flood cover for renters' belongings is available separately, including through the National Flood Insurance Program.
- Damage to the building itself (that is the landlord's insurance).
- Pests, wear and tear, and some water damage such as sewer backups unless you add it.
- Expensive jewellery, gold or art above a small limit, unless you add extra cover. This matters if you keep family jewellery at home.
- Your roommate's belongings, unless they are named on the policy.
Replacement cost or actual cash value?
Actual cash value pays what your things were worth after wear and tear, so a five-year-old laptop pays little. Replacement cost pays what it costs to buy a similar new item. Replacement cost policies usually cost more but pay out more.
How much cover?
- Go room by room and add up what it would cost to replace your things. Most people are surprised how much it comes to.
- Choose a personal property limit near that total, a liability limit you are comfortable with, and a deductible you could pay from savings.
- Keep a home inventory: photos or a video of your things, plus receipts for valuable items, stored online.
Before you buy
Check whether your lease requires renters insurance and a minimum liability amount. Compare quotes from licensed insurers for the same limits and deductible. Add the premium to your budget. See Insurance basics for the key terms.
Handy tools
- Monthly budget planner: see what is left each month and how your spending splits up.
General information, not financial or insurance advice. Coverage, prices and rules vary by state, insurer and policy. Read your policy and check with the insurer, a licensed agent or your state insurance department before you decide.