When moving into a new rental, there is plenty to think about, from transporting your belongings and hooking up the internet to finding the best nearby coffee shop and gym. With so much to be excited about, new renters may not be thinking about insurance, but they should be. Renters insurance is a cost-effective way for individuals to protect their personal belongings and to secure legal and medical assistance in the event a guest is ever hurt on the rental property. The purpose of this guide is to explain everything that renters and landlords need to know about renters insurance, including what it covers, who needs it, how much is needed, how much it costs, and finally, the best renters insurance companies.
Before getting into all of these details, here is a preview of our top picks for the best renters insurance companies:
Top Renters Insurance Companies
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Understanding Renters Insurance
What Is Renters Insurance?
Renters insurance is a type of property insurance that provides financial protection for renters in the event that their personal property is damaged, stolen, or destroyed. Renters insurance also covers legal liability claims against the renter, such as those resulting from injury to a third party while on the premises.
The personal property component of renters insurance extends to family and guests and covers property on and off the premises. Additionally, these policies provide no-fault financial assistance for medical payments to others injured on the property, as well as financial assistance for living expenses when the renter is displaced from his or her home.
Is Renters Insurance Required?
If you live somewhere that you don’t own, even if you don’t have a signed lease agreement, you are eligible for renters insurance. It is available for people in most living arrangements, including houses or apartments, and people who live at college in dorms, fraternities, and sorority houses. It covers the policyholder’s kids, resident family members, guests, and can even protect against liability stemming from pet damage.
While renters insurance is not required by law in any U.S. state, it is highly recommended even by many government agencies. Additionally, some landlords and property management companies may require tenants to purchase an insurance policy in order to obtain a lease.
Renters Insurance vs. Homeowners Insurance
The distinction between renters and homeowners insurance is pretty straightforward. Renters insurance is for people who rent, and homeowners insurance is for people who own the home they live in. Both types of insurance offer personal property coverage, personal liability and no-fault medical payment coverage, and additional living expenses. Homeowners insurance takes coverage to one additional level by providing protection for the structure as well. For renters, the structure is the landlord’s concern and typically covered under a landlord insurance or commercial property insurance policy.
Renters Insurance vs. Landlord Insurance
Landlord insurance is for homeowners who rent out their homes, and renters insurance is for tenants. When a landlord leases out a home, the structure is still the landlord’s responsibility, and landlord insurance provides coverage for it. Additionally, landlord insurance provides liability protection for the landlord, and will usually cover any of the landlord’s personal property left on the premises.
Landlord insurance will generally not help tenants with what renters insurance provides, such as protectection of a tenant’s personal property from common sources of damage or theft. For example, consider a fire that destroys part of the home, thousands of dollars of the tenant’s personal property, and the landlord’s lawn mower. Landlord insurance will cover repairs to the structure and the landlord’s lawn mower, but will not cover any of the tenant’s personal property. Furthermore, it won’t provide coverage for tenant personal liability. So, if a guest of the tenant is injured on the property, requiring expensive medical bills, the tenant is only protected under a renters insurance policy.
What Does Renters Insurance Cover?
Renters insurance policies provide protection through several different coverage options. As is the case with any insurance policy, what is covered will be named explicitly in the policy. A typical insurance policy will provide personal property protection, personal liability protection, no-fault medical payments for injured guests, and additional living expenses in the event that the dwelling becomes uninhabitable.
Here is a breakdown of the standard protections included in a renters insurance policy:
Summary of Coverage
|Personal Property||Pays money to the renter when the renter’s personal property is damaged, stolen, or destroyed|
|Personal Liability||Financial assistance for the renter when the renter is liable for injury to another person or for damage to another person’s property|
|No-Fault Medical Payments to Others||No-fault financial assistance available for medical services for injured guests|
|Additional Living Expenses||Financial assistance for the renter while the renter is displaced from the property|
This section outlines how renters insurance policies are structured and what is covered by each named protection in a standard policy.
1. Personal Property
A renters insurance policy will provide coverage for personal property items under specific circumstances. Most personal property items are covered under a generic policy, and most occurrences that cause damage are covered occurrences. However, not every situation will be covered. In a particular policy, it is important to be aware of what personal property items are covered (and up to what amount), when they are covered, where they are covered, and what being covered means.
Personal Property That Is Covered
Clothing, furniture, electronics, and appliances are all covered under standard policies. Almost anything kept inside a rented residence can be covered, and some of those same items may be covered even when they are not in the residence. The personal property of relatives, guests, and employees (such as a house cleaner or babysitter) are also typically covered in the event of a loss. Note that for rare or very valuable items such as animals or expensive jewelry, coverage may be unavailable or may need to be increased or specifically added to be sufficiently covered. The policy will outline the coverage clearly.
Personal property is covered while it’s inside the residence. Studios, duplexes, and lofts are covered places in addition to houses, apartments, condos, and anywhere else someone might live. Having a lease is not even necessary.
Personal property is also covered while it’s outside the residence. For example, a laptop computer, if stolen while being used at a coffee shop or even out of a car, is covered by a typical renters insurance policy. Items in a storage unit are deemed outside the residence, and they’re covered. Note, however, that coverage for personal property items that are outside the insured’s residence is often capped at 10 percent of the policy’s personal property coverage maximum. This lower limit within the insurance policy for personal property damaged or stolen outside the residence is called a sublimit. Learn more about sublimits below.
Personal Property That Is Not Covered
Unfortunately, personal property protection in a renters insurance policy doesn’t cover everything. In fact, even a specific item that is not categorically excluded may be subject to a sublimit based on the type of personal property it is. Here is a list of personal property items that might not be covered by standard policies:
1. Undocumented Personal Property – When filing a claim in connection with damaged or stolen personal property, policyholders need to be able to prove not only how much a claimed item is worth, but that the item is in fact theirs. This can be accomplished with photos, receipts, or possibly even a police report. If, however, there is a legitimate dispute as to whether an item belonged to the policyholder, the insurance company may not cover it. Renters are encouraged to frequently take photos of everything they own and to keep receipts for as much of their personal property as they can.
2. Roommate Personal Property – Unless roommates are related to the policyholder, their personal property is not automatically covered by the policyholder’s insurance. There is a section below on the pros and cons of sharing insurance with a roommate.
3. Automobiles – Although automobiles are personal property, they are not covered by renters insurance. Motor vehicles must be covered with auto insurance. However, the personal property inside an automobile is covered by renters insurance. So, if a car is broken into, and a laptop is stolen out of it, renters insurance covers the laptop, but will not cover any damage to the car. Be mindful, however, that there are limits not only on personal property coverage as a whole, but on specific categories of items, such as electronics, as well as on the amount of coverage provided for personal property items when they are damaged or stolen while not in the residence (e.g. a laptop stolen from a car).
4. Business Property – Renters insurance is designed to protect personal contents, so business property is likely to be excluded from any standard policy. If business property is covered, it’s probably limited to a specific sublimit beneath the overall personal property limit. Some providers offer add-ons that extend coverage for business property or that will increase the amount already provided.
When Personal Property Is and Isn’t Covered
Personal property items are covered when they are damaged, stolen, or destroyed by any covered occurrences. A policy will typically refer to these occurrences as perils, the most common of which are shown below:
- Impact From Aircraft
- Falling objects
- Weight of ice, snow, or sleet
- Riot or civil commotion
- Impact From Vehicle
- Vandalism or malicious mischief
- Breaking of glass
- Damage from artificially generated electrical current
- Discharge of water or steam from cooling/heating appliances/systems
- Sudden tearing apart, burning, cracking, or bulging of a household appliance, steam or hot water heating system, air conditioning system, or automatic fire protection system
While coverage for losses resulting from fire, lightning, and explosions are relatively straightforward, it is important to note that losses resulting from some perils such as theft or falling objects may have specified terms or caveats. For example, coverage for theft often does not apply when the theft occurs during construction on the property, or if it is committed by a roommate or regular guest of the residence. Further, falling object coverage is usually limited to the damage the object does to other personal property (i.e. damages to the object that fell are often not covered).
Unfortunately, personal property protection is not available in every circumstance. While it is best to reference the list of covered perils in a policy, there will be a section that identifies several perils it will not cover. If personal property is damaged or destroyed by any of the following occurrences, a typical policy won’t cover it. Common exceptions include:
1. Pest Infestation or Damage – Renters insurance will not provide coverage for bug or rodent infestations or damage. Pests fall under the responsibility of the landlord. Landlords have a legal obligation to deliver properties to tenants in good condition. Furthermore, rental leases come with an implied warranty of habitability, which means the unit must continue to be livable. Be sure to reference the explicit language in a rental agreement, however, as landlords and tenants are free to contract as they please. Generally, tenants must mitigate damage done by pests and be sure not to create the problem with their living habits or exacerbate a problem by neglecting it.
2. The Policyholder Is the Cause of the Loss or Damage – Personal property protection will not help renters with personal property that they drop or break, whether intentionally or by accident, nor will it replace items that the person simply misplaces. Neglect on the part of the renter may also be grounds for the insurance company to deny a claim. For good measure, any criminal act on the part of the insured that results in personal property damage or loss will not be covered either. In summary, personal property coverage helps when things go wrong, but not when it’s the tenant’s fault.
3. Wear and Tear – Renters insurance will not replace items that have simply worn down over time with no sudden cause of damage or breakage resulting from listed perils in the policy. Ordinary wear and tear affects just about all personal property, and these insurance policies are not designed to replace those items once they reach or exceed their respective natural life expectancies. If something breaks or stops working before one would expect it to, check to see if the item is under warranty.
4. Earthquake and Flood Damage – No damage resulting from earth movement such as earthquakes, mudslides, or sinkholes will be covered by most standard policies. Water damage is also typically not covered. So, while ice, wind, and hail damage may include moisture, it’s the force of such perils that’s covered by renters insurance and not the water damage itself. Coverage for flood damage is rarely included in an average renters policy.
How Renters Insurance Pays for a Personal Property Claim
When personal property is damaged, stolen, or destroyed by a covered peril, the insurance company will pay either the actual cash value or replacement cost value of the property, subject to the policy maximum and any item sublimits, after the insurance deductible is paid. Whether the policyholder will receive actual cash value or the replacement cost value is determined ahead of time, when the policy is signed. In order to receive the best coverage, replacement cost value is recommended. Here is how most insurance companies define each term:
Actual Cash Value vs. Replacement Cost Value
The actual cash value of the property is determined by the cost of the property minus its depreciation. It is the actual worth of whatever was damaged or lost at the time that it was damaged or lost. For example, a sofa purchased two years ago for $1,200 may only pay out $500 after depreciation. Accordingly, actual cash value policies may not pay out enough to replace what was lost.
Replacement cost value will pay out what is necessary to actually replace what was damaged, stolen, or destroyed. Instead of focusing on what was lost and paying what that item was worth, as if one were trying to sell that item used, the payout will look forward to what it will cost to replace the property and make the policyholder whole again. That $1,200 sofa that is now worth $500 may cost around $1,200 to replace. Replacement cost value typically pays out more than actual cash value. As a result, the premiums on these policies are higher.
Personal property protection is available up to the policy maximum chosen. The policy maximum is the most amount of money the insurance company will pay out for a claim. Within renters insurance, there are different policy maximums available for each of the protections provided by the policy. For personal property, the overall limit can range from $10,000 to $250,000. There will be different limits for personal liability protection, additional living expenses, and medical payments to others.
Some policies place particular personal property items into categories with sublimits. A sublimit will cap the amount of coverage available for items in that category. There may be a sublimit for the collective amount claimed in a category as well as for the amount payable for any single item in that category. Here are some scenarios that illustrate personal property sublimits:
- Personal property outside the residence – Personal property that is damaged or stolen while outside the residence—such as an item in a car or storage locker—is almost always covered only up to a predetermined sublimit, usually 10 percent of the policy maximum. So, if a renters insurance policy covers up to $25,000 in personal property, a claim might be limited to 10 percent of that, or $2,500, if the loss occurs while outside of the residence. Sometimes, the limit is capped at a flat rate like $1,000 instead of being a percentage of the overall coverage maximum.
- Category sublimit – It is common for jewelry to be named specifically in a renters insurance policy as its own category with a special sublimit beneath the overall personal property policy maximum. For example, if a policy has an overall maximum of $65,000 in personal property coverage with a sublimit on jewelry set at $3,000, then a robbery of the insured residence that results in $6,500 of jewelry items stolen will pay out only $3,000 for those items.
- Item sublimit – It is also common for certain categories of items with sublimits to have item sublimits within them. So, the renters insurance policy with a jewelry sublimit of $3,000 may also have a cap of $1,500 payable for any single item that’s stolen or destroyed. For example, if one $2,000 ring is stolen in a robbery, even with a sublimit of $3,000 for jewelry, the policy will pay out a maximum of $1,500 for the ring.
- Endorsements and scheduled floaters – If a default renters insurance policy will not sufficiently cover the policyholder’s personal property, it can be tailored with endorsements and scheduled floaters to attain full coverage. Endorsements and floaters are used to add items to a policy that otherwise would not be sufficiently covered. This guide explains endorsements (sometimes called riders) and scheduled floaters in more detail below.
2. Personal Liability
The second major protection included within renters insurance is personal liability protection. While personal property protection covers the personal property of the policyholder, personal liability coverage protects the policyholder in situations where he or she may be sued.
Personal Liability Coverage Explained
Personal liability protection provides legal and financial assistance when the renter is potentially liable for an injury to another person or for damaging another’s property. Like personal property protection, this coverage follows the policyholder anywhere. Unlike personal property coverage, personal liability coverage is reserved for when the policyholder is at fault for damage or injury. The protection first provides a legal defense to claims that the insured is responsible for damage or injury to someone else. If it turns out that the renter owes anything to the injured party, either by way of a settlement or as a result of a lawsuit, the policy will then pay out what’s owed up to the personal liability protection maximum.
Common Personal Liability Protections
- Slip/Trip and Fall
- At Fault Fire Damage
- Swimming Pool Injury
- Dog Bite
- Injured Workers on the Property
- Tree Falling
- Trampoline Injury
- Damage to Property by Pets
- Other Damage to the Property that Goes Beyond Normal Wear and Tear
Where Personal Liability Coverage Applies
Personal liability protection may cover injuries to guests at the insured residence as well as injuries and damage done to others off the property. Personal liability protection follows the policyholder anywhere.
1. Inside the Residence – The law is structured so that people are protected from foreseeable risks, and it puts that responsibility on those who are in the best position to guard against those risks. In a renter’s home, the risk extends to all guests because the risks are not known or foreseeable to them. The responsibility rests with renters to protect their guests. So, if a dog bites a guest in the backyard, or if someone slips on spilled water in the kitchen, personal liability protection is available.
Renters need to protect all guests on their property, including not only social guests, but contractors, neighbors, and even unwanted trespassers, as anyone can sue for injuries or damage sustained on, or as a result of activities on, the renter’s property. For example, a backyard trampoline or swimming pool can cause neighborhood children to sneak in for a jump or dive. Yes, kids that the renter doesn’t even know about can hop the fence or wall and hurt themselves, and the renter may be legally responsible for it.
If a guest slips on the guest’s own mess, or walks through a fence to get to the pool before getting hurt, there is a chance that the renter—who arguably did nothing wrong—would not be held liable for the resulting injury. Whether clearly at fault or not, an adequate insurance policy will provide a defense for the policyholder and ultimately pay out the costs associated with liability (up to the policy limit) under personal liability protection if fault is found.
2. Outside the Residence – As is the case with personal property protection, personal liability coverage follows the policyholder as well as those covered under the policy. Here are some examples of how personal liability coverage can come in handy outside the policyholder’s home:
- Bump into someone – If the policyholder accidentally walks into someone at a coffee shop and that person is burned by spilled coffee, personal liability protection covers it.
- Child breaks a neighbor’s window – If the policyholder’s 15-year-old son sends a baseball through a neighbor’s second-story window, the repairs are covered.
- Young child hits another child – While intentional acts are a common exclusion to personal liability coverage under most insurance, if a child under the age of 13 hurts someone intentionally, insurance may still cover it.
What Personal Liability Coverage Does Not Cover
Personal liability protection does not help pay for injuries to the policyholder or anyone else named in the policy, like relatives of the insured. Health insurance is for injuries to those covered by the renters insurance policy, and the personal property portion of the renters policy covers their belongings. Here are a few more limitations to personal liability coverage:
- Intentional or criminal acts – Renters insurance will not assist when injuries to other people or damage to their property is the intended or foreseeable result of the actions of the insured. Personal liability coverage is designed to help with accidental or negligent acts that hurt other people.
- Pest infestation or damage – Personal liability broadly covers damage caused by the insured, so pest damage could be covered if the damage is entirely that person’s fault. However, pests are the landlord’s responsibility. As a result, renters insurance is unlikely to provide coverage for damage to the structure caused by pests.
- Some pets – Damage caused by pets—like when a dog bites a guest—is often covered, but some policies may not include pet damage, and some policies that do include it will exclude certain types of damage and specific dog breeds.
- Automobile – Any damage or injury resulting from a car accident will not be covered by renters insurance, but auto insurance should cover it.
- Business liability – Businesses can incur liability in many ways that a person cannot. Because the risks associated with a business are not factored into a renters policy, business liability protection is not included. For business liability protection, business owners will want to consider a business owners insurance policy.
- Some workers – Anyone whose injuries are covered by workers compensation insurance is not covered by personal liability protection. If someone was doing work at the policyholder’s residence, and that worker’s employer did not carry workers compensation insurance or if that worker was working “off the books,” then personal liability coverage may cover an injury.
- Punitive damages – Punitive damages are damages designed to punish a defendant and are typically reserved for egregious behavior. If personal liability protection is covering a policyholder for damages resulting from a civil lawsuit, that coverage will not extend to any punitive damages stacked on top of more generic compensatory damages.
3. Medical Payments to Others
A third portion of any standard renters insurance policy includes no-fault financial assistance for medical payments to injured guests. This coverage sounds a little bit like personal liability coverage, but it works somewhat differently, and it does not provide for nearly as much coverage.
No-Fault Medical Payments to Others Explained
This portion of the policy is intended to help guests directly with paying for medical treatment related to an injury suffered on the policyholder’s property, regardless of whether the injured guest could or would attempt to blame the policyholder or file a lawsuit against them. If the injury is not the policyholder’s fault, or the injured party has no desire or intention to file a lawsuit, a different kind of claim—one for no-fault medical payments—can be filed directly with the insurance company. And in all likelihood, the necessary financial assistance will be provided for medical payments up to the policy limit, which is often between $1,000 and $5,000.
The personal liability insurance portion of the policy exists to protect the policyholder when the policyholder is facing a potential lawsuit, when there is at least some question of whether the damage done was the policyholder’s fault. No-fault medical payments, on the other hand, can be submitted directly to the insurance provider for payment without a determination of fault, which could help prevent a lawsuit, especially when the injury is relatively minor, or when the injured guest has no interest in suing.
This coverage may be helpful and convenient for something like a cut finger that requires a single, inexpensive visit to an urgent care or emergency room. The coverage is available only for injured parties who are not named in, or covered by, the insurance policy. Again, injuries to those insured by the policy must use their health insurance to cover their own injuries.
4. Additional Living Expenses
The final major protection of any standard renters insurance policy is financial assistance for living expenses when the insured residence is uninhabitable. While typically not the primary draw to these policies, additional living expenses coverage can be useful when being displaced is a financial burden.
Additional Living Expenses Explained
Also known as loss-of-use coverage, the additional living expenses portion of a policy provides financial assistance for the extra costs associated with being displaced from the policyholder’s residence if it is uninhabitable as a result of a covered peril. For example, if there was a fire at the insured’s apartment and repairs were needed, the insured’s renters insurance policy would cover the additional cost of living at the hotel during that time. Furthermore, the policy may cover the cost of food and even gas, if the expenses during that time are greater than usual.
What Do Additional Living Expenses Cover?
Additional living expenses covers the additional expenses incurred as a result of being displaced from a rental unit due to a covered incident. If, for example, an individual’s apartment rent is $1,750 per month, and it will cost $2,000 per month to stay somewhere else, then (assuming the person is not paying rent the month that repairs are being made) the insurance policy will pay out the difference of $250. Additional living expenses will cover temporary lodging of a similar location and quality to the insured rental. It will also cover:
Additional living expenses are only available when the premises are made uninhabitable by a covered peril. These perils will be the same as those that the policy will cover for personal property damage, as they almost always go hand in hand.
However, this coverage has its limits. It will not cover expenses that do not exceed the typical expenses paid by the policyholder over the period of time he or she is displaced. The cost of a hotel is certainly an additional expense, so it’s covered. Other expenses, however, such as food, gas, and transportation, are provided for only when they exceed the usual amount spent.
Additional living expense coverage likely does not apply for mandatory evacuations, except for in the case of a fire. In regions highly susceptible to brush fires, like California, renters insurance will provide coverage. Additional living expenses pay out for the amount of time necessary to restore the residence to its pre-damaged state. If the damage causes a permanent relocation, the policy will pay out until the new home is settled into. Typically, regardless of whether it is a temporary or permanent relocation, the policy will not pay out for more than 12 months.
Loss-of-Use of a Subleased Portion of a Rental Property
Additional living expenses coverage may also come in handy if a covered loss renders a portion of the residence that is rented out by the policyholder uninhabitable. Even if the room is just held out to be rented, when it becomes uninhabitable as a result of a covered loss, it is covered by additional living expenses. Additional living expenses coverage would pay out fair market value for the lost use of any part of the residence that is rented out and rendered uninhabitable by a covered peril until it’s repaired, usually for up to 12 months.
Who Is Covered Under a Renters Insurance Policy?
Renters insurance protects the policyholder from paying large out-of-pocket expenses for personal property damage or personal liability, but other people such as guests and neighbors can benefit from the policy as well. For detailed information about each provision that comprises these insurance policies, read the sections above. A general rule of thumb is that for most components of a renters insurance policy, the policyholder and the policyholder’s children, spouse, and resident family members are covered. For the personal property component only, guests and employees may also be covered.
Can You Share Renters Insurance With a Roommate?
Renters insurance will not automatically cover unrelated roommates. It is possible, however, for roommates to share a policy. Good friends or unmarried couples may consider splitting the cost of a policy thinking that it could be more convenient or save them money. That said, sharing an insurance policy with roommates is usually not recommended for the following reasons:
- Things change – Unrelated roommates frequently live together for relatively short periods of time, and they own their own things. The personal property coverage maximum should be in an amount that covers all named parties’ stuff. When someone moves out, there’s no need for as much coverage, and there may be an issue when both sides need to figure out who’s paying the bill.
- Claim history – When one roommates files claim, the occurrence goes down for both parties’ insurance history. Insurance premiums are determined, in part, by insurance histories. So, even if a filed claim had nothing to do with one party, the consequences of filing a claim will affect both parties equally.
- It likely isn’t worth it – Because all of the personal property should be covered by the policy, the parties may not save much when sharing a policy. For example, one party may need $15,000 in personal property coverage while the other needs $20,000. The combined $35,000 coverage maximum needed may render the policy as expensive for both sides to split as it would for each side to have their own $15,000 and $20,000 policies.
What Does Renters Insurance Not Cover?
Renters insurance covers a lot—personal belongings, personal liability, and temporary living expenses for all resident family members—but it doesn’t cover everything. Here are some of the most important things renters insurance doesn’t cover.
- Policyholder health – Personal liability coverage serves to provide financial assistance to the policyholder so that the policyholder can pay for someone else’s damage or injuries. If the policyholder or any other named insured is hurt, they will need to use their health insurance or pay out-of-pocket for their medical needs.
- The residence itself – Renters insurance does not cover the structure that the policyholder lives in. If the renter is personally liable for damage to the structure, personal liability coverage may cover the cost of reimbursing the landlord or management company for the repairs to the structure, but only if the damage was accidental. For example, homeowners are free to wall-mount TVs anywhere they want. Tenants, on the other hand, may not be permitted to drive nails into the wall for wall-mounted TVs. If a tenant decided to do so in violation of a lease agreement, renters insurance would not cover the damage because it was an intentional act.
- Roommates – Unrelated roommates are not automatically covered by renters insurance. Guests, who by definition visit only temporarily, may be able to get coverage from personal property that was damaged while they were visiting, but unrelated roommates are excluded from coverage entirely.
- Dog health – Renters insurance may cover pet damage, but it won’t cover pet health. For pet health coverage, the owner will want to consider pet insurance.
- Cars and car accidents – Automobiles are not covered by renters insurance. Even when parked inside the garage, damage done to them is not protected. For car accidents and damage done to a renter’s car, they will need auto insurance.
- Earth movement and floods – Most renters insurance will not cover damage done to personal property by earthquakes, sinkholes, or landslides without an endorsement. Even an endorsement may not cover all earth movements. Similarly, flood damage is typically not covered, but can be covered with flood insurance. There are other ways that water damage may or may not be covered by a given policy. With much variation between providers and policies, often based on location, prospective policyholders will need to determine the extent of water damage coverage on a case-by-case basis.
- Pests – Pest damage, whether to personal property or the structure itself, is the responsibility of the landlord. Sometimes, when renters are responsible for the pests, they can be found liable for the damage done.
Getting the Right Coverage
The benefits of carrying renters insurance can easily outweigh the costs. At times, the less money someone makes, the more beneficial renters insurance can be. A low monthly payment can provide the replacement value of all personal belongings as well as personal liability protection. Lawsuits can vary from a few thousand dollars to more than $100,000. When someone doesn’t have a lot of money readily available at any given moment, those kinds of expenses without insurance can be devastating.
How Much Renters Insurance Do I Need?
The right amount of coverage will depend on the reason the renter is buying the policy. Some policyholders want to have some coverage for their belongings in the event of a worst-case scenario or are required to carry renters insurance in order to obtain a lease, while others are looking to cover all of their assets entirely. Here are some general rules regarding how much renters insurance you need:
|Personal Property||The amount it would cost to replace all of a renter’s personal property|
|Personal Liability||The amount that would cover all of the renter’s assets|
|No-Fault Medical Payments to Others||The most amount the insurance company offers, usually $5,000 of coverage|
|Additional Living Expenses||Usually determined based on the personal property coverage maximum|
These are just basic guidelines, and a standard renters insurance policy may not accomplish every individual’s unique situation. This is where endorsements, floaters, and umbrella policies are useful.
Endorsements, Riders, Scheduled Floaters, and Umbrella Policies
When structuring a policy, renters have the ability to tailor the policy and the coverage to their specific needs. If the default options don’t do enough to sufficiently insure the renter’s possessions, then endorsements (sometimes called riders) or scheduled floaters may be used to adequately cover the policyholder’s personal items and lifestyle. When those options aren’t enough, the last resort is to purchase an umbrella policy to increase the total coverage of the policy and to fill in some of the gaps in the coverage.
If neither endorsements, floaters, nor an umbrella policy can get an individual the coverage needed, then a whole other type of insurance is needed, such as classic car insurance for cars that are never insurable through renters insurance or animal liability insurance when a pet presents an expensive enough risk to exceed the maximum amount of liability coverage attainable through a renters policy.
Endorsements / Riders
An endorsement, sometimes called a rider, is a modification to an insurance policy. An endorsement can be used to raise the policy limit for a particular category of personal property or to add coverage for previously uncovered perils such as pet or earthquake damage. Here are some examples of popular renters insurance endorsements:
- Electronic equipment – It’s common for electronics to be grouped into a category of personal property that is bound by a sublimit, either a set dollar amount or a percentage of the total personal property coverage afforded by the policy. TVs, stereo equipment, and video game consoles are all included. If a renter’s personal property coverage is otherwise comfortably set at $35,000, it may make more sense to add an endorsement for electronic equipment that raises the sublimit to an amount that adequately covers it.
- Collections – Trading card, coin, and comic book collections can all be difficult to insure, as the value of a collection can far exceed the value of any individual item within it. Accordingly, in order to sufficiently cover a collection with renters insurance, one should consider getting their collections appraised and adding an endorsement to their policy to attain coverage in that amount.
- At-home business – Renters insurance generally does not cover business property. However, some people use personal property to make some money. In some cases, that property is, or can be, covered. If renters want to insure any personal property they use in an at-home business, they should inquire about an at-home business rider.
- Replacement cost – If someone opted for an actual cash value renters insurance policy, they may still be able to cover a particular item with replacement cost value coverage instead by way of a replacement cost rider. This may be useful when the cost of changing the entire policy to a replacement cost policy is not as cost effective as simply adjusting the coverage for a single item.
- Pet damage – Some policies don’t include coverage for pet damage, and others exclude types of pets or even breeds of dogs from coverage. This damage includes bites on and off the property as well as any damage to other people’s property. If needed, pet damage coverage can sometimes be added by way of an endorsement. In other cases, an umbrella policy or different insurance entirely may be the only way to get the necessary coverage for pet damage.
A floater policy is a different kind of modification to an insurance policy. When a renters insurance policy limits a claim for a loss to a maximum amount of money for a single item, some items may not be adequately covered. A policyholder can ensure a specific item will be covered by scheduling it with a floater policy.
A common example of scheduled personal property is a wedding ring. Jewelry coverage is often subject to a sublimit within the total amount of personal property coverage provided by a renters insurance policy. For people who don’t have a lot of jewelry, that may work out just fine. However, married couples often have at least one expensive piece of jewelry. Renters can cover their wedding rings by scheduling them separately under an existing policy.
Other popular items include musical instruments and art. Floaters typically need to be professionally appraised in order to determine the actual value to establish coverage. They are also often protected from even more perils than other covered personal property, including coverage for simply losing the item.
While not being able to sufficiently cover one’s personal property under renters insurance is somewhat rare, as the maximum amounts available are typically high, it’s not uncommon to require more personal liability protection for complete coverage. For more personal liability coverage, or when renters insurance can’t cover a specific need (such as a specific dog breed from liability), an umbrella policy can be used.
An umbrella policy provides even more coverage and kicks in once the coverage maximum is reached under the base insurance policy. Umbrella insurance is often sold in one million dollar increments and can fill in gaps that may be left with default personal liability coverage. Umbrella coverage is a good idea for renters with a lot of assets that should be protected from unfortunate and expensive liability.
How to Choose Coverage Maximums
Before going step-by-step through a process of determining how much coverage a particular renter might need, here is some information about the common amount of coverage available in a standard policy.
Coverage Minimums and Maximums
Most renters insurance providers offer a minimum of $10,000 in personal property coverage, $100,000 in personal liability coverage, and $1,000 in no-fault medical payments to others. Coverage maximums will vary among carriers. The following table shows some common protection ranges and includes a recommended balance that should be adequate for most individuals.
|Coverage Type||Minimum Coverage||Balanced Coverage||Maximum Coverage|
|Personal Property||$10,000||$35,000 – $60,000||$250,000|
|Medical Payments to Others||$1,000||$5,000||$5,000|
|Additional Living Expenses||$5,000||$40,000||$200,000|
Walk-Through Guide to Choosing Your Renters Insurance Coverage
When determining how much renters insurance is needed, renters will be choosing the coverage maximums in four coverage areas, as well as adding any endorsements or floater policies that may be needed to attain the right coverage. Choosing the base policy limits should be pretty easy, and renters can always make adjustments to the maximums over time if needed.
Calculating Personal Property Coverage
The personal property protection that’s needed can vary tremendously among renters. Whether someone is young and single or established with a family can mean the difference between needing $15,000 in personal property coverage or $150,000. To determine how much coverage is right for a particular renter, follow these steps:
- Calculate how much the personal property is worth
- Take note of any specific items or types of items that are worth more than $1,000
- Do the same for anyone else who will be covered under the policy
- Add the value of everyone’s personal property together
- Round up
Renters should give this process its due diligence, as it is common for people to not realize just how much their personal property is worth. In fact, the average renter owns at least $35,000 in personal property, according to State Farm.
Calculating Personal Liability Coverage
Ideally, renters would protect up to what all of their assets are worth in personal liability coverage. However, current assets aren’t even all one needs to worry about, as future earnings can be garnished if a judgment is issued as a result of a lawsuit. While it’s difficult to provide a figure that works for everyone, $300,000 is a commonly chosen coverage maximum in renters insurance policies that should protect most people adequately. For those who want to be cautious because they frequently host social gatherings and have highly valuable assets, maximums go up to $500,000 or more. Beyond that, an umbrella policy could add an additional $1,000,000 in personal liability protection.
Medical Payments to Others
Renters insurance policies usually offer between $1,000 and $5,000 in maximum financial assistance for no-fault medical payments to others. This is the money available for any guest who gets hurt on the property regardless of whose fault it is. If it isn’t too expensive, it’s recommended to carry the maximum amount available here.
Additional Living Expenses
This coverage is usually determined based on the policyholder’s personal property coverage maximum. For example, Lemonade caps additional living expenses at about 30% of the personal property protection coverage maximum. If renters have the ability to select a specific loss-of-use maximum, they’ll want to estimate how much extra it would cost to live displaced from their home for some time. Determining the right amount of loss-of-use coverage can be speculative, but consider the cost of lodging and any additional amount that might be spent on food, gas, transportation, storage, and laundry.
Renters Insurance Costs
Renters insurance is pretty easy to understand, and it provides a number of benefits for renters. It’s highly recommended for almost anyone who rents, and it may even be required by landlords and management companies in order to obtain a lease. So how much does it cost?
How Much Does Renters Insurance Cost?
The most recent comprehensive data shows that the average cost of renters insurance in the United States was $179 per year in 2018, according to the Insurance Information Institute (III). Between 2008 and 2018, the average homeowners insurance rates rose each year, while renters insurance was cheaper in 2018 than in any other year over the same 10-year span. At around $15 per month, renters insurance is among the most affordable types of insurance one can carry.
Average Annual Insurance Premiums
|Year||Homeowners Insurance||Renters Insurance|
Cost of Renters Insurance by State
Average renters insurance premiums fluctuate by location, among other factors. Coverage is reserved for particular perils that cause damage or injury, and some places are more likely to experience certain perils than others. While earthquakes are excluded from most policies and thus don’t affect the average premiums in vulnerable locations, lightning and wind damage are covered by renters insurance. As such, the most expensive states for renters insurance, on average, are in the South where hurricane winds, tornados, and lightning are expected.
States With the Most Expensive Renters Insurance Premiums
|Rank||State||Average Annual Premium|
On the other hand, states further from hurricane winds situated primarily in the middle of the United States experience, on average, the lowest annual renters insurance premiums.
States With the Least Expensive Renters Insurance Premiums
|Rank||State||Average Annual Premium|
Factors That Affect Cost
There are several factors that impact the price of a given renters insurance policy. The tables above demonstrated that, on average, policies range from $120 to almost $260 per year, depending on the state the policyholder lived in. In addition to location, the amount of coverage chosen, type of policy, deductible, and claims history of the policyholder each influences the cost of an insurance policy as well.
Amount of Coverage Chosen
The biggest factor in determining the cost of a renters insurance policy is the specific coverage chosen. Premiums are largely dictated by the protection maximums. For example, someone insuring $100,000 in personal property is very likely going to pay higher premiums than someone else with just $35,000 in personal property coverage. When a renter needs to schedule a rare baseball card collection or an expensive wedding ring, those add-ons raise the premiums.
Type of Policy
Many providers offer replacement cost value for personal property, as opposed to actual cash value. Replacement cost value policies cost more than actual cash value payouts because the cost to replace a broken or stolen item is almost always greater than what the item was actually worth at the time of the loss. Still, replacement cost value is the recommended payout method, as receiving only the actual cash value of lost property doesn’t typically make the renter whole.
What state a someone lives in can be indicative of how much their insurance policy will cost, but it isn’t a factor per se. Rather, the risks associated with the location directly affect the cost. The risk of covered perils occurring such as theft, fire, lightning, and wind are all calculable and do influence the cost of most policies in higher-risk locations. Even the type of dwelling itself can impact the cost of a policy, as apartment building residents sometimes experience slightly more favorable rates than home dwellers.
Before receiving any benefits from a personal property claim, the policyholder must always pay the policy’s deductible, as is the case with many types of insurance. When a deductible is set at a higher figure, the cost of the premiums typically go down, and vice versa. As a result, the deductible selected has a direct impact on the cost of being insured.
Making use of insurance often drives up the cost of carrying it. Providers calculate premiums based in large part on risk. A good indicator of future behavior, for insurers, is past behavior. Accordingly, past claims can drive up insurance premiums in the future.
How to Save Money on Renters Insurance
Much of what influences the cost of any particular insurance policy will be outside of the renter’s direct control. Most people aren’t going to leave the state to find a more affordable insurance policy, and the past is the past in terms of claim history. While renters can save money by choosing less coverage or selecting an actual cash value policy instead of the recommended replacement cost value payout option, there are several ways to save money on renters insurance without making sacrifices in coverage.
While the available discounts vary among providers, most providers offer at least some discounts. Here are some that are often available:
- Pay in full – Rather than pay monthly premiums, some providers allow policyholders to pay annually. Paying for the year up front can often save money.
- Automatic pay plan – When policyholders sign up to have payments automatically drawn from their bank accounts, they can receive a discount on their premiums with certain insurers.
- Home security system – Renters can sometimes save money on their premiums with a “safe home” discount.
- Fire/smoke protection in home – Having fire/smoke detectors in the house as well as automatic sprinklers and/or fire extinguishers can make a devastating fire less likely to occur, which translates into potential savings on insurance premiums.
- Retired residents – Some insurers offer discounts for retired renters who are also at least 55 years old.
- Receive documents by email – Progressive will apply a discount to its customers’ policies when they select e-documents instead of standard mail.
- Claim-free – Some providers will offer discounts when a customer goes a certain amount of time without filing a claim—another reason to limit the number of claims filed.
Bundling Insurance Policies
To “bundle” insurance policies is to use the same insurance provider for more than one type of insurance. Many insurances providers offer discounts for customers when they bundle their renters insurance coverage with other insurance. The most popular renters insurance bundle is renters with auto insurance. While bundling policies isn’t always the best decision, it will likely help save money.
Renters insurance may be tax deductible if there is a room dedicated to a home office or business in the policyholder’s home. The home must be the primary place of business, and the room must be used solely for business. If the space is eligible, renters insurance premiums may be tax deductible, though this is something policyholders will want to consult a tax advisor on.
How to Compare Renters Insurance Companies
Finding the best renters insurance can be a time-consuming process, but knowing exactly what to look for will make the search far more efficient. Read on to learn more about how to compare companies on your own, or skip ahead to our reviews and recommendations.
The most important factor to consider when choosing an insurer is the coverage. Most policies are affordable, and if renters are spending any money at all, it should be to adequately cover them and their stuff. Remember, unique personal property like card collections, expensive jewelry, or pricey musical instruments usually requires special coverage. The best companies will be able to accommodate these needs, and our reviews take all of a company’s coverage options into consideration.
Another factor to consider when choosing a policy is company reputation. Reputable organizations like the Better Business Bureau (BBB) and J.D. Power regularly rate companies based on their products, services, and customer reviews. The BBB’s information can be especially helpful because readers can see customer reviews as well as company responses. Review boards are often overrun by negative interactions with companies. So, while they’re useful to be aware of, shoppers should lean on expert reviews to get the best picture of a company’s overall reputation.
A company’s financial strength speaks to its ability to pay its expensive claims. Even relatively inexpensive policies include $100,000 to $500,000 in personal liability coverage. Popular providers insure millions of Americans and for much more than just renters insurance. Organizations like AM Best, Moody’s, and S&P rate insurance providers’ financial strength to help prospective customers choose financially stable providers.
Cost is always a factor for the prudent shopper. Company reviews can provide averages for insurance policies by company, but rates change frequently and vary from state to state and from home to home. The best indicator of the cost of a particular policy for a particular individual is a renters insurance quote. The cost of the policy is important, but be sure to choose the best coverage and to consider the provider’s reputation and financial strength as well.
Best Renters Insurance Companies
Below is a list of the best renters insurance companies according to coverage options, company reputation, financial strength, and costs. Renters should be sure to get a quote from each of these providers when they’re ready.
Lemonade (Best Overall)
Lemonade Insurance was founded in 2015. Each year since then, the average cost of renters insurance in the United States has gone down. While we can’t say for certain that Lemonade caused these price drops, Lemonade’s renters insurance is among the cheapest out there. The company doesn’t have a long enough track record to afford it J.D. Power ratings or accreditation by the BBB, but the company reputation is already very strong.
Lemonade is unique as insurance companies go, evidenced first by its peer-to-peer business model. Additionally, while traditional insurance companies keep all capital remaining after claims and expenses are paid as profits, Lemonade fixes its profits and donates the excess to charities chosen by its customers. This Giveback policy is very popular among its customers. The company set a world record in 2016 by receiving, closing, and paying a claim to one of its customers in three seconds flat. The record is indicative of the biggest draw to Lemonade Insurance—the convenience. Renters insurance can be quoted, bought, and used all through the app.
Lemonade is changing the way insurance works. As the company continues to grow and mature, it may only tighten its grasp on being the best overall renters insurance company. Read on to learn more about Lemonade’s coverage options, reputation, financial strength, and cost.
As a new company on the insurance scene, Lemonade does not yet have all the special coverage options that some other insurance companies have, though it does offer a home safety discount. Lemonade offers pretty standard coverage at very affordable rates and allows customers to get extra coverage for personal property items worth more than $1,500. Lemonade only offers renters and homeowners insurance, so bundling policies isn’t an option. Insurance can be obtained very quickly, and claims can be filed easily and pay out fast.
Here is a breakdown of Lemonade’s renters insurance coverage minimums and maximums:
|Medical Payments to Others||$1,000||$5,000|
|Additional Living Expenses||$3,000||$200,000|
Those who choose Lemonade can have the benefit of replacement cost value for their personal property and can select a policy that locks their premiums in at one price for good and that has no deductible. If renters are looking for different premium options, the deductible can also be set at either $250, $500, $1,000, or $2,500.
Lemonade won’t work for everyone though because it’s currently only available in these states:
- New Jersey
- Rhode Island
- New Mexico
- New York
Lemonade’s website and app are both full of very easy-to-understand renters insurance information, including a glossary of insurance terminology. Everything about the coverage options they have is explained clearly. Its clarity and transparency are together one of the biggest benefits of choosing Lemonade, but it’s also one of its potential drawbacks.
Because Lemonade makes everything so clear, the company chooses to not have easily-accessible 24/7 customer service and no instant chat feature. Oftentimes, customers need to send an email in if their online assistance and FAQs are not enough. Furthermore, if policyholders do not know what they’re doing when they apply for insurance or file claims, they can make mistakes doing it all on their own.
In order to make the best use of this brand new and top-rated insurance company, we recommend reading Lemonade’s walk-throughs carefully. The features are very clear, and the experience is quick and easy.
Because almost everyone’s interactions with Lemonade occur either online or through the app, as opposed to with different insurance agents across the country, we find the customer reviews of Lemonade especially insightful. The BBB currently shows a 4.5 star rating from Lemonade’s customer reviews and issued the company a B+ rating. The Lemonade app has a 4.9 star rating and garners high praises from its regular users for its convenience and feel. There is no J.D. Power rating yet, but the early signs for this nearly five-year-old company’s reputation are strong.
Still so new, Lemonade’s financial strength is not yet rated everywhere. However, Demotech, an Ohio-based financial analysis firm, has issued Lemonade an A rating. Lemonade underwrites its own insurance policies and then reinsures those policies at Lloyd’s of London. Without any major tests to its ability to pay its claims yet, Lemonade has managed to attain excellent financial stability in its early years.
If all the transparency in its business practices or its breadth of insurance information online and on its app were not enough to interest you in Lemonade, then its renters insurance rates certainly will. Lemonade offers policies for as low as $5 per month. Of course, for $5, renters are getting the least amount of coverage they offer, but average rates from Lemonade are still among the lowest in the industry. Remember that Lemonade is not available everywhere, but if it’s available in your area, we recommend at least getting a quote from them before deciding to sign up somewhere else.
State Farm (Best for College Students)
Established 98 years ago, State Farm is the largest insurance company in the United States. A 2020 NAIC report showed that State Farm had more than double the direct homeowners insurance premiums written than the second place insurer did in 2019. A large presence means access to agents everywhere and a lot of information to use to decide whether State Farm is the right insurer for you.
State Farm doesn’t specialize in renters insurance, as it offers policies for auto, life, small business, and even health insurance, among other kinds; but its renters insurance options are solid and affordable. In fact, because it has so many insurance options available, has a solid and improving financial track record, and can serve customers in all 50 states, State Farm is a safe, traditional choice for insurance. For residents who want the stability of an established insurer with real live agents available to speak with at any time, we recommend State Farm.
State Farm offers a wide variety of renters insurance options, which is one of the benefits of choosing a larger insurance provider. Individuals can choose their deductible amount, which will impact the relatively low premiums they offer. The recommended replacement cost value for personal property coverage is an option, and customers can choose up to $10,000 in no-fault medical payments coverage, $1,000,000 in personal liability protection, and 24 months of unlimited additional living expenses coverage.
Here are some of State Farm’s renters insurance add-ons:
- Personal articles policy
- Pet medical insurance
- Earthquake damage
- Additional liability coverage
- Identity restoration
- Incidental business liability
State Farm also has at least two main discounts available, including a discount for bundling customers’ renters insurance with an auto insurance policy and the Home Alert Protection Discount for having safety features present in and around the home.
State Farm has a strong company reputation. J.D. Power ranked State Farm the 2nd best renters insurance company in its Customer Satisfaction Index for 2019, just three points behind American Family Insurance. With five power stars on the J.D. Power index, State Farm is only one of two insurance companies rated anywhere above average. And the BBB issued State Farm an A rating.
State Farm’s financial strength is nearly unparalleled, as indicated by its most recent AM Best and S&P credit ratings. AM Best scored State Farm an A++ for “superior,” which is the highest rating available. State Farm received an S&P Global Rating of AA, the 2nd highest rating possible.
The cost of renters insurance varies according to several factors, but State Farm is among the more affordable providers. While their lower coverage packages aren’t as cheap as some other options on the market, State Farm has very competitive higher-end coverage options, especially when customers take advantage of the ability to bundle their renters insurance with auto insurance. Getting a quote from them is the best way to know what a State Farm policy will cost. Their quote process is very quick and easy.
Allstate (Best for Apartments)
Allstate is the second largest insurance provider in the United States. In addition to the stability and wide range of options typically expected from a large insurance company, Allstate has some of the best online resources among any renters insurance company. This, combined with excellent customer reviews, a superior online experience, and myriad discounts available, positions Allstate among the best choices for renters insurance.
Allstate is among the most flexible renters insurance providers in terms of coverage and add-ons. As would be expected from a highly ranked provider, customers can ensure their policy pays out with replacement cost value instead of actual cash value for their personal belongings. The deductible can be adjusted to shift the premiums up or down. And Allstate has an array of discounts policyholders might be eligible for.
Here are Allstate’s coverage options:
|Medical Payments to Others||$1,000||$5,000|
|Additional Living Expenses||N/A||No Maximum (12 months)|
Allstate is available in all 50 states and provides several other types of insurance as well, including homeowners, auto, life, event, and pet insurance. The size of the company gives it flexibility in its ability to offer discounts. Some of the discounts available include:
- Multi Policy – Customers can bundle their renters insurance with Allstate auto insurance and save money.
- Safe Home – If the resident’s home has qualified safety features like fire alarms or a security system, customers can save up to 15% on their premiums.
- Easy Pay Plan – Customers can save up to 5% on when they sign up to have their payments pulled directly from a linked bank account each month.
- 55 and Retired – Customers who are at least 55 years old and who are not seeking employment can earn up to 25% off.
- Claim-Free – When new customers sign up who have never filed a claim before, they can get up to 20% off. If renters continue to stay claim-free, more bonuses are added each year.
In addition to the basic renters insurance coverage offered by Allstate, customers have the ability to add flood insurance to their policies. Flood damage is arguably the biggest gap in most renters insurance policies that can be filled with Allstate. Customers can also add a personal liability umbrella policy to their plan if the $500,000 default maximum isn’t enough for them.
J.D. Power’s Customer Satisfaction Index issued Allstate Insurance a score of 829 out of 1000, placing Allstate above most insurance companies, including Farmers, Progressive, Nationwide, Liberty Mutual, and Travelers. The BBB rates Allstate with an A+ rating. Overall, Allstate has a strong company reputation.
According to the NAIC, Allstate has over 8.5 billion dollars in direct homeowners insurance premiums written annually, second to only State Farm. These large insurance companies are among the most financially stable in the market. AM Best issued Allstate an A+, or “superior,” rating, and the S&P gave the company an A- credit rating.
On the whole, Allstate is fairly average when it comes to renters insurance pricing. Estimating premiums for any one person is speculative, however, especially when the provider issues policies in all 50 states. With costs determined by the policyholder’s insurance history, the home itself, the location, type of coverage chosen, and several other factors, it’s recommended that prospective customers get a quote from Allstate directly. The quote process is free and quick.