Many renters are under the impression that their landlord’s insurance policy will cover their belongings, but unfortunately, this is often not the case. Your landlord’s policy covers the building itself, but may not include your personal belongings and may not cover damage sustained inside the structure. That’s where renters insurance comes in.
Renters insurance protects your personal property in an apartment, condo, or house you rent from unexpected circumstances like theft, fire, or damage from sewer backup and spillage, and will pay you for lost or damaged possessions. It can also exempt you from civil liability if someone is injured on your property.
Renters insurance is similar in scope to homeowners insurance, except that it does not provide coverage for the home itself or other structures.
How does renters or renters insurance work?
If you have a covered loss at your rented place, renters insurance can help cover the associated costs. The amount covered will depend on the type of loss that occurred and the amount of coverage you have.
There are two types of coverage options under a regular renters policy: Actual Cash Value coverage and Replacement Cost coverage. This is the difference between the two:
- Actual Cash Value coverage will reimburse you for the value of the items at the time of damage or loss.
- Replacement Cost coverage covers the cost of replacing lost or damaged items.
What does renters insurance cover?
A renters or renters insurance policy provides coverage for the loss or destruction of your personal belongings in the event of a covered peril, such as:
- A frozen plumbing system
- The impact of a vehicle
Renters or renters insurance may also cover you, if:
- You are forced to temporarily move out of your home: If your home becomes uninhabitable due to damage caused by a covered incident, such as fire or vandalism, renters or renters insurance may help cover the cost of alternative accommodations while your home is being repaired or rebuilt.
- A person is injured on your property and requires medical attention: Personal liability coverage is designed to protect both you and those who visit your home, in the event of an accident. This type of coverage will help you pay for medical expenses and legal fees that you might end up incurring.
- Items you keep inside your car are damaged or lost: Depending on your renters or renters insurance policy, you may have coverage for items you keep inside your car. Keep in mind that this coverage does not include the equipment or systems installed in the car.
What does renters or renters insurance not cover?
Now that you have a basic idea of what renters or renters insurance covers, it’s important to know what a renters or renters insurance policy doesn’t cover so you’re prepared:
- Valuables. High-cost collectibles and valuables, such as jewelry, may not be covered under a basic renters policy and additional coverage may be needed.
- Businesses you do from home. Operating a small business from your home does not mean that you will be covered by your renters or renters insurance. For example, if your business laptop is stolen from your apartment, it may be considered business property and therefore not fully covered by your renters or renters insurance. Check with your provider to see if your policy covers home businesses or if you need additional coverage.
- Motor vehicles. Your renters or renters insurance does not cover the use or ownership of a motor vehicle even if it is parked on your property (this also applies to specific aircraft and watercraft). However, personal belongings stored inside the vehicle are usually covered.