What Renters Insurance Does and Doesn't Cover

Renters insurance safeguards your belongings from theft or damage, covers liabilities in case of injuries or damages you cause and offers temporary housing if a covered event makes your rental uninhabitable. However, it typically excludes certain events, such as bed bug infestations and damage from floods, earthquakes or landslides. Despite these exclusions, the protection offered by renters insurance is often well worth the expense. It may also be required in your lease.

• What Does Renters Insurance Cover?
• What Does Renters Insurance Not Cover?
• How Much Renters Insurance Coverage You Should Buy
• How to File a Renters Insurance Claim
• Frequently Asked Questions

Renters insurance has three core coverages: personal property, personal liability and loss of use coverage. Personal property coverage safeguards your belongings against theft or damage, while personal liability protects against claims of harm or property damage. Loss of use assists when your rental becomes uninhabitable. These important coverages offer financial protection when the unexpected happens.

All renters insurance policies include personal property coverage, which protects your possessions, such as your clothes, appliances, decor and more in your apartment, condo or rental unit. If a covered event happens, such as a fire, theft or vandalism, and your items get damaged, your policy will reimburse you for damages up to your limit.

However, not all personal property is covered. Below is a list of items that are often covered by a renters insurance policy:

Apart from protecting items in your home, renters insurance also applies to items you carry in your car that aren’t directly attached to the vehicle. This could include your laptop, CDs, clothes and more.

High-value items such as expensive jewelry or art pieces are typically not included in your standard personal property coverage limits, but some providers may offer additional riders that can cover these items at a few extra dollars a month. If you own expensive equipment, ask your provider if they offer a rider to protect it.

Renters insurance policies can pay out in two ways: actual cash value (ACV) or replacement cost value (RCV).

• ACV: Represents the current value of your belongings, deducting depreciation over time.
• RCV: Reflects the cost to replace your belongings with brand-new items, without considering depreciation.

Most renters insurance policies have replacement cost coverage, or you can add it for a small fee. It may be worth it to have replacement cost coverage, as it will replace your older items with new items. If you have coverage on an actual cash value basis, then you will only get reimbursed for the cost of a used, five-year-old TV, rather than the replacement cost to buy a brand-new one.

Personal liability coverage protects you against the cost of accidents that are your fault, while medical payments coverage will pay for injuries sustained on your property regardless of who is at fault. For medical payments, the base is $1,000 of coverage.

You can usually increase limits for liability insurance for just a few dollars a year, and it might be worth it depending on your lifestyle. For instance, if you tend to have guests over multiple times a week or host parties and get-togethers often, increasing your limits can ensure you won’t have to pay out of pocket in case the worst happens.

Additional living expenses (ALE), otherwise known as loss of use in renters insurance, pays for your temporary living expenses if your rented unit is deemed uninhabitable due to a covered event. Typically, additional living expenses can pay for the following expenses:

• Hotels or alternative rented apartments for temporary stays
• Increased commuting expenses
• Elevated food costs due to frequent dining out
• Boarding fees for pets if not allowed in temporary lodgings
• Storage fees for personal items
• Laundry service charges in the absence of on-site facilities
• Costs for moving trucks to transport belongings to storage or another location
• Childcare expenses arising from disrupted routines
• Extra charges for utilities or internet services.

Depending on where you live, it can be costly to rent a hotel room or temporary housing. Check your renters insurance policy to see how much coverage you have for additional living expenses or loss of use, as insurance company limits can vary.

Renters insurance isn't just about protecting your personal belongings; it also offers a range of additional coverages that can be invaluable in specific situations. These coverages address various challenges renters might face, ensuring comprehensive protection beyond the basics.

Some additional coverages you can get, depending on the provider, include:

• Credit Card and Check Forgery Coverage: This offers protection against financial losses if someone forges a check or illicitly uses your credit or debit card, ensuring your finances remain secure.
• Perishable Food Reimbursement: In the event of a power failure or mechanical breakdown that results in spoilage of perishable food, this coverage can reimburse you for the loss, minimizing wastage costs.
• Debris Removal: After a covered claim, there might be debris that needs clearing. This coverage ensures that the costs associated with such removals are taken care of, maintaining the cleanliness and safety of your living space.
• Additions or Alterations Reimbursement: If you've made modifications or additions to your rental space and they get damaged due to a covered event, this coverage can reimburse you for those alterations, ensuring your investments in the property are protected.

While renters insurance is comprehensive, it doesn’t cover everything. For instance, damages due to neglect, mold, insects and flooding are typically not covered. Additionally, damage to your roommate’s possessions and your vehicle aren’t covered. Understanding these exclusions can help you prepare adequately and avoid unexpected burdens.

Renters insurance is tailored specifically to the individual policyholder. This means that your roommate's property won't automatically be covered under your policy. For instance, if a burglary occurs and both your laptop and your roommate's gaming console are stolen, only your laptop would be covered under your policy. Your roommate would need their own renters insurance to ensure their possessions are safeguarded against potential risks.

Renters insurance doesn't cover motor vehicles. Instead, auto insurance provides the necessary protection for vehicular damages or theft. For example, if a tree falls during a storm and damages both your bicycle in the storage room and your car parked outside, your renters insurance might cover the bicycle's repairs, but the car's damages would be a claim for your auto insurance.

Determining how much renters insurance coverage you need involves a thorough examination of your personal belongings, lifestyle and budget. While you can get cheaper renters insurance if you lower your limits, you risk not being fully covered.

Ensuring the right amount of personal property coverage is crucial for safeguarding your belongings. After all, if a fire damages your apartment and your coverage limit is too low, you might bear the brunt of replacement costs for items like electronics and furniture.

One way to determine the amount of personal property coverage you need is to create a home inventory. There are several ways to do this:

• Use your smartphone or camera to take photos or videos of each room. Capture clear images of valuable items, serial numbers and any identifying features. Store these digital files in a cloud storage service or an external hard drive for safekeeping.
• Use a mobile app designed specifically for home inventory. These apps allow you to catalog items, attach photos, note purchase dates and even save digital receipts, making the process streamlined and organized.
• Use a notebook or computer spreadsheet to list out items room by room. For each item, note its description, purchase date, estimated value and any other relevant details. Pair this written inventory with printed photos of items for a comprehensive record. Store the inventory in a safe place, such as a fireproof or safe deposit box.

It’s important to know how much your belongings are worth. If you have $20,000 worth of personal property, ensure you have at least that amount of coverage. You wouldn't want a $10,000 personal property renters insurance policy if a catastrophe could cause $20,000 worth of damage.

If you have high-value items like jewelry or fine art, check with your agent or insurer to see if there is an endorsement or special coverage you can include to properly cover those items. The top renters insurance company for you will have coverage for the items you value most at an affordable rate.

When you compare renters insurance quotes, be sure to check coverage limits, deductible amounts and if there is replacement cost on contents, so you know you’re getting the best value for the price.

Determining the right amount of personal liability coverage in renters insurance is key to ensure you're adequately protected. Several factors come into play:

• Assets: The more assets you have, the higher the coverage you might need to protect them.
• Risks: If you have potential risks in your rented space, like a dog known for its aggressive breed, you might need more coverage.
• Location: Living in a litigious area or a city with higher medical costs can influence the amount of coverage you should consider.

Balancing these factors, experts often recommend a baseline of $100,000 in liability coverage. However, for those with significant assets or higher risks, considering coverage of $300,000 or more is advisable.

Knowing how to navigate the claims process is essential when an unexpected event occurs. A structured approach and clear knowledge can simplify the claims process.

MoneyGeek answered the most commonly asked questions about renters insurance to help you determine the right amount of coverage for your renters insurance policy.