Your Landlord carries insurance on their property, but it only covers the building and permanent attachments like the water heater, stove, or bathtub. Your personal items are not protected by the Landlord’s insurance.

If disaster strikers, you could lose all your furniture, clothing, electronics, kitchenware, and more. Renter’s insurance is designed to protect you against these losses. According to the Insurance Information Institute, less than 40% of all renters carry insurance.

The average cost of Renter’s Insurance is around $15 a month. The cost depends on where you live, what coverage your purchase, and other factors.

Renter’s Insurance typically protects against 16 types of loss:

  1. Fire or lightning
  2. Windstorm or hail
  3. Explosion
  4. Smoke
  5. Vandalism or malicious mischief
  6. Theft
  7. Riot or civil commotion
  8. Damage caused by aircraft
  9. Damage caused by vehicles
  10. Volcanic eruption
  11. Falling objects
  12. Weight of ice, snow, or sleet
  13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance
  14. Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system
  15. Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance
  16. Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)
There are some things Renter’s Insurance will not cover. Exclusions are typically:

  • Natural floods
  • War
  • Nuclear hazard
  • Neglect, meaning your failure to save your property at the time of loss or after.
  • Intentional loss, meaning your intentional destruction of your property.
  • Governmental action, such as seizure of your property.

It is important to check with your carrier to confirm what is covered and what is not.

Now that you know the types of problems you are protected against, it’s important to consider how you want your belongings covered. The two types of coverage are “actual cash value” or “replacement cost.”

Actual cash value pays for what your property is worth at the time of loss. If you bought a $1000 television five years ago, it has depreciated over the years and may only be worth $500 today. Your insurance company will only pay you what the depreciated value is, minus your deductible.

On the other hand, replacement cost coverage will pay you the actual cost of replacing the item lost. If you bought a 50” HDTV for $1,000 five years ago, the insurance company will pay you enough to buy a comparable 50” HDTV, minus your deductible. Replacement cost coverage is more expensive, but it pays out more if you ever file a claim. By talking to your agent about your valuables, they can help you compare the costs vs. the benefits of each type of coverage available.

Insurance carries specific dollar limits for certain items. If your item is worth more than the coverage allows, you will need to purchase a “rider” to increase coverage. Here are some example limits:

  • Cash – $200
  • Securities, passports and stamps – $1,500
  • Theft of jewelry, watches and furs – $1,500
  • Theft of firearms – $2,500
  • Theft of silverware, goldware, flatware: $2,500
  • Unauthorized charges to your credit card: $500

For example, you have $5,000 in firearms stolen from your home. Your coverage is limited to $2,500 so you will lose the remaining $2,500 in value. Without riders for the more expensive items, you can’t recover the value of your full loss.

If you are thinking of getting a dog, talk to your insurer first. Some insurance companies will not write policies for certain breeds of dog. You should also check with your Landlord to see if there are restrictions based on the Landlord’s insurance policy.
Renter’s insurance policies include liability protection for property-damage and bodily-injury lawsuits against you. If someone is visiting your home and falls down the stairs, the liability insurance will protect you against their claim. It will also pay for your legal defense, if needed.

If your fire is damaged by fire, water, or any other reason covered by your policy, the insurer will pay for “additional living expenses” like putting you up in a hotel until the home is habitable again.

To protect yourself in the case of loss, we highly recommend you inventory all your personal belongings. Create an inventory list that includes an item description, purchase date, purchase price, and serial number where applicable. Take photographs or videotape everything. Keep important receipts in a fireproof safe or off-site location.

The Insurance Information Institute provides free inventory software at KnowYourStuff.org

Renter’s insurance is fairly inexpensive, but there are ways to save even more money. Some examples:

  • Increase your deductible (the amount you pay before your coverage kicks in).
  • Asking for discounts if you add a security system or make other changes to your residence.
  • Buying multiple policies from the same company (i.e. policies for car, renter, or life)
  • Paying your annual bill in advance instead of making monthly payments.