What Renters Insurance Does and Doesn't Cover
Renters insurance covers damaged or stolen property, liability costs if you're at fault for injury or property damage to others and temporary housing costs if your rental unit is rendered uninhabitable due to a covered event. Renters insurance does not cover everything, though. Most companies exclude certain circumstances from coverage, like bed bug infestations and property damage due to a flood, earthquake or landslide.
Even though some things aren’t covered, renters insurance coverage is almost always worth the cost. Keep reading to learn more about what renters insurance does and does not cover.
What Does Renters Insurance Cover?
Renters insurance has three core coverages: personal property, personal liability and additional living expenses. These important coverages offer financial protection when the unexpected happens.
The Three Core Renters Insurance Coverages
Personal property coverage pays out if your stuff is damaged or stolen. You’ll be covered up to the dollar value of the limit you select when you buy your policy.
Personal liability insurance covers your legal exposure. If you’re found responsible for injuries or property damages to others, your renters insurance policy can cover the costs, up to the value of your selected limits.
Additional living expenses coverage protects you against extra costs if you’re displaced from your home. For instance, it can pay for a hotel room to stay in while your landlord repairs the damage to your unit.
Personal Property Coverage
Personal property is all your possessions (clothes, kitchen appliances, game consoles, decor, etc.) in your apartment, condo or rental unit.
Just like with homeowners insurance, renters insurance coverage applies in the event of a covered peril. The most common claim types are fire, wind and theft. Suppose there is substantial damage to your personal property due to a covered claim. In that case, the insurance company will reimburse you for damages up to your policy limit (and minus your deductible). You can get cheaper renters insurance if you lower your limits, but you may risk not being fully covered.
It also applies to items you carry with you in your car (like CDs, clothes and car repair tools) that aren’t directly attached to the vehicle. That’s right, if your personal property (like a laptop or clothes) travels with you and someone steals it, you can get reimbursed by your insurance company.
Most renters insurance companies will cover a damage claim caused by the following perils:
- Smoke damage
- Snow or ice collapse
- Falling objects
- Damage caused by frozen or leaking pipes
- Items in a storage unit (lesser coverage may apply)
For example, suppose you live in an apartment building, and a fire starts in another unit and damages your personal property. In this scenario, your renters insurance will cover this loss, minus your deductible. If there is smoke damage or water damage from the sprinkler system, you can get reimbursed under your personal property coverage on your renters insurance.
This is why it’s important to know how much your stuff is worth. If you have $20,000 worth of personal property, make sure 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.
Personal Liability and Medical Payments Coverages
- Personal liability coverage protects you against the cost of accidents that are your fault.
- Medical payments coverage is similar but distinct. It 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.
For example, let’s say your dog bites someone while they are in your home. An ambulance takes your guest to the ER, and they end up suing you. Under your renters insurance policy, the personal liability coverage will pay up to the policy limit for legal representation and the settlement or judgment.
According to the Insurance Information Institute, the average cost of a dog bite claim in 2019 was $44,760, up from $39,017 the previous year. They expect this number to trend higher as medical costs and judgment amounts also increase.
Additional Living Expenses Coverage
Additional living expenses (ALE) coverage is also called loss of use. If your residence is not currently livable due to a covered claim, ALE coverage will pay for you to stay somewhere else. If it’s only a few days, it might pay for the cost of a hotel room. However, if it’s a large claim (like a fire or weather claim), it will pay for you to get a temporary rental elsewhere.
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.
Additional living expense coverage under your renters insurance policy only applies if your apartment or residence is uninhabitable due to a covered peril.
Other Events Covered by Renters Insurance
Renters insurance also has some additional coverages that could come in handy. Credit card and check forgery coverage provides protection if someone forges a check or uses your credit or debit card. If there is a power failure or mechanical breakdown that causes perishable food to spoil, there could be some coverage to reimburse you for the food loss. If debris has to be removed after a covered claim, there may be some coverage in your renters insurance policy. If you’ve made changes to the building that are damaged due to a covered loss, you may be able to get reimbursed for what you paid for additions or alterations.
What Doesn’t Renters Insurance Cover?
Renters insurance does not cover everything that happens to your personal property. The most common claims that aren’t covered are floods and bed bugs, or other pest infestations. Unless your roommate’s name is on the policy, their personal property isn’t covered under your policy either.
These are the major events that renters insurance does not cover:
- Bed bugs or other pests
- Damage to or theft of car
- Damage to or theft of your roommate's possessions
If you live in a place where floods are common, you can get a separate flood insurance policy to cover your personal property.
How Much Renters Insurance Coverage You Should Buy
Renters insurance won't fully cover you unless you buy enough of it, so it's important to know is how much personal property coverage you need to protect your belongings. Buying more coverage is more expensive, but not having enough coverage when you need it could leave you with a costly bill after a disaster.
For example, the average cost for $20,000 in personal property coverage is $13 per month, while $50,000 is $20 monthly. If you need more, say $100,000 in personal property coverage, the cost is $31 per month.
One way to determine the amount of personal property coverage you need is to create a home inventory. To do this, make a list of all the items you own and assign a value to them. You can also walk around your home with a video camera to record the contents while discussing the items, their age and value. Making a home inventory can also help if you have a claim, so the insurance company knows the type and value of your items.
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 a five-year-old TV, rather than the replacement cost to buy a brand-new one.
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 right value for the price.
FAQ About Renters Insurance Coverage
What renters insurance does and does not cover can be confusing. The next questions are the ones most commonly asked, with answers to help you determine the right amount of coverage for your renters insurance policy.
Read More About Renters Insurance
About the Author
- Insurance Information Institute. "Spotlight on: Dog bite liability." Accessed November 17, 2020.