Although renters outnumber homeowners in many U.S. cities, the Insurance Information Institute estimates that just 37% of renters have renters insurance, compared to 95% of homeowners who have homeowners insurance.

Many renters are under the impression that their belongings are insured under their landlord’s policy, but in reality, your landlord’s insurance only covers the building itself: the walls, windows and roof, plus plumbing, heating and cooling systems, permanent lighting fixtures and appliances not owned by the renter.

Insurance is all about the “what ifs.” What if a house fire destroys all of your stuff? What if your neighbor files a lawsuit because they’re injured in your home? What if your phone is stolen while you’re on vacation? Renters insurance can come to the rescue in these scenarios. Keep reading to learn how you can protect yourself and your stuff with renters insurance.

Do You Really Need Renters Insurance?

The truth is, you don’t legally need renters insurance unless your landlord requires it. But you do need to evaluate whether going without it is worth the risk.

Say your home is burglarized or your neighbor sues you because they are injured inside your home—without renters insurance, the cost of replacing your belongings or paying for legal defense will come out of your wallet.

You may be thinking, “But my roommate has renters insurance. Doesn’t that mean I’m covered?”

Not quite.

Your renters insurance policy applies to anyone in your home who is related to you by blood, marriage or adoption. Your roommate’s or domestic partner’s renters insurance policy covers their liability and personal property—not yours. You’re better off getting your own policy. 

How Much Renters Insurance Coverage Do You Need?

If you were to lose it all—everything from your furniture to your French press—you should ideally have enough coverage to replace everything. You need to understand the value of your personal property to know how much coverage is necessary, which is easier than you may think:

  1. Walk around your home and take pictures or video of the things you’d really hate to lose: your phone, bike, laptop, guitar, DSLR camera, nice furniture—you get the idea.
  2. Create a detailed inventory of your most valuable possessions. For things like electronics and pricier items, list makes, models and when you purchased them. Include pictures of any receipts too, if you still have them. Compile your inventory using a cloud-based program like Google Docs. That way, you’re able to access it anywhere on any device.
  3. Estimate the cost for bulk items, like clothing and shoes.
  4. Add up your estimates. This is a pretty good indication of how much renters insurance coverage you need.

Personal property coverage typically starts at $10,000. Fortunately, you can customize the amount of coverage based on the value of your things and your lifestyle. It’s usually recommended that you add $10,000 to the amount you estimated. You can also add additional coverage—Scheduled Personal Property Coverage—to help protect more valuable possessions, like an engagement ring, expensive sound system or wristwatch.

It’s important to note that most renters insurance policies include maximum amounts for certain types of personal property. Before you purchase an insurance policy, review it carefully to ensure that the things you want covered are, in fact, covered up to the amount you need.

What Does Renters Insurance Cover?

Renters insurance includes protection in three main areas:

  • Personal Property
  • Personal Liability
  • Additional Living Expenses

Personal Property

One of the more obvious benefits of renters insurance is that it protects your personal property from a variety of named perils, including but not limited to:

  • Fire
  • Smoke damage
  • Water damage
  • Theft
  • Vandalism

Renters insurance will provide coverage for these named perils inside and outside of the home, up to the limits of your policy. So, if smoke damage from a kitchen fire destroys all of your things or if your laptop is stolen while you’re working at a coffee shop, you could be covered.

Should you ever need to file a claim, you can be reimbursed in one of two ways, depending on your policy’s structure:

  • Actual cash value (ACV): This type of policy would reimburse you for your property’s value at the time of loss minus depreciation. In other words, if you have ACV coverage and your laptop is stolen, you could be reimbursed an amount equal to the depreciated value of the laptop.
  • Replacement cost value (RCV): Under this policy, your property would be replaced with a comparable item at current market value. It does not factor in depreciation. For example, if you have RCV coverage and your laptop is stolen, your policy could pay for a brand new, comparable laptop.

Personal Liability

The standard renters insurance policy also carries personal liability protection, which can pay for damage you, your family members and even your pets cause, up to the limits of your policy. Personal liability protection includes coverage for:

  • Accidental damage to someone else’s property, such as if your child accidentally breaks your neighbor’s window. However, if your child accidentally breaks your window, you won’t be covered.
  • Medical expenses, so if a visitor is injured in your home, you can send their medical bills straight to your insurance company. Medical expenses for your family or pets are not covered.
  • Legal fees, which can cover the cost of defending you in court and for court awards, up to the limits of your policy.

Additional Living Expenses

If your home is destroyed by a covered peril and you have no choice but to live elsewhere while your home is being repaired or rebuilt, renters insurance can help pay for those Additional Living Expenses (ALE), up to the limits of your policy. This type of coverage is also referred to as Loss of Use Coverage.

The standard renters insurance policy will reimburse you for the difference between your normal living expenses and your additional living expenses. ALE coverage can pay for a multitude of expenses, including:

  • A temporary residence, such as a short-term rental or hotel
  • Restaurant meals or takeout
  • Laundry
  • Moving costs and storage fees
  • Parking and transportation costs
  • Pet boarding

How Much Does Renters Insurance Cost?

Many renters, especially younger renters, are under the impression that renters insurance is expensive, but that’s just not the case. The average cost of renters insurance is between $15 and $30 per month, depending on the size and location of your home, as well as the value of your belongings.

Plus, Personal Express offers several discounts to help you save even money on renters insurance. For instance, you can save money for having protective devices, like a smoke detector or deadbolt, and by bundling your renters insurance and auto insurance policies.

Whether you’re moving into a new place this spring or staying put where you are, now is a great time to purchase a renters insurance policy—or reevaluate your existing one. At Personal Express, our Homegrown Pros can help you make sense of your renters policy, so you have the coverage you need and understand precisely how you’re protected. Just visit your local Personal Express office or talk to a local agent in your neighborhood by calling 1-800-499-3612.

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*The information provided in this blog is designed to give helpful advice on the topic discussed. It is not intended to provide legal or any other type of advice and is not meant to be a thorough discussion of every issue that a person should consider or may encounter. Personal Express Insurance is a brand utilized by the following insurance underwriting companies: Integon National Insurance Company and National General Premier Insurance Company. All policies will be underwritten by these two underwriting companies.

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