What is Renters Insurance?: Tenant Rental Insurance Explained
Renting an apartment does mean you’re not responsible for maintenance and repairs to the physical structures. However, you are still responsible if your belongings are stolen or destroyed, or other factors such as needing to find another place to live if the building is deemed inhabitable.
To protect yourself, consider taking out a tenant rental insurance policy. Let’s take a look at what it is, what it covers and how you can purchase a policy.
What is Renters Insurance?
Renters insurance is also known as an HO-4 policy or tenants insurance and is similar to some aspects of homeowners insurance. Your personal belongings are protected in the event of situations such as natural disasters, fire, and theft. Plus, you may get liability coverage if someone is injured on our premises and additional living expenses if you need to reside elsewhere if the structure is too dangerous for anyone to inhabit.
How Does Renters Insurance Work?
Purchasing a renters insurance policy means that your personal property like your furniture and jewelry are protected in case of loss or theft — that’s why it’s important to choose a policy that covers most of what your items are estimated at.
If an event happens like an injury where you can make a claim, you’ll do so with the insurance company. Once that claim is filed it’s then processed and if successful, you’ll work with the insurer to determine the next steps.
What Does Renters Insurance Cover?
In addition to covered theft of loss or personal property, renters insurance also provides additional living expenses and liability coverage. What this means is that if a guest is injured on the property and you’re responsible, their medical expenses are taken care of. So are your legal fees (which could be up to a certain amount) if you get sued.
You may also receive financial assistance if you have to live elsewhere while your rental property is being repaired. This could include money for temporary housing (like a hotel room), additional food, and transportation costs, depending on your policy.
What Does Renters Insurance Not Cover?
Renters insurance doesn’t cover the physical structure itself since that is the landlord’s responsibility (they may have their own insurance policy). For example, if a hurricane comes and wreaks havoc on the property, your renter’s insurance will cover any furniture that’s broken, but not the fencing around the yard. Same with broken windows or roofs.
Is Renters Insurance Required?
The short answer is no. However, more landlords of property management companies require proof of insurance before you can become a tenant. That’s because landlords may want to limit the amount of risk for your liability costs or personal property damages.
How Much is Renters Insurance?
Premiums for renters insurance will vary depending on where you live and how much you want to be covered. According to NerdWallet’s rate analysis, it’s around $14 a month, which is pretty affordable — think a few lattes a month at your local coffee shop.
If you decide to bundle insurance policies, many insurance companies offer a discount if you purchase auto and renters insurance through them. You may also receive a discount if your apartment or rental home has security systems such as alarms, smoke detectors or deadbolts.
Other ways to save include raising your deductible — the amount you need to pay out of pocket before insurance takes care of the rest — the higher it is, the cheaper your premium will be. For example, there is a house fire and you have $10,000 in damages. If your deductible is $1,000, then you’ll receive a check for $9,000, assuming your claim was successful.
When looking at policy premiums, make sure you can afford the deductible. Sure, you can save money by choosing a higher one. However, if you can’t afford it even if insurance will pay for most of your claim, then consider purchasing a policy with a lower deductible until you can (perhaps through an emergency fund).
How to Get Renters Insurance
The good news is that it’s pretty painless to get a renters insurance policy quickly — in many instances, you can complete an application form online, receive a quote and pay for a policy right then and there.
Before purchasing a policy, you’ll want to figure out how much coverage you want or need. To do so, think about how much your belongings cost and add them up. According to the Independent Insurance Agents and Brokers of America, the average policy covers up to $30,000 in personal property, loss, damage or theft. If you need more than that, make sure you have a policy covering the right amount.
Don’t forget to shop around — doing so can get you the right coverage at the best price. Get at least a few quotes and compare policies. If you’ve got questions, feel free to talk to an agent or by contacting customer service online to get those addressed.
While there are some great insurers out there, starting your search online will make the process much smoother. Some places you can start your search include:
- Lemonade: This online issuer makes it easy to take out a policy. Policies start at $5 a month and the insurer says it’ll pay out claims quickly (read our full Lemonade renters insurance review).
- Policygenius: You can compare quotes from multiple companies by filling out your information once, saving you time (read our full Policygenius renters insurance review).
- Gabi: Another online comparison site, this website also helps you cancel your old policy (read our full Gabi renters insurance review)
Otherwise, try traditional insurance companies such as Allstate, Assurant, Progressive, Liberty Mutual, and State Farm. All of these insurers are highly rated and offer a multitude of discounts for things like being claims-free for five years, having security systems, and more.
Once you have a renters insurance policy in place, don’t forget to create an inventory of your items and its estimated value. Plus, print out a copy of your policy and put it somewhere you can access it easily but where it’s safe from harm (like a fireproof safe). That way, if something does happen and you need to make a claim, you can access all the information you need quickly.