Insurance Basics
February 21, 2024

What is Renter's Insurance and What Does It Cover?

Steadily's blog cover page for information around landlord insurance.

A renter's insurance policy provides a number of coverages that help protect renters living in an apartment or house. In general, renters insurance policies include three types of coverage to help protect you, your belongings, and your housing after a covered loss. While not legally required, renter's insurance is a low cost and valuable insurance coverage to have, and is something frequently required by landlords and property management companies.

What Does Renter's Insurance Cover?

Renters insurance (commonly known as tenants insurance) helps protect tenants against unforeseen events, such as theft, a break-in or a visitor's injury, or other perils. The three common types of renter's insurance are personal property, liability, and additional living expenses.

Personal Property Coverage

Renters insurance includes personal property coverage, which can protect you if your things are damaged or destroyed unexpectedly. According to the Insurance Information Institute, this protection applies to certain risks (also called perils), such as fire. This coverage may help you pay for the costs of replacing your furniture and clothing, for example, if they are destroyed by a fire.

How Much Personal Property Coverage Do I Need?

Think of everything you currently own. Now consider how much would it take to replace them if they were stolen, damaged or destroyed. That's how much personal property coverage you will want on your policy.

Some helpful tips:

  • Create an inventory of your belongings (both in your home and elsewhere)
  • Assess the value of your things to help you decide which personal property coverage is right for you
  • Set coverage limits appropriate to your personal situation
  • Determine what type of policy you want to purchase: actual cash value; or, replacement cost coverage

Actual cash value

Actual Cash Value, commonly abbreviated to ACV, is how insurers determine the process for personal property claims. Actual cash value protection typically covers belongings up to their current market value, which takes depreciation into account.

However, if you are insured under Actual Cash Value, your insurance company may calculate your reimbursement cost using a different method than other coverages such as Replacement Cost Value. The actual cash value of your property is calculated by taking away depreciation from the replacement cost. If your property is secured for its ACV, this essentially means you will receive a payout equal to the amount it’s worth at the moment it’s lost and not what it costs to replace for a brand-new product.

An example calculation would look something like this: $6,000 x (10-5) /10= 3,000. therefore, you would only receive a payout of $3,000 from your insurance company, leaving you to pay the remaining $3,000 to replace your system.

Replacement Cost Coverage

This helps you pay to replace your items at today's retail prices after a covered loss.

Replacement cost (or RCV) is the amount your insurance policy will pay to repair, replace, or rebuild your damaged property based on current costs without accounting for age, wear, and tear. Your property should be restored in its original condition to its original quality and value.

Replacement cost policies typically cost more than actual cash value policies since they offer more comprehensive coverage.

Does Renters Insurance Cover Theft?

Yes! Theft is a named peril (like fire, vandalism, freezing, and more). Renters insurance policies allow you to choose the personal property coverage limit, which is the maximum the insurer will pay if your items are stolen. For example, if you buy $50,000 worth of coverage, your insurer will pay up to that amount in the event of a claim.

Theft coverage applies to belongings both inside and outside your home. So, if someone steals things from your car or a hotel room, renters insurance can reimburse you for that loss.

Typically, a renter's insurance policy will have a deductible, which is the amount of money deducted from an insurance claim check before the insurer will pay out the full amount of the claim. For example, if someone steals your $1,500 bicycle and you have a $500 deductible, you’ll get an insurance check for $1000.

Renter's insurance typically covers the below types of theft:

  • Stolen bicycles
  • Belongings from inside your car (however, not the vehicle itself. You will require a car insurance policy for that)
  • Cash in small amounts (usually up to $250)
  • Jewelry
  • Electronics
  • Collectibles
  • Clothing
  • Cameras
  • Musical Instruments
  • Artwork

For any high-value items like jewelry, artwork, cameras, etc. you'll want to ensure you have additional coverage. Be sure to ask your Steadily insurance agent for the recommended coverage limits and schedule personal property accordingly. More on that, below.

Liability Coverage For Renters

Renters liability insurance is the part of a renters policy that covers you if you cause injuries to other people or damage to their property, or if others are injured while on your property. Renter's liability cover generally includes personal liability plus your own belongings and expenses associated with living away from home during covered repairs.

Some examples of instances covered under renter's liability coverage include:

  • Medical expenses for a guest who is injured in your home
  • Damage to other properties as a result of an incident originating in your home (for ex., a fire)
  • Damage to other people's things for which you are responsible (for ex., breaking something of value in a friend's home)
  • Host liability
  • Dog bites to guests, or others who are not on-property

A renters insurance policy usually comes with $100,000 of renters liability coverage, but you may want to consider more depending on your circumstances. Liability coverage is the best way to ensure your assets and finances are safe if you are ever found at-fault for damage or injuries.

Am I Covered Under My Landlord's Insurance Policy?

While renters insurance helps protect you and your belongings, it does not typically cover damages to the physical building you live in, or injuries in the common spaces of the building. Landlord insurance protects the owner's property, while you, the renter, are responsible for protecting the belongings you keep inside. Landlord insurance may offer liability protection for the policyholder, but that coverage protection does not extend to tenants.

Am I Legally Required To Have Renters' Insurance?

Renter's insurance is not required by law, however landlords and property management companies frequently require tenants to have proof of renters insurance. Personal property, liability, and loss of use coverages are valuable to both tenants and landlords in reducing the financial impact of a peril or sudden loss. And with many policies starting as low as $10 a month, the benefits of having renter's insurance definitely outweigh the cost.

This post is for informational purposes only and does not serve as legal, financial, or tax advice. Consult your own legal, financial, or tax advisor for matters mentioned here. The information on this site is general in nature. Any description of coverage is necessarily simplified. Whether a particular loss is covered depends on the specific facts and the provisions, exclusions and limits of the actual policy. Nothing on this site alters the terms or conditions of any of our policies. You should read the policy for a complete description of coverage. Coverage options, limits, discounts, deductibles and other features are subject to individuals meeting our underwriting criteria and state availability. Not all features available in all states. Discounts may not apply to all coverages. Steadily is not liable for any actions taken based on this information. If you believe any of this information may be inaccurate please contact us.

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