Updated: Dec 15, 2021
If you are renting, whether you’re a college student living off-campus, a recent graduate in the workforce living in your first apartment, or a family in an apartment or house, you will want to make sure that your property is properly protected.
For college students, if you are living in campus housing, you are most likely covered through your parents’ homeowners insurance policy. Otherwise, you should seriously be purchasing a renter’s insurance policy. Your landlord may require you to have renters’ insurance, but not all do. Just because your landlord insures the space you rent does not mean you have coverage.
What’s Covered by Renters Insurance
If there is damage to your apartment, whether from a fire, calamity, or break-in, your landlord is responsible only for repairs to the building, not for the cost of fixing or replacing your personal property. Renters insurance covers you against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm, and certain types of water damage (such as from a burst pipe or when the tenant upstairs leaves the water running in the bathtub and floods your apartment).
Renters insurance will pay for your personal belongings up to the policy limit. If your apartment is broken into and you have belongings stolen, renters’ insurance can help you replace them.
If disaster or damage to your rental forces you to move elsewhere temporarily, such as a hotel or another rental unit, the coverage can pay for those additional living expenses, including the cost of meals, for a certain period of time or up to a dollar amount.
Renters insurance also provides liability coverage, often up to $300,000, in the event you are sued for injury or damages by someone visiting you, perhaps as a result of a fall on the steps or a dog bite.
You’re Covered for Events Not Connected to Your Apartment
Renters’ insurance often protects your belongings when you aren’t at home as well. If you lose your luggage while traveling, have your laptop stolen at a coffee shop, or have items stolen out of your car you may be able to file a claim on your policy. Theft of your car itself is not covered by renters insurance. Your auto insurance policy may provide coverage (but not always).
Renters insurance may cover losses to the policyholder resulting from the theft and fraudulent use of credit cards or forgery of checks. Coverage is usually up to a limited amount, such as $1,000.
What’s Not Covered by Renters Insurance
As with homeowners insurance, renters insurance won’t cover damage caused by natural disasters, such as floods or earthquakes. If you’re at risk for these events, you will need to purchase separate policies for that coverage.
Most renters’ insurance policies will not cover damage costs associated with bed bugs, with limited exceptions. Along with other pests, such as rodents, they are considered a maintenance issue, and not covered under your standard renter’s policy.
Renters insurance policies generally do not cover damage costs associated with your roommate’s belongings. In order for them to be covered, they have to be listed on the policy, in which case you could split the cost of renters insurance.
We would recommend not adding roommates, however, unless they are related or a spouse. Adding a non-relative to your policy may save you some money, but it will split coverage among all those assigned to the policy. So if your policy insured up to $20,000 in damage, you and your roommate would split that coverage for all your possessions.
Renters Insurance is Inexpensive
Renters’ insurance is fairly inexpensive and most policies range from $15 to $30 per month. Already moved in? No problem. You can open a policy at any time (however it will not cover claims occurring prior to the effective date of the policy). Property coverage limits do not apply equally across all items. Particular high-value items such as jewelry and electronics may be covered under separate sub-value limits given the high monetary risk pose by their damage or theft. If you own expensive individual items, you should make sure you buy a renters insurance policy that permits you to increase sub-limits to ensure you’re fully covered.
Replacement Cost (RC) vs. Actual Cash Value (ACV) coverage: These are the two types of personal property coverage – RC is better, ACV is cheaper. If you have replacement cost coverage, your insurance company owes to reimburse you for the full cost of replacing what you lost. If you only have ACV, your insurance company will pay only replacement cost less depreciation, or what a willing buyer would have paid you immediately before the loss. We strongly recommend replacement cost coverage if you can afford it.
Discounts: Ask your insurance agent/broker what discounts might be available to you. The most common one is a “multi-policy” discount for buying an additional policy, such as auto. Discounts may also be available for having fire extinguishers in your home, a home security system, having a clean claim history, and having good credit.