Renters insurance protects you where existing homeowners insurance falls short

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• Renters insurance offers protection for your belongings, liability, and more when you rent.
• Renters insurance is inexpensive, averaging $15 a month in some states.
• Homeowners insurance will cover the property owner and building, but not renters.

Renters insurance is sold by many homeowners insurance companies as an HO-4. It doesn't cover the building you live in, appliances, or structural upgrades, as you don't own the property. However, it's essential to cover personal property losses, personal liability, and loss of use if you're displaced from your home.

Because a renters policy doesn't cover the dwelling, pricing is much more affordable than many people think. Even if you get the minimum coverage (around $10,000 in personal property coverage), it will easily prove its value. 

While not required by state law, some apartment buildings will require proof of insurance for move-in. Some of these communities have contracts with companies that offer extra protections for residents, like security deposit protection. Unfortunately, the Insurance Information Institute found that only 37% of renters had renters insurance. 

Do I need renters insurance?

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

A cautionary tale from director and actress Issa Rae makes the case for renters insurance. Shortly after college, she received a fellowship in New York City. Thieves stole her laptops, camera, and all of her tapes, and other expensive equipment. If she had renters insurance, everything could've been replaced (as long as the policy had sufficient personal property coverage). Instead, it was a total loss, and she ended up leaving New York.

What does renters insurance cover?

Renters insurance covers your personal property, protects you from personal liability, and offers "loss of use" coverage if your rental becomes inhabitable. This covers hotel stays, eating out if a kitchen is not available, and more.

Basic home belongings are covered, but you may need additional coverage, known as riders or endorsements, for specialty items like wedding rings or other jewelry, cameras, artwork, bicycles, or musical instruments. Especially if you have expensive electronics for hobbies or work, you'll want to talk to your insurance agent about which items need a specialty coverage rider.

Yael Wissner-Levy from Lemonade Homeowners Insurance - Product Name Only said that as a renter, you are protected from anything that suddenly causes water damage without any prior known issues, like the accidental overflow of water or steam from plumbing, heating, AC, or sprinkler systems. You're also protected if your apartment sprinklers go off and soak all your belongings or if your pipes freeze in the winter and burst. However, insurers add a caveat for negligence. Like home insurance, neglect, intentional damage (by the policyholder), etc. would not be covered.

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

Renters insurance doesn't cover roommates

Renters insurance doesn't cover your roommate. If you have a roommate, each roommate should get their own policy. Aside from insurance carriers not extending coverage, it could also create complications when a claim is filed. Roommates may have limited recourse if the policyholder doesn't pay for a roommate's personal belongings after a claim.

How much is renters insurance?

The average cost of renters insurance is around $15 a month, or $180 yearly in some states. Factors that go into determining your premium are the amount of coverage you want, where you live, if you own a pet, claims history, deductible, and your credit score. Renters who want extra coverage for jewelry, computer equipment, and other expensive items will pay more. If you already have auto insurance, you may get discounts from your provider for bundling your renters and auto insurance.

However, rates will not vary as much as expected with any homeowners policy, including condo policies. Simply put, a renters policy never covers the structure, and personal property coverage is limited. So risks and costs are more predictable for insurers. 

How much renters insurance do I need?

Your renters insurance premium is based on how much money it would take to replace your belongings. Renters insurance policies cover up to a certain amount, usually around $10,000 or $30,000 worth of coverage. Determining the value of your belongings will help you decide how much coverage to get. If you rent a full house, you might want more coverage. However, if you rent a partially furnished room, you probably don't need as much coverage.

How to get renters insurance

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

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