Renter's Insurance Guide

Renter's insurance can give you peace of mind that you're protected in case of theft, extreme weather, and accidents occurring in your home. Learn what renter's insurance is, what it does and doesn't cover, and how to find a policy.
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Renter’s Insurance Guide

Written by Brian Greenberg

Last updated: September 27th, 2022

Reviewed by Rebecca Thrift

What Is Renter’s Insurance?

Definition: Renter’s insurance protects you and your property if you rent a home or apartment. You can think of it as homeowner’s insurance for renters because it offers protection from many of the same threats, such as fire, floods, and theft.

What Are the Types of Renter’s Insurance?

There are two main types of renter’s insurance:

  • Actual cash value. Your insurance company bases claims on the current value of your items rather than how much they cost when they were new. For example, if you paid $1,300 for a laptop computer 5 years ago, you’d receive less than $1,300 because your computer is no longer worth what it was when you first bought it.
  • Replacement cost. Your insurance company bases claims on how much it costs you to buy replacement items. With this type of coverage, your insurance provider covers the cost of replacing a possession with the same thing or a similarly priced product. If you paid $1,300 for your laptop 5 years ago and the laptop still sells for $1,300, you would get $1,300 to buy the same one.

With an actual cash value policy, you’re more likely to have out-of-pocket costs if you suffer a loss. However, the premiums for this type of renter’s insurance are often more affordable than replacement cost policies because insurance companies save money on claims.

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How Does Renter’s Insurance Work?

With renter’s insurance, you pay a monthly or annual fee called a premium in exchange for protection. Your insurance company promises to pay up to a certain amount, called the maximum coverage of the policy. If something you own becomes damaged or is stolen, you file a claim with your insurance company. A representative for the insurance company, called the insurance adjuster, investigates the claim. The adjuster determines how much the company will pay based on the value of the stolen or damaged items, and the insurance company issues a payout either by check or an electronic deposit.

What Does Renter’s Insurance Cover?

What’s covered by renter’s insurance differs from company to company and policy to policy. Generally, most plans cover all of the following.

Personal Property Damage

Renter’s insurance usually helps cover the cost of replacing items that are damaged or destroyed due to:

  • Explosions
  • Fire
  • Hail
  • Lightning
  • Water damage due to plumbing accidents
  • Windstorms

Some policies also cover flood damage caused by natural disasters and damage due to earthquakes.

Personal Liability

If someone is injured while inside your rental home or unit, you could be legally liable. Renter’s insurance can protect you by covering the costs of their medical bills.

Most policies also protect against damage to property. If a possession of someone visiting you becomes damaged, your policy may help pay for the repair or replacement. Personal liability protection may also help pay for any damage you do to the home or apartment that’s not covered by your security deposit.

Personal Living Expenses

If you can’t live in your apartment due to a covered event like a storm or plumbing accident, renter’s insurance is likely to cover the cost of your hotel. It may also help pay for the price of renting essential items while you wait for a replacement.

Theft and Vandalism

Renter’s insurance policies usually protect you against losses due to theft. If someone breaks in and steals items or vandalizes your rental unit or property, the insurance policy will likely pay for replacements or repairs.

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What Does Renter’s Insurance Not Cover?

Renter’s insurance may not cover:

  • Losses due to certain natural disasters. Not all policies cover flood and earthquake damage. Those that do usually cost more. If you live in an area prone to flooding or earthquakes, you may need to buy supplemental insurance.
  • Losses over the maximum limit. If you suffer a catastrophic loss, your insurance company will only pay up to the maximum amount specified in the policy. Any additional costs over that amount are your responsibility.
  • Losses during the deductible phase. Some renter’s policies have a deductible, an amount that you need to pay out of pocket before coverage begins for each incident or claim. You’re responsible for paying for repairs or replacements up to the amount of your deductible. Then, your insurance company pays for the rest up to the maximum limit.
  • Losses covered by your landlord’s insurance: Major structural damage normally falls under property insurance rather than renter’s insurance. If a natural disaster damages the building and your property, your landlord files a claim to make repairs to the unit, and you would file one to your renter’s insurance to pay for personal possessions.

What Are Add-Ons, Riders, and Endorsements for Renter’s Insurance?

Add-ons, riders, and endorsements are all different terms for the same thing. They’re optional protections that you can add to your renter’s insurance policy. When you do, the insurance company increases your premium by a set amount. Companies offer many add-ons. Some common ones include:

  • Pets. Insurance companies may provide additional coverage for damage or injury caused by your pets.
  • Identity theft. Some policies protect you against fraudulent charges on your credit cards. This coverage may also include identity theft monitoring and repair services.
  • Business property. Basic renter’s insurance may not cover the full cost of replacing items used for business purposes, such as equipment or tools, even if you store them in your home or apartment. A business property rider provides extra protection for these types of items.
  • Scheduled property. Some policies place caps on how much you can receive on certain possessions like firearms or jewelry. A scheduled property rider raises this limit for one or more specified high-value items by assigning them a specific value.
  • Perils. Peril riders expand your protection due to losses from threats that your policy normally won’t cover, such as sinkholes, floods, sewer and drain backups, and earthquakes.
  • Assisted living. If you provide care for a disabled or elderly relative in your home, an assisted living rider will pay to place them temporarily in an assisted living home if your residence becomes uninhabitable.
  • Refrigerated property. If you experience a power outage, the refrigerated property endorsement can pay to replace food or medication that spoiled in your refrigerator or freezer.

Who Needs Renter’s Insurance?

While anyone can benefit from renter’s insurance, some people are more in need of protection than others. If any of the following apply to you, getting a policy may be a wise decision:

  • You’re on a fixed income. If you’re living paycheck to paycheck, you likely don’t have the savings to replace essential items in the event of a theft or natural disaster. Although the premiums for renter’s insurance are an additional expense, they’re usually much less costly than the price of having to replace everything if the worst should happen.
  • You’re in an area prone to extreme weather. If your region is prone to hurricanes or tornadoes, renter’s insurance can give you peace of mind.
  • Your landlord hasn’t invested in safety. If your building or home lacks good security or fellow tenants are lax about letting people in the front door, you may wish to invest in renter’s insurance for theft protection.
  • You entertain frequently. The more you entertain, the more at risk you are for theft and accidents occurring on your property.
  • You’re a student. For college students who live in off-campus housing, renter’s insurance offers protection from theft as well as injuries and damage that occur due to parties in your residence.
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Is Renter’s Insurance Mandatory?

Unlike auto insurance for drivers and homeowner’s insurance for people with mortgages, renter’s insurance is less likely to be mandatory. Unless your landlord stipulates in your lease that you must have it, you’re free to choose whether you want the benefits of a policy.

How Much Does Renter’s Insurance Cost?

The average cost of renter’s insurance in the United States is $174 per month, according to reports from the Insurance Information Institute. What you actually pay for a policy depends on:

  • Maximum coverage. The larger the amount of your maximum coverage, the more expensive your policy will be.
  • Where you live. Insurance rates vary from state to state. The states where the rates are the highest are Mississippi, Louisiana, and Alabama, and the lowest are South Dakota, Wisconsin, and Pennsylvania. The crime rates and risk for severe weather events in areas also factor into the cost of renter’s insurance.
  • Credit history. Some companies offer lower rates for applicants with a strong credit score and history.
  • Building history. Insurance coverage may be more expensive if you live in an older apartment building or home.
  • Deductible amount. Generally, insurance policies with higher deductibles cost less per month or year. However, if you suffer a loss, you’ll have to pay more before coverage kicks in.
  • Replacement calculation. As mentioned above, replacement cost policies tend to be more expensive than cash-value payment policies.
  • Discount eligibility. Renter’s insurance companies may offer discounts for having multiple policies, installing a security system, living in a gated community, and for many other reasons.

What Insurance Companies Offer Renter’s Insurance?

Many insurance companies that provide homeowner’s policies also offer renter’s insurance. Check out this table to learn more about major providers.

Company nameAverage priceBenefitsDrawbacks
Lemonade$155/year
Easy online application

Pet damage endorsement

Loyalty discount

Home protective device discount

Not available in all areas

No agents

Progressive$225/year
Increased coverage available for boats, collections, firearms, and other possessions

Online quotes available

Nationwide availability

Higher price than some other companies

Must apply through your agent if you already have coverage to ensure your policy goes through the same company

Auto-Owners Insurance$130/year
Low cost compared to many other companies

Add-ons for waterbeds and spoiled food during power outages

Not available in all states

No online quotes or application

Chubb$170/year
Available nationwide

High coverage limits

Fewer add-ons than other companies

No online quotes or application

Nationwide$155/year
Bundle discounts available

Protection against unauthorized credit card transactions

Online quotes available

Not available in all states
Amica$170/month
High rates of customer satisfaction

Available in the 48 contiguous states

Online quotes available

Fewer discounts than competitors
Country Financial$195/month
Many endorsements for customizing your coverage

High rates of customer satisfaction

Not available in all states

No online quotes

Travelers$195/month
Offers many discounts

Easy claim filing

Online quotes available

Fewer add-on options than competitors

Not available in all states

Allstate$195/month
Large discount for bundling renter’s and auto insurance

Available in every state

Online quotes as well as claims filing

Fewer policy options than many other companies

Lower rates of customer satisfaction

American Family$150/month
Lower price than many competitors
High rates of coverage satisfaction

Multiple coverage options and discount opportunities

Online quotes available

Not available in all states
Farmers$195/month
Many discount options

Online quotes available

Not available in all states
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Where Can You Get a Quote for Renter’s Insurance?

Because rates, riders, and discounts for renter’s insurance can vary dramatically from company to company, obtain quotes from at least two or three providers before you choose. Some companies give free quotes online. With others, you need to call a hotline or get in touch with a local agent.

Key Takeaways About Renter’s Insurance

To summarize:

  • Renter’s insurance can protect you from financial loss due to theft, liability, or damage.
  • Premiums depend on the total amount of coverage and other factors.
  • Endorsements expand coverage.
  • Discounts are available for bundling policies, having a security system, staying with a company for more than one year, and more.
  • Obtaining multiple quotes online or through agents can help you get the best price.

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