Renters insurance, and whether you need it
Your landlord’s insurance covers the building, not your belongings. Renters insurance covers your things, and it often costs less than people expect.
What it covers
A standard renters policy usually has three parts:
- Your belongings: furniture, clothes, electronics and other personal property, if they’re damaged or stolen by a covered event such as fire, smoke or theft. This often applies even when they’re away from home, such as a laptop stolen from your car.
- Liability: if you accidentally injure someone or damage their property (for example, your bathtub overflows into the apartment below), it can pay for their costs and your legal defense.
- Additional living expenses: if your home becomes unlivable because of a covered event, it can pay for temporary housing and extra costs while it’s repaired.
What it usually doesn’t cover
- Floods and earthquakes: these usually need separate policies.
- Damage to the building itself: that’s the landlord’s insurance.
- Your roommate’s belongings: roommates usually need their own policy unless they’re named on yours.
- High-value items above set limits, such as jewelry: you may need to add extra coverage.
Choices that change the price
Replacement cost vs. actual cash value
Actual cash value pays what your things were worth after depreciation, so an old couch pays very little. Replacement cost pays what it costs to buy new ones. Replacement cost is a little more expensive, but it’s usually worth it.
The deductible
This is the amount you pay before the insurance pays out. A higher deductible lowers the premium, but choose one you could actually afford in an emergency.
Coverage amounts
Estimate the total cost of replacing everything you own. People usually underestimate this: add up clothes, kitchen items and electronics room by room.
Do you need it?
If you couldn’t easily afford to replace everything you own, or to pay a large liability claim, renters insurance is usually worth it. Some leases require it. Bundling it with car insurance from the same company can lower the price of both.
Do this today
- Check whether your lease requires renters insurance.
- Walk through your home and estimate what it would cost to replace your belongings.
- Get quotes from two or three insurers, including the one you use for car insurance.
- Make a quick video inventory of your belongings and save it somewhere other than your phone.
Sources
This guide is general information, not insurance advice. Policies differ in what they cover and exclude. Read your policy and ask the insurer about anything you’re unsure of.