Standard renters insurance generally covers personal belongings, liability, and additional living expenses. However, many insurance providers offer customizable plans if you want to adjust your coverage limits or add optional upgrades, such as flood or earthquake protection. Here’s what you need to know.
What Renters Insurance Typically Covers
Personal property
Your personal belongings are typically covered against damage or theft in most renters insurance policies. Please note that you cannot be reimbursed for more than your coverage limit, even if a damaged or stolen item is worth more.
Responsibility
Most renters insurance policies include liability coverage to protect you in situations where you may be held responsible for damages or other expenses. For example, you could accidentally damage someone’s property, or a guest could be injured on your property and you may have to pay their legal or medical bills.
Additional Living Expenses (ALE)
This coverage can help you find a temporary place to stay if your rental home becomes uninhabitable for a covered reason. For example, if your rental property is damaged by fire, ALE coverage could reimburse you for hotel or short-term rental expenses.
Risks covered
The coverage included varies by policy and provider, but these are commonly covered risks:
Please note that “vandalism” in this case generally refers to any of your personal belongings being vandalized or damaged. Vandalism to the actual structure of the rental property should be covered by the owner’s insurance policy.
More information: Does renters insurance cover mold?
What Renters Insurance Does NOT Cover
In general, a standard renters insurance policy likely will not cover these items or situations:
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Floods: While water damage caused by plumbing or an air conditioning unit may be covered, standard renters insurance policies typically do not include flood protection.
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Earthquakes: Similarly, earthquake coverage is usually an optional add-on.
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High value items: Certain items, such as gold and jewelry, may have maximum standard coverage limits, so you may need to increase your limits or purchase an upgrade to get additional coverage.
Coverage limits explained
Renters insurance coverage limits fall into two categories: general policy limits and item-specific limits.
Policy limits
Your policy limits are the maximum amounts your provider will pay for each type of coverage.
For example, if your plan includes $10,000 of personal property protection per event, you may receive up to that amount per covered event. This does not mean you will automatically receive $10,000 if an item is stolen or damaged, as it depends on how your plan calculates the value of the item and the replacement cost.
Item Limits
Depending on your policy, you may have coverage limits for specific items. This could include limits on high-value items, such as gold, jewelry, art and collectibles.
If you have an item that has a specific coverage limit, it will follow the rules of that limitation rather than your policy’s overall limit.
Optional add-ons
Standard renters insurance protection doesn’t cover everything, but most providers offer upgrades you can add for a larger fee. Below are some examples of optional plugins:
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Registered personal property (high value items): Covers specific, appraised items, such as engagement rings and antiques.
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Identity Theft Protection and Restoration: Helps protect you against identity theft. If you also have restoration coverage, it will help you pay for related expenses, such as lost wages and legal fees, if someone steals your identity.
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Flood Insurance: Provides protection against flood damage.
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Earthquake insurance: Provides protection against earthquake damage.
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Personal general policy: Provides additional liability coverage to what you may already have through your renters insurance policy.
How much coverage do you need?
The main components of renters insurance are personal property protection, liability coverage, and additional living expenses. Each of them has their own coverage limits that you will have to choose from, although some may be easier options than others.
For example, with personal property protection, you can take an inventory of your belongings and estimate the cost of replacing them. This will give you a quick and easy estimate of how much coverage you may need for this part of your policy.
For liability coverage, it is not easy to estimate the coverage needed as liability expenses can run into the hundreds of thousands. You will have to use your best judgment in this case, balancing the risk you want to take with the amount you are willing to pay for premiums.
For additional living expenses, you may be able to calculate a rough estimate of how much it might cost to live in a nearby hotel or other type of accommodation if your place becomes uninhabitable. For example, if living in a hotel is going to cost $4,000 per month and you want at least two months of coverage, you will need at least $8,000 in additional living expenses.
What does renters insurance cover? Frequently asked questions
What are three things renters insurance typically doesn’t cover?
Renters insurance typically does not cover floods, earthquakes, or the full value of high-value items.
What are the most common renters insurance claims?
Common renters insurance claims include:
How much does renters insurance cost for $100,000 a month?
It depends on the policy, but some insurance companies include $100,000 in liability protection for as little as $8 per month.
Read more: How much does renters insurance cost?
What are the disadvantages of renters insurance?
Renters insurance typically doesn’t include protection against natural disasters or cover property you don’t own, such as a roommate’s belongings. Additionally, your policy may not provide enough coverage for high-value items, such as jewelry and art.
Do landlords like having renters insurance?
They most likely do this because it is an additional coverage that protects the owner from certain legal disputes and financial risks. With renters insurance, the tenant has their own protection for their personal belongings and assumes responsibility for injuries to guests or negligent damage to the property.