Even if your landlord doesn't require renters insurance, it could be worth it to provide peace of mind

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  • Renters insurance offers protection for your belongings when you rent, rather than own, your home.
  • Even if your landlord doesn't require it, it's worth having renters insurance for peace of mind, since it protects your belongings.
  • Renters insurance is relatively inexpensive, averaging $15 a month.
  • You can decide how much renters insurance you need by determining the value of your belongings.
  • Policygenius can help you compare renters insurance policies to find the right coverage for you, at the right price »

Renters insurance is a type of homeowners insurance, known as HO-4, that protects renters from a fire, storm, or theft. Your landlord has insurance that covers the building and structure, but your belongings inside the rental unit are your responsibility.

Unlike car insurance, renters insurance is not required by state law. In fact, only 37% of renters had renters insurance, according to the Insurance Information Institute. 

Do I need renters insurance?

Most renters only get insurance if required by their landlord. Even if it's not required by your landlord, renters insurance helps protect your belongings from theft, fire, and other damage — and it's relatively inexpensive, so it's usually worth it for the peace of mind. The question is not whether you need renters insurance, but rather can you afford to lose your belongings and replace them yourself.

A cautionary tale from director and actress Issa Rae makes the case for having renters insurance. Shortly after college she received a fellowship in New York City. As The New York Times reports, "One night, thieves broke into her apartment and stole thousands of dollars' worth of equipment, including her laptops, camera and all of her tapes." If she had renters insurance, she would have had her equipment replaced. Instead, it was a total loss and she ended up leaving New York and returning home.

What does renters insurance cover?

Yael Wissner-Levy, vice president of communications at Lemonade Insurance, told Business Insider that renters insurance covers three things:

  1. Things that happen to your stuff
  2. Things that you're responsible for
  3. Events that force you out of your home
CoverageHO-4 Renters insurance
Dwelling/StructureNo – landlord's responsibility
Personal liabilityYes
Personal belongingsYes
Loss of Use (additional living expenses)Yes
PetsYes
RoommatesNo
Special jewelry/high end electronics*
Earthquake*
Water damageYes

*Available as add-on coverage

Data from Hippo Insurance

Some renters insurance policies will cover a portion of your costs if you have to temporarily relocate because your apartment was damaged, known as loss of use. Basic home belongings are covered, but you may need additional coverage — known as riders or endorsements — for specialty items like wedding rings or other jewelry, cameras, artwork, bicycles, or musical instruments. 

Wissner-Levy noted that as a renter, you are protected from anything that suddenly causes water damage without any prior known issues, like the accidental overflow of water or steam from plumbing, heating, AC, or sprinkler systems. You're also protected if your apartment sprinklers go off and soak all your belongings, or if your pipes freeze in the winter and burst.

If you have a pet, you should inform your agent if you have an exotic animal, large dog, or certain breeds to make sure you are covered. There may be limits to liability coverage if your pet attacks or dog bites a guest. If you fail to disclose the breed or that your pet is an exotic animal, renters insurance may deny your claim.

Note that renters insurance doesn't cover roommates

Renters insurance doesn't cover your roommate. If you have a roommate, each roommate should get their own policy. Renters insurance only covers the insured policyholder; it does not extend to other people living in the apartment or house. 

How much is renters insurance?

The average cost of renters insurance is around $15 a month, or $180 yearly. Some factors that go into determining your premium are the amount of coverage you want, where you live, if you own a pet, and your credit score. If you already have auto insurance, you may get discounts from your provider for bundling your renters and auto insurance.

If you rent in disaster-prone areas — flood zones, hurricanes, tornadoes, wildfires, mudslides, hail, and earthquakes — will have increased premiums because they're not included in basic coverage and will need to be add-on policies, known as a rider. 

How much renters insurance do I need?

Your renters insurance premium is based on the amount of money it would take to replace your belongings. Renters insurance policies cover up to a certain amount, usually around $20,000 or $30,000 worth of coverage. Determining the value of your belongings will help you decide how much coverage to get. 

How to get renters insurance

Like car insurance, renters insurance prices can vary by state. Where you live will play a big role in your quote, and each company will consider that differently. 

To be sure that you're getting the best price for your renters insurance coverage, you'll want to shop online and get quotes from several different insurers. Compare the quotes, and look for the most coverage types and limits. Then, look for the lowest premiums that fit your budget. If you have auto insurance, consider bundling your renters and car insurance.

Ronda Lee is an associate editor for insurance at Personal Finance Insider covering life, auto, homeowners, and renters insurance for consumers. She is also a licensed attorney who practiced litigation and insurance defense.

 

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