When moving into a new rental, there is plenty to think about, from getting all your stuff there 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 renters insurance, but they should be. Renters insurance is a cost-effective way for renters to protect their personal belongings and to secure legal and medical assistance in the event a guest is ever hurt on the premises. The purpose of this guide is to explain everything that renters and landlords need to know about renters insurance, including: what it is, what it does and doesn’t cover, who needs it, how much is needed, how much it costs, and finally, the best renters insurance companies. Before getting into all these details, here are the best renters insurance companies:
Top Renters Insurance Companies
|Best for||Best Overall||College Students||Apartments|
Understanding Renters Insurance
What Is Renters Insurance?
The personal property component of renters insurance extends to family and guests and covers property on and off the premises. Additionally, renters insurance provides 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 property.
Is Renters Insurance Required?
Renters insurance is not required by law in any U.S. state. However, some landlords and property management companies may require renters to purchase renters insurance in order to obtain a lease. Even if it is not required, renters insurance is highly recommended.
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 renters’ kids, resident family members, guests, and can even protect renters from liability stemming from pet damage.
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.
Renters Insurance vs. Landlord Insurance
Landlord insurance is for homeowners who rent out their homes, and renters insurance is for tenants. When a landlord rents out a home, the structure is still the landlord’s responsibility, and landlord insurance provides coverage for it. It may provide coverage for landlord personal property left behind for the benefit of the tenant as well, such as kitchen or maintenance equipment. Lastly, landlord insurance provides personal liability protection for landlord legal liability.
Landlord insurance will not help renters with what renters insurance provides. Landlord insurance will not protect renters’ personal property from common sources of damage or theft. For example, consider a fire that destroys a part of the home along with thousands of dollars of tenant 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 tenant personal property. Furthermore, it won’t provide coverage for tenant personal liability. So, if a guest is injured on the property, requiring tens of thousands of dollars in medical bills, the renter is only protected with renters insurance.
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 renters insurance policy will provide personal property protection, personal liability protection, including coverage for damages and legal fees, 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 Renters Insurance 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 everything in any 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 by renters insurance 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 residence employees 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 sufficient to cover a loss. 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 the items that are not categorically excluded may be subject to sublimits based on the type of personal property it is. Here is a list of personal property items that might not be covered by renters insurance:
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 belongs 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 renters insurance. Read all about renters insurance and roommates below.
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 renters’ 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 to renters insurance policies 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. Fortunately, the perils that are covered are the most common occurrences to damage or destroy personal property. A typical renters insurance policy will cover personal property in these circumstances:
- 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 premises, 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 these occurrences, renters insurance 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 rental premises 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.
Whether or not a situation becomes uninhabitable as a result of the presence of termites, cockroaches, rats, bed bugs, or any other pests, and whose fault the problem is, is a question of fact, likely to be hashed out on a case-by-case basis. Renters and landlords should be vigilant about pests and maintain open communication with each other. Landlords are also encouraged to document all pest issue history in order to identify when any costs associated with remedying a pest problem might transfer to a tenant who may actually be responsible for the problem occurring.
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 renter 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 renters when bad things happen to their belongings, but it won’t help when it’s the renter’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 renters insurance is 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 renters insurance 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 flooding from heavy rain or from underground is rarely included in an average renters insurance 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 acquired. 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||Actual Cash Value*||Replacement Cost Value*|
|$65 blue jeans||$12||$65|
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 a renter’s personal property, it can be tailored with endorsements and scheduled floaters to attain full coverage. Endorsements and floaters are insurance tools that can be used to add items to a policy that otherwise would not be included and to increase limits and sublimits in order to effectively cover one’s property. This guide explains endorsements (sometimes called riders) and scheduled floaters in a later section.
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 renter in the event that a covered peril causes the property to be damaged, stolen, or destroyed, personal liability coverage protects the policyholder in situations where the policyholder may be sued.
Personal Liability Coverage Explained
Personal liability protection provides legal and financial assistance to a renter 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 renter 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 (Covered)
- 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. Damage done off the property may be to a neighboring property through a wall or fence, but renters are covered even when the damage or injury occurs nowhere near the rental. 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 a renter 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 trespasser-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 in the renter’s backyard, and the renter may be legally responsible for it. Installing a fence around potentially dangerous backyard equipment may be the pivotal factor in determining liability.
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 would not be held liable for the resulting injury. The renter arguably did nothing wrong, or adequately protected against the risk. Whether clearly at fault or not, a renters 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 residence:
- 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 renters insurance, if a child under the age of 13 hurts someone intentionally, renters insurance may still cover it.
When Personal Liability Coverage Applies
Personal liability protection helps the policyholder in situations where a lawsuit could arise. There needs to be an injury to someone else or damage to someone else’s property for the coverage to kick in, and the injury or damage needs to be the policyholder’s fault. Fault for purposes of personal liability simply means legally responsible. Inside the residence, renters have a duty to protect visitors from being hurt. Outside the residence, renters have the same duty as everyone else—to not act negligently, or to take reasonable care to avoid injury to others. Accidents do occur, however, and personal liability coverage within renters insurance serves to protect renters from the potentially tremendous costs associated with legal action and medical services in and outside the residence.
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 renters 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 the renter’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 exclude certain types or 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 insurance 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 within renters insurance. 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 was not the policyholder’s fault, or the injured party has no desire or intention to file a lawsuit, a different kind of claim—this claim 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 looking at 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 renters insurance policy. Again, injuries to those insured by the policy must use their health insurance to cover injuries to themselves.
Does Offering Financial Assistance Imply the Renter Is at Fault?
For public policy reasons, offers to pay medical expenses are excluded by the Federal Rules of Evidence to show fault for an injury. The exclusion is intended to encourage people to attempt to resolve their issues among each other before resorting to legal action. It accomplishes that goal by preventing the injured party from being able to bring into evidence the fact that the defendant offered to pay for the injured party’s medical bills, as the offer to pay medical bills can be interpreted as evidence of guilt, when in reality that is not always the case.
So, when a renter’s guest is hurt on the renter’s property, the renter should feel comfortable offering to make use of the no-fault financial assistance included in the renters insurance policy. It’s quick and useful. Be careful, however, as statements made in association with the act of offering to pay medical expenses for someone often can be admitted into evidence against the person who made that offer, to establish that the offeror is or might be responsible for the injury (not in California). So, the fact that the renter offered to pay for the renter’s guest’s badly cut elbow after the guest tripped on loose laundry and fell in the renter’s apartment will not be admissible in court to establish that the renter is responsible for the guest being hurt. But, when the renter says, “I’m so sorry that you tripped and fell inside my apartment; it’s completely my fault that it happened. Let me pay your medical bills,” those words will be admissible.
If the aid provided by no-fault medical payments coverage is enough to resolve the injury costs to the renter’s guest entirely, it serves as a settlement of any claim the guest could have brought for the injury. However, if there are costs still mounting beyond the coverage maximum, and the guest decides to sue the renter for more, personal liability coverage kicks in to protect the renter, and whether or not the renter was at fault for the injury will not be impacted by the fact that the renter offered to help pay for the guest’s medical bills from the start.
It is recommended that renters use their renters insurance to help their injured guests, but it may be wise to not outwardly take the blame for the injury, as their words may be used against them in legal action. Also, renters should always ask about the potential impacts on their insurance premium before filing a claim.
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 renters insurance, additional living expenses coverage can be a useful feature when being displaced costs more money than the renter is used to paying for typical living expenses.
Additional Living Expenses Explained
Also known as loss-of-use coverage, the additional living expenses portion of a renters insurance 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?
The additional living expenses component of renters insurance covers the additional expenses incurred as a result of being displaced from a rental unit due to a covered incident. If, for example, a renter’s apartment rent is $1,750 per month, and it will cost $2,000 per month to stay somewhere else, then (assuming the renter is not paying rent the month that repairs are being made) the renters 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. For example, a fire that renders an apartment uninhabitable will almost always burn and destroy personal property in the apartment as well. Fires are covered perils under a renters insurance policy, and the personal property damage will be covered by the personal property protection portion of the policy, while the policyholder’s additional living expenses will be covered by the loss-of-use portion of the policy during the time the renter is living off the premises for it to be repaired.
This coverage has its limits. It will not cover expenses that do not exceed the typical expenses paid by the renter over the period of time the renter 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. If a renter needs to stay at a hotel while the renter’s apartment is being fixed after taking extensive smoke damage, and the renter ends up spending $100 more on food that week than normal because the hotel did not have a kitchen the renter could use, the policy will cover it.
The 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 renter’s 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 a renters insurance policy, read the sections above. This section is dedicated to reviewing specifically who is and isn’t covered by each provision and who else may benefit from renters insurance.
Personal Property Protection
With regards to personal property coverage, those named in the policy will be protected, as well as the policyholder’s resident spouse and any resident family members. The protection works essentially the same for any resident relative of the policyholder as it does for the policyholder. Covered individuals include:
- The policyholder
- The policyholder’s resident spouse (the spouse lives there)
- The policyholder’s children
- Other resident family members of the policyholder
- Residence employees (pool cleaner, gardener)
- Guests, at the option of the policyholder
One useful feature of renters insurance is its ability to protect personal property when it’s not even on the property. When a child is living at college, their property may still be covered by their parents’ renters insurance policy. It will depend on the type of living situation, with on-campus living more likely to be covered than off-campus living. The coverage may also be limited to a fraction of the personal property coverage maximum named in the policy.
Personal property coverage may extend to guests as well, at the request of the policyholder, in the event that their personal property is damaged while at the residence. Remember, however, that guests are temporary, so personal property coverage will not automatically extend to unrelated roommates. For a roommate who is not related to the policyholder to be covered, he or she will need to be named in the policy or have their own renters insurance. Read more about renters insurance roommates below.
Personal Liability and Medical Payments to Others
Personal liability protection covers the same types of situations that no-fault medical payments to others are for. When someone who is not an insured is hurt or endures property damage, and the injury or damage is an insured’s fault, these coverages are available. These protections provide financial assistance to the person responsible for the damage or injury so that they can afford to help the injured person. Covered individuals include:
- The policyholder
- The policyholder’s resident spouse
- The policyholder’s children
- Other resident family members of the policyholder
- Some pets
Personal liability coverage won’t be available when the actions that led to damage or injury were intentional. However, when children are under the age of 13, renters insurance may cover intentional actions, as young children don’t weigh consequences the same way adults do. Pets are often covered for bites or damage they cause to other people’s property (not the renter’s property). Sometimes certain pets are not covered.
Like personal property protection, the coverage is available for at-home occurrences as well as issues arising outside the home. Unlike personal property protection, it may not extend to protect guests from personal liability to another. It is reserved solely for the named insured and resident family members.
Additional Living Expenses
The additional living expenses portion of the policy benefits the policyholder and his or her resident family members. It shouldn’t impact others much, as the coverage provides financial assistance when the residence is uninhabitable due to a covered peril. When this happens, the coverage provides for the insured, and his or her family members who live there, to live somewhere else while the premises are fixed.
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 renters insurance 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. Sharing a renters insurance policy with a roommate is 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 a renters insurance policy as expensive for both sides to split as it would for each side to have their own $15,000 and $20,000 policies.
Some providers may not allow unrelated roommates to share a renters insurance policy, but some will. Unrelated roommates can choose to share a policy; it’s just not recommended. However, if roommates share ownership over most of their personal belongings, and they are aware of the risks associated with sharing a policy, then it may be a cost-saving move for them with the right provider.
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. The sections above go into detail about the coverages of each renters insurance protection. 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 renter 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. Renters, on the other hand, may not be permitted to drive nails into the wall for wall-mounted TVs. If a renter 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 damage coverage, renters will want to check with their policy to ensure their specific pet or breed is covered. For pet health coverage, renters 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 by a renters policy. For car accidents and damage done with a renter’s car, renters 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, renters 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. Read more about pest damage here.
Getting the Right Amount of Renters Insurance Coverage
Renters insurance is highly recommended. It protects the renter’s personal property inside and outside of the rented premises, and it provides personal liability protection for the renter when needed. It covers the renter and all of his or her resident family members. Lastly, renters insurance will provide financial assistance in the event that the renter is displaced from the rented premises for a period of time, including the coverage for the cost of rent, food, and gas.
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 protect against all costs associated with being sued for damage to a neighboring property or for injury to a guest. 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?
A renter’s target coverage will depend on the reason the renter is buying the policy. Some renters want to have some coverage for their stuff 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. This guide will go in-depth about how to choose a renters insurance policy later. 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 for the renter, based on the personal property coverage maximum|
A barebones renters insurance policy may not accomplish every buyer’s renters insurance goals. Read on about endorsements, floaters, and umbrella policies to learn about customizing renters insurance.
Endorsements / Riders, Scheduled Floaters, and Umbrella Policies
Renters insurance policies have limits. Apart from there being maximum coverage limits within each protection, the policy may fall short of covering all of a renter’s personal property because of sublimits. And if the damage to the renter’s belongings was caused by an uncovered peril, renters insurance isn’t going to help either.
Fortunately, 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 a renter 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 renters insurance.
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, renters 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 a renter opted for an actual cash value renters insurance policy, the renter may still 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 for the renter 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 people often have at least one fairly important and usually expensive piece of jewelry in a wedding ring. Renters can cover their wedding rings by scheduling them under a renters insurance policy.
Renters can schedule most expensive items to ensure full coverage. 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 property under renters insurance, 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, renters may need to consider an umbrella policy.
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.
Renters insurance is not for everything. When personal property can’t be covered because of its value or risk, there is likely another type of insurance that can. For example, because pets are often deemed not to be personal property, they aren’t usually covered by personal property protection. For pet coverage, renters need pet insurance. Sometimes, the damage they might do is covered by renters insurance, whether by default or with an endorsement or umbrella policy. However, if pet damage can’t be covered through renters insurance, animal liability insurance will work. The same goes for almost anything that renters insurance won’t cover.
Here is a table to illustrate the main ways that a renters insurance policy might fall short of adequately covering a renter and what the renter can use to ensure that the renter is covered:
|“My policy has a sublimit of $3,000 for jewelry, and I have over $5,000 of jewelry.”||Endorsement|
|“My renters insurance will not pay out more than $1,000 for a single musical equipment item, and I have a $3,500 drum set.”||Scheduled Floater|
|“My policy will not allow me to cover more than $500,000 in personal liability, and I have assets that exceed that figure.”||Umbrella Policy|
|“My policy does not cover any injuries my Rottweiler may cause.”||Umbrella Policy or Other Insurance|
How to Choose Renters Insurance Coverage Maximums
Before going step-by-step through a process to determine how much coverage a particular renter might need, here is some information about the common range of coverages available in a standard renters insurance 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 viable for many renters.
|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. Also, don’t forget that several personal property items are categorized by the insurance company, which then have sublimits attached to them within your total coverage limit. In order to adequately protect all of the renter’s stuff, renters may need to specifically address those sublimits by way of endorsements or floater policies.
Calculating Personal Liability Coverage
The goal with personal liability coverage is to feel confident that an injury to a guest or damage to a neighbor’s property will not exceed the coverage maximum the renter chooses. However, predicting how much money one might owe as a result of an accident is very speculative. A serious injury can result in millions of dollars in medical expenses.
Ideally, renters would protect up to what all of their assets are worth in personal liability coverage. Current assets aren’t even all renters need 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 renters 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 that renters carry the maximum amount available here.
Additional Living Expenses
This coverage is usually determined based on the renter’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 renters might spend on food, gas, transportation, storage, and laundry.
It is a good idea to request a sample policy from the renters insurance companies you are considering. To see real examples of renters insurance policies, download this sample Liberty Mutual renters insurance policy or this sample Allstate renters insurance policy.
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?
This section explores the costs of renters insurance, including the average cost, the average cost by state, and factors that affect the cost, and finally ways to save money on renters insurance.
How Much Does Renters Insurance Cost?
The most recent comprehensive data shows that the average cost of renters insurance in the United States was $180 per year in 2017, according to the Insurance Information Institute (III). Between 2008 and 2017, the average homeowners insurance rates rose each year, while renters insurance was cheaper in 2017 than in any other year over the same 10-year span.
Average Annual Insurance Premiums
|Year||Homeowners Insurance||Renters Insurance|
Founded in 2015, Lemonade offers renters insurance policies for as low as $5 per month ($60 per year), though quotes may vary by location. Even at $15 per month, renters insurance is among the most affordable types of insurance one can carry.
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. That’s to say that some places experience higher risks of loss to renters 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, based solely on the state the policyholder lived in. In addition to a renter’s location, the amount of coverage chosen, type of policy, deductible, and claims history of the renter each influences the cost of a renters 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 renter lives in can be indicative of how much a renters insurance policy will cost, but it isn’t a factor per se. Rather, the risks associated with a renter’s 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 renters 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.
For renters who are determined to file a renters insurance claim only for a disaster, setting the deductible higher often makes sense. A higher deductible enables lower premiums for maintaining the coverage until the worst-case scenario occurs. In such an event, paying the $1,000 or even $5,000 deductible will be worth not only the benefits provided by the insurer, but also the act of filing the claim. Keeping a lower deductible may make filing a claim more worth the insurance payout, but renters should remember to try to file as few claims as possible.
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 renters insurance premiums in the future.
How to Save Money on Renters Insurance
Much of what influences the cost of any particular renters insurance policy will be outside of the renter’s control. Most renters aren’t going to leave the state to find a more affordable renters insurance policy, and the past is the past in terms of a renter’s 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 a renter can save money on renters insurance without making sacrifices in coverage.
Renters insurance, as relatively inexpensive as it is, can be even cheaper when renters get discounts. While the available discounts vary among providers, most providers offer at least some discounts. Here are some discounts available to renters:
- Pay in full – Rather than pay monthly premiums, some providers allow renters to pay for renters insurance annually. Paying for the year up front can often save money.
- Automatic pay plan – When renters sign up to have payments automatically drawn from their bank accounts, they can receive a discount on their premiums with Allstate.
- Home security system – Because insurance protects against the risk of covered perils, renters who present less of a risk of some perils, such as burglary or vandalism, 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 renters insurance premiums.
- Retired renters – 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 in favor of standard mail.
- Claim-free – Some providers will discount renters insurance premiums when a customer goes a certain amount of time without filing a claim, offering another reason for renters to try to limit the number of claims they file.
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 renters 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 save renters money.
Bundling Pros and Cons
- Multiple Policy Discount – Renters might receive an automatic discount of as much as 10% to either their renters or their other insurance policy for bundling.
- Single Deductible Benefit – In the event that a renter needs to file a claim under both policies for a related incident, often only one deductible—instead of both—must be paid.
- Convenience – Having one provider can be more convenient to deal with, especially when an incident involves both policies.
- Lose Coverage – Bundling does not always result in a net gain in savings. If it does, sometimes the renters insurance coverage is less than it would be without the bundle.
- Failure to Shop Around – Policyholders can become complacent or not shop around at all when they settle for using the same insurance provider for all of their insurance. The best price or coverage may be with a different provider.
*Bundling pros and cons vary among providers and policyholders. Not all providers offer the same discounts.
In some cases, renters insurance may be tax deductible. While business property is not always covered by renters insurance, and business liability never is, a home office may render the renter’s policy tax deductible. Renters insurance may be tax deductible if there is a room dedicated to a home office or business in the renter’s home. The room can’t be a bedroom, living room, or dining room, and it must be used solely for business. Lastly, the home must be the primary place of the business. If the space is eligible, renters insurance premiums may be tax deductible, though this is something renters will want to consult a tax advisor on.
Be Informed and Prepared
Lastly, renters should approach the process of getting renters insurance as informed and prepared shoppers. This guide provides everything renters and landlords need to know about renters insurance. At its conclusion, we rank the best renters insurance companies.
- Become knowledgeable about renters insurance – Knowing how policies are structured and what factors help shape the cost of a given policy allows renters to effectively shop for and ultimately choose coverage.
- Get multiple quotes / shop around – When looking for renters insurance, getting quotes from several providers is a great idea. Provide as much accurate information as possible in order to receive the most useful quotes. Some providers are better for certain renters than others. There is no single, best renters insurance provider.
- Maintain a good credit score – Better rates are often available for those with better credit histories.
How to Find the Best Renters Insurance
There are several insurance companies that offer renters insurance. Finding the best match can be a time-consuming process. Getting a quote from a provider is the best way to know what a particular policy will cost, but knowing how to choose the best policy for you takes work. Fortunately, insurance brokers and agents are available to help with the process. Renters can also do their own research online.
Where to Get a Quote: Broker vs. Agent vs. Online
Insurance brokers help clients find the best insurance for them. Brokers are experienced with insurance as well as the specifics of most insurance companies. Using a broker can help match a particular renter with a particular policy. However, using a broker can increase the overall cost of insurance as they don’t work for free.
Insurance agents are employees of the various insurance providers. Agents can help explain the details of their specific coverage to renters when they want to fully understand what the options are with that specific company for them. An insurance agent won’t be able to help renters learn everything about all insurance companies, but they can provide direct information about their quote and their coverage.
Renters can also pass on using brokers and agents to conduct their own research about renters insurance online. Most insurance companies provide at least some information online about the policies and discounts. Lemonade insurance makes a lot of their policy and company information available online. Using this guide, shoppers can learn just about everything that’s needed to understand renters insurance. In the next section, read about how we determined the best renters insurance companies.
Comparing Renters Insurance Companies
Shoppers who choose to conduct their own research on renters insurance providers can start with a guide like this one. When comparing renters insurance companies, it’s recommended to first canvas the coverage options available from each, eliminating companies that don’t provide necessary coverage for them. Renters might also want to consider the company reputation and financial strength. Get quotes from companies that check all the right boxes. In the end, cost may end up being the deciding factor, so renters will definitely want to keep track of the quotes they get during the search. Read on to learn more about how to compare renters insurance companies on your own, or skip ahead to our reviews of the top renters insurance companies.
The most important factor to consider when choosing a renters insurance provider is the coverage. Most policies are affordable, and if renters are spending any money at all, it should be to actually cover them and their stuff. Even though renters will end up with only one policy, having many options with their respective providers is great, as renters may end up needing more or different coverage as time passes. Many insurers will have very similar, base coverages available, but there are some differences, and coverage limits vary. Remember, unique personal property like card collections or expensive jewelry usually requires special coverage. Even just a lot of any certain type of property like sporting equipment or musical equipment may need extra coverage. And the types of perils that are covered certainly vary among providers. Our reviews take all of a company’s coverage options into consideration.
Another factor to consider when choosing a renters insurance 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 frequently comprised of negative interactions with companies. So, while they’re useful to be aware of, shoppers should lean on expert reviews as well any reputable awards providers may tout as well 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 renters insurance 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 renter 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 to start comparing renters insurance companies.
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 renters 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 renters 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 renters insurance 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|
Renters 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 renters insurance 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 renters insurance game. 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 your renters insurance policy.
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 renters insurance. For renters 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. Renters 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. When renters choose a massive insurer like State Farm for their renters insurance, they have nothing to worry about in terms of financial strength.
The cost of renters insurance varies according to several factors, but State Farm is among the more affordable renters insurance providers. While their lower coverage packages aren’t as cheap as some other companies’, 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 State Farm renters insurance will cost for a particular renter. Their renters insurance 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. Because renters insurance is a fairly straightforward type of insurance, it’s the little things that set these companies apart. Capable of providing almost anything a renter could need, with excellent customer reviews and financial strength, the superior online experience, resources and myriad discounts available positions Allstate among the best choices for renters insurance in 2020.
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 renters 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 to renters insurance policyholders include:
- Multi Policy – Customers can bundle their renters insurance with Allstate auto insurance and save money.
- Safe Home – If the renter’s home has qualified safety features like fire alarms or a security system, customers can save up to 15% on their renters insurance.
- Easy Pay Plan – Renters can save up to 5% on their renters insurance when they sign up to have their payments pulled directly from the bank accounts every month.
- 55 and Retired – Customers who are at least 55 years old and who are not seeking employment can earn up to 25% off their renters insurance with Allstate.
- Claim-Free – When new customers sign up who have never filed a claim before, they can get up to 20% off their renters insurance with Allstate. If renters continue to stay claim-free, more bonuses are added each year.
In addition to the generic renters insurance coverage offered by Allstate, customers have the ability to add flood insurance to their policies. Flood damage is arguably the biggest hole in most renters insurance policies that can be filled with Allstate. Renters 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 2019 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 had over 8.5 billion dollars in direct homeowners insurance premiums written in 2019, 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 renters insurance costs 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.
Filing a Renters Insurance Claim
In order to receive the benefits of coverage, renters must file a claim with their insurance company. A claim is a request to an insurance company to compensate the policyholder for a covered loss. The claims process varies based on what type of coverage the policyholder is requesting. For example, claims for damaged personal property are different from claims for stolen personal property. The general process of filing a claim works like this:
- Report the occurrence to the police (vandalism or theft)
- Report the occurrence to the landlord if the property is damaged
- Document the loss
- Complete and submit claim forms
Claims can be resolved quickly when renters are prepared. It’s a good idea for renters to keep an inventory of their personal belongings. Keep receipts if possible, especially for items that are extraordinarily valuable. It’s ok to not have the value of everything renters own documented, but if a renter files a claim for something unusually valuable, there may be an issue getting the full value replaced if the renter can’t prove what it’s worth. Once the damage is done, renters should be sure to take good pictures and to file their claims in a timely manner. Here is more information about filing renters insurance claims:
Filing a Claim for Personal Property
First, renters will need to decide whether filing a claim for the loss is the best decision for them. If it is, renters will then inform the landlord if the property is damaged and then the insurance company of the incident and start the claim process. If the claim is approved, renters will receive insurance benefits shortly thereafter.
Should I File a Claim?
In the event that personal property is damaged or destroyed, renters will first consider whether they should file a claim. Filing a claim, as opposed to paying for the loss out-of-pocket, is not always the best option. Here are some reasons why:
- The deductible may cost more than the loss – A policy that requires a $1,000 deductible before insurance benefits are paid will not be worth filing if only $500 is needed to make the renter whole.
- Filing a claim can make premiums increase – Unfortunately, insurance companies are likely to increase insurance premiums as a result of claims being filed. The provider, policyholder, location, number of claims, and size of past claims all contribute to what insurance premiums will be and whether they’ll rise. In the event that too many claims are filed too frequently, insurance can even be cancelled.
It is recommended that renters file claims as infrequently as possible, typically only for a disaster that leaves them with no real alternative. If a loss can be covered out-of-pocket, it probably should be.
Inform the Landlord if the Property is Damaged
If a disaster that damages the property befalls the renter, and it’s time to file a claim, the first step is to inform the landlord. Oftentimes, an incident that damages or destroys personal property in the residence does some damage to the residence itself as well. The landlord will want to know so that the landlord can initiate repairs. In fact, informing the landlord may be required by the renters insurance policy, or by state law.
File a Police Report if the Personal Property is Stolen
When personal property is stolen, it is common for the insurance company to require that the policyholder file a police report before filing a claim. The insurer will want a copy of the report. This is because the evidence of the loss is gone when property is stolen. A police report is the best way to legitimize the reason for the claim. The rest of the steps for filing a claim are the same.
File the Claim
Next, the damage should be documented. Photos or video footage of the damage works best. If the damage is covered by the policy, the insurance company should be contacted promptly. Sometimes, there’s a relatively small window of time for the policyholder to file the claim before the policyholder is no longer eligible for insurance benefits. The insurer will require certain forms to be filled out. Knowing or being able to prove what the property is worth can be helpful, though not necessary for common household items. Once the paperwork is filed, an adjuster may visit to inspect the damage.
Receive Insurance Benefits
In a best-case scenario, a check can be issued either when the adjuster comes to assess the damage, or immediately upon review. For some property or situations, a check will come after the adjuster has left and completed more work on the claim. For damaged or destroyed personal property, even with a replacement cost value policy, benefits are usually paid out in a couple different steps. First, the actual cash value of what was lost will be paid. Then, if the policy or any items were covered with replacement cost value, the policyholder will pay to replace the lost items, and the insurer will reimburse the renter for those expenses.
Filing a Personal Liability Claim
Renters need to know what their obligations are under their renters insurance policy. Under personal liability protection, insurers have a duty to provide financial assistance to renters when they are found legally liable for damage or an injury. For that reason, insurance companies oftentimes require policyholders to notify them, as soon as possible, of any potential claims against their customers. The insurer will investigate and vigorously defend its customer from being found liable for the loss. If the policyholder is deemed liable, the insurer is responsible for paying those costs.
So, when a renter becomes aware that someone may sue the renter for an injury or for property damage, the insurance company should be notified promptly. The insurer will dispatch an adjuster to investigate the grounds for the claim, gathering evidence and speaking to any witnesses when possible. If a claim is filed against the policyholder, the insurer will defend the renter until the case is either dismissed or settled, or until the policy coverage limit is reached.
Filing an Additional Living Expenses Claim
Sometimes, a fire or hurricane will do enough damage to a residence to force the renters out of it entirely until the house or apartment is repaired. Having renters insurance at such a time can be a lifesaver for both the landlord and renter. Renters can continue to live without being forced to move in a moment’s notice, saving them precious time and potentially lots of money. And the landlord can keep his or her tenants and welcome them back as soon as repairs are completed.
To file a claim for additional living expenses, a policyholder must notify the insurer when an occurrence forces the renter out of the residence. As long as the cause of the displacement is a covered peril under the policy, the renter will be able to submit receipts for additional expenses incurred during the displaced period for up to 12 or 24 months, depending on the policy. Remember that floods and earthquakes are rarely covered perils. If a renter is forced out of their home for an uncovered peril, the additional living expenses under renters insurance will not help.
Renters are entitled to maintain their regular standard of living. The living quarters should be similar, and the lifestyle shouldn’t change more than is necessary. Receipts for food, gas, transportation, laundry, storage, and anything else that exceeds the normal standard of living can be submitted to the insurance company. The adjuster will review the expenses, and renters will be reimbursed for the additional costs that they are forced to pay during the displacement period. Upon request, a renter can sometimes receive an advance for expenses.