Why renters need their own policy
A landlord's insurance generally covers the building and the landlord's own liability. It does not pay for a tenant's belongings, a tenant's legal liability or a tenant's hotel bills after a fire. Renters insurance, sold on the HO-4 form, fills that gap. It is not required by state law, but many leases require it, and it is one of the least expensive forms of personal insurance.
What renters insurance covers
The Insurance Information Institute (Triple-I) describes three core parts of a renters policy:
- Personal property pays to repair or replace furniture, clothing, electronics and other belongings damaged or stolen by covered perils such as fire, smoke, lightning, windstorm, explosion, certain water damage, theft and vandalism. Coverage usually follows your belongings away from home, for example a laptop stolen from a car or a suitcase taken while traveling.
- Personal liability pays legal defense and damages if you accidentally injure someone or damage their property, including damage you cause to the apartment or a neighbor's unit, such as an overflowing bathtub.
- Additional living expenses pay the extra cost of temporary housing and meals if a covered loss makes your rental unlivable.
Most policies also include a small amount of medical payments coverage for guests injured in your home, regardless of fault.
What is excluded or limited
Like homeowners policies, renters policies exclude flood and earthquake. Flood coverage for contents is available through the National Flood Insurance Program or private insurers, and earthquake coverage through a separate policy or endorsement. Policies also exclude wear and tear, pests, intentional damage and business property beyond small limits. Jewelry, watches, furs, collectibles and some electronics carry dollar limits for theft; schedule them with a floater if they are worth more. Your roommate's belongings are not covered unless the roommate is named on the policy.
Replacement cost or actual cash value
Actual cash value pays what your items were worth after depreciation, which can be little for a five-year-old sofa or phone. Replacement cost pays what it costs to buy comparable new items, usually for a modestly higher premium. For most renters, replacement cost is the better choice.
What drives the price
The main factors are the amount of personal property coverage, the liability limit, the deductible, the building's location and construction, local crime and weather risks, your claims history and, where allowed, a credit-based insurance score. Bundling renters insurance with auto insurance often earns a discount, and some insurers lower premiums for smoke detectors, sprinklers and security systems.
How to choose a policy
Start with a quick home inventory: list major items, add up what it would cost to replace them and choose a limit to match. Pick a liability limit that protects your savings and future earnings; many renters choose more than the default. Check the deductible, the valuation method and the special limits for valuables, and confirm whether pets, a partner or a home business are covered. If you work from home with expensive equipment, ask about a home business endorsement, since standard limits for business property are small. You can estimate a budget with our renters insurance calculator.
How claims work
Report theft to the police and get a report number, then contact your insurer as soon as possible. Photograph damage, keep damaged items until the adjuster has seen them, and save receipts for emergency purchases and temporary housing. A video or photo inventory made before a loss, stored online, makes the claim much faster. With replacement cost coverage, some insurers pay depreciation only after you actually replace the item.
Polis Re helps you compare renters insurance options from several insurers and request quotes in one place. Policies are issued by licensed insurers and placed through licensed producers in your state.
