How Does Renters Insurance Work? What to Know

Evelyn Long

May 2, 2023

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Homeowners need home insurance, but you can get insurance as a renter. Renters insurance protects you and your items throughout your lease. 

Who Needs Renters Insurance?

You can benefit from renters insurance if you rent your home or apartment. 

When you sign a lease, landlords sometimes require you to purchase renters insurance since they can’t compensate you for destroyed items while you live there. 

While you don’t own the property, you own the items you bring inside. Many things can affect your home, costing hundred or thousands of dollars, so being prepared for unexpected costs can give you peace of mind. 

Four main categories can affect your rental property. 

1. Weather Events 

Weather is the top cause of home damage across the United States. Research shows more extreme events occur because of climate change. Hurricanes, tornadoes, flooding and wildfires as the top issues, but hail, lightning, dust storms, strong winds and severe temperatures can also affect your home. 

Around 14,000,000 homes face weather damage in the country each year, and it doesn’t discriminate between rented and owned homes. Depending on your lease, you could be liable for damage to you, the items inside your home and the house itself. 

2. Crime

Millions of home break-ins happen yearly in the United States, with valuable items take and interiors ransacked. 

You can’t guarantee your home will be safe when you are away. Americans spend more than $20 million on security devices yearly to prevent intruders from invading their space. While they can help protect your home, sometimes crime finds a way. 

It’s good to know you can get compensation for precious items you can’t recover. 

3. Accidents 

Accidents happen, including inside and outside of your home. Whether you break an item or yourself, repair and medical bills can pile up. 

No matter how safe your exterior is, there’s also a possibility someone will get hurt on your property, no matter how safe your exterior is. You are likely liable by your lease for any accidents inside and outside of your home. 

4. Fraud 

Hackers are sneaky, and a compromised card could lead to you disputing multiple charges while still trying to afford your rent. 

When you end up with extra charges, your payment and interest rate goes up, making it difficult to manage your apartment costs. 

What Does Renters Insurance Cover?

Most renters insurance will cover a mixture of these six things.  

  1. Your Items 

Renters insurance can compensate you for precious items broken outside of your control. Though it’s hard to put a price on your possessions’ values, you may be eligible for physical or monetary replacement.

Items often covered under renters insurance include: 

  • Furniture – Couches, chairs, stands and unique furniture pieces.
  • Clothes – Both formal and everyday attire.
  • Jewelry – Wedding rings, necklaces, bracelets, earrings and identifying tags.
  • Devices – Televisions, computers, tablets and phones. 
  • Security Equipment – Cameras, alarm systems and locks. 
  • Miscellaneous – Any item more than your policy’s minimum amount, which could include food, decor, cleaning supplies and toiletries. 
  1. The Inability to Reside

Most home insurance policies will help you if damage to your home prevents you from living there during repairs. You’ll still get coverage for the repairs but can also recoup some living expenses. 

  1. On-Property Accidents 

If someone gets hurt at your home, renters insurance can cover their medical bills or damaged items. Chances are you’re liable for incidents at your residence. Proper insurance will protect you so you don’t have to disrupt your finances for accidents. 

  1. Personal Liability

Renters insurance also covers when you get hurt at your home. If you or someone in your household is injured or killed through a freak accident in your house or the yard, renters insurance can contribute to most or all of the bills. 

  1. Repairs and Alterations 

Things break and renters insurance can cover and repairs or alterations necessary for your home that isn’t covered through your lease. 

  1. Credit Card Fraud

If you lose money to hackers, renters insurance can help you cover rent costs and recoup lost funds. 

How to Get Renters Insurance 

There are a couple of things you’ll need to consider when securing renter’s insurance. 

Decide on Your Policy

Different policies and packages are available depending on the insurer. However, there are some standard things to keep in mind. 

All-RIsk vs. Named Perils

An all-risk policy covers almost any type of event that results in damage or loss. It’s an overall policy unless there are specifically-stated exceptions. 

A named perils policy only provides coverage for what’s specifically stated in the policy. Yo’ll need to repair or replace anything else. These policies are cheaper as the insurance company knows exactly what’s expected and sees you as less of a risk. 

Actual Cash vs. Replacement Cost 

Another aspect to consider is whether you want a policy that covers the actual cash versus the replacement cost. 

When something is lost or damaged, you can choose whether you want to get the replacement cost–the cost of the item is bought new– or the actual cash amount–the item’s value with the depreciation amount it had before the event. 

A policy that provides actual cash will cost less since the insurance knows they won’t have to pay as much for the items if disaster strikes. 


With certain policies, you can add additions called “riders” to give you more coverage. Some insurers don’t cover certain weather events, pets or account for items outside of your policy. The riders can add those items to your policy. 

Shop Around 

There are various companies with different policy options depending on where you live. It’s important to consider which one is best for you carefully. Websites like PolicyGenius and Value Penguin let you compare the best plans where you live. 

Carefully Review Important Documents 

Before you accept your policy, ensure that you review both your lease and insurance contract so you know you are making the right decision. Sometimes, landlords will actually cover certain damages. You don’t want to pay for something if it’s already guaranteed. 

You’ll also need to ensure you agree with the policy contract offered, including your coverage, premium, deductible and term. 

Gaining Security Through Renters Insurance 

Renters insurance is an excellent way to get a sense of safety for you and your home. Just because you don’t own your house or apartment doesn’t mean you don’t deserve compensation for whatever life throws your way.

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