Renters insurance guide
Millions of Americans live in rental housing, but many of these households do not have renters insurance. While renters are typically not responsible for covering costs associated with maintenance or losses to the building itself, it can still be a good idea to have a renters insurance policy. There are many valuable benefits associated with this type of insurance, including coverage for personal property in the event of loss or damage.
Key takeaways
- Renters insurance is typically quite affordable compared to many other types of insurance.
- The main coverages on a renters insurance policy are personal property insurance, personal liability insurance and additional living expenses.
- Standard renters insurance policies usually cover losses due to theft, but certain items may only be covered up to a certain dollar amount.
- Bundle your policies, install protection devices, consider how you pay and increase your deductible to save money on renters insurance.
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What is renters insurance?
As of November 2023, there were about 45.2 million renter households in the United States. While some renters are required to have insurance per the terms of their lease, others aren’t. However, it may still be a good idea to have some financial protection in place. A comprehensive renters insurance policy (aka HO-4 policy) can help cover your personal belongings, liability exposure and additional living expenses should your home become uninhabitable due to a covered event.
The good news is purchasing renters insurance is typically quite affordable compared to many other types of insurance. If you’re in the market for renters insurance, here’s what you need to know.
What is covered by renters insurance?
Renters insurance may apply in numerous situations, depending on the endorsements that you add to your policy. However, the main coverages on a renters insurance policy are:
- Personal property insurance: As the name suggests, this coverage will help pay for damage to your personal belongings after an approved claim. This may include furniture, clothing, jewelry and electronics. There may be limits to some high-value items, such as expensive artwork.
- Personal liability insurance: This is the portion of your policy that covers legal or medical costs if someone is injured or their property is damaged while at your home, and you are found to be at fault.
- Additional living expenses: If your apartment or rented home or condo is damaged to the extent that you cannot live in it until it is repaired, this coverage will pay for the cost of a hotel and other expenses, including meals or pet boarding. It only covers additional expenses, however, not expenses you would normally have. So, for example, your hotel bill will be covered, but not utility payments at your home.
You may also have the option to add things like identity theft coverage, pet liability coverage and scheduled personal property coverage to your policy. If you are unsure what coverages to consider, talking to a licensed agent could help.
What doesn’t renters insurance cover?
Most renters policies exclude damage to your personal items caused by earthquakes and flooding. While earthquake coverage can often be purchased as an endorsement, you may need to buy a separate policy if you live in a high-risk area. Similarly, flood insurance is commonly offered as a separate policy, although a few companies offer endorsements or include this as a coverage option.
Also notable, the premium you pay for standard renters insurance usually includes coverage of losses due to theft, but the policy typically spells out the exact items covered. And some of your personal items may only be covered up to a specific dollar amount.
How much does renters insurance cost?
Renters insurance costs $173 per year on average per the latest data available from the Insurance Information Institute. However, the cost of your renters insurance policy will vary based on several factors, including how much personal property coverage you purchase, which level of liability coverage you select, what additional coverages you choose and what your claims history looks like.
What states offer renters insurance?
Renters insurance is available in all 50 states and Washington, D.C. However, states that have a high density of renters, such as California, New York and New Jersey, may have more active renters insurance markets with more companies and endorsements to choose from.
Note that renters insurance isn’t just for those who rent apartments. Renters in condos and homes also have the option to purchase renters insurance. In warmer states like Florida and Georgia, homeowners may choose to rent their homes out for part of the year if they live elsewhere. The renters who occupy those homes can also purchase renters insurance policies to cover their belongings and liability exposure.
What companies offer renters insurance?
There are numerous renters insurance companies on the market, but your options will depend on what state you live in. Not all companies are available nationwide, and not all companies offer renters insurance in each state where they operate. If you are looking for the best renters insurance company, you may want to get quotes from these providers:
- Nationwide: Nationwide was in fourth place in the 2023 J.D. Power Customer Satisfaction Index Ranking for renters insurance. The company’s policies, however, may cost a little more than competitors.
- Lemonade: Lemonade is known for its app, which allows renters to obtain a quote, manage their policy and file a claim all in one place. The company also donates leftover premiums to global causes.
- Erie: Renters looking for affordable rates and an easy-to-navigate claims process may want to consider Erie. Erie took the top spot in the 2023 J.D. Power rankings. However, this insurer is only available in about one-fifth of the U.S.
- State Farm: Renters looking for an in-person agency experience might want to get a quote from State Farm. The company has over 19,000 agencies across the country.
- American Family: This regional insurer is in second place in the J.D. Power ranking for customer satisfaction for renters insurance, but it only sells policies in 19 states. The company has 24/7 claims and policy support, which may be appealing to some renters.
- Liberty Mutual: Liberty Mutual advertises renters insurance for as low as $5 a month, so may be worth looking at for those on a tight budget. The company scored well with J.D. Power’s Digital Experience Study in the shopping category, so could be a good choice for those who prefer to handle their insurance business online.
Can I transfer my renters insurance to a new apartment?
It is possible to transfer your renters insurance to a new apartment, but you may want to talk to an agent when you make the switch. In many cases, your premium rate could change when you switch to the new location. For example, if you’re moving from a small one-bedroom apartment into a more spacious condo or home, your rates may increase. Your location may impact the cost as well — if you move from a high-crime urban area to a safer suburban location, you may see your rate go down.
If you move to a state that your current insurer does not cover, you may need to purchase a new policy. It’s also important to note that you cannot transfer your renters insurance policy to another person. If you are leaving your apartment, but a housemate is staying behind, they will need to purchase their own policy.
How do I save on renters insurance?
Although renters insurance is generally much less expensive than homeowners or condo insurance, there are still ways to reduce your premium.
- Bundle your policies: If you also have an auto insurance policy, consider bundling your renters insurance with the same insurer to earn a discount.
- Install protection devices: If your apartment has smoke alarms, a carbon monoxide detector or a home invasion alert system, you might save money on your policy.
- Consider how you pay: If you can pay your annual premium in full, you might save money. If you do need to pay in installments, many companies offer discounts if you sign up for automatic withdrawal.
- Increase your deductible: Your deductible is the amount you will pay out of pocket if you file a claim. Generally, the higher your deductible, the lower your premium. Just be sure to choose a level that you can afford to pay if you file a claim.
Every insurance company is different, so discussing your policy with a licensed agent could help you find additional ways to save.
Can I cancel my renters insurance at any time?
Yes, in most cases, you can cancel your renters insurance at any time. However, it’s important to review the terms of your insurance policy so you understand if there are cancellation fees or other restrictions.
To cancel your renters insurance, you typically need to contact your insurance company directly. You may be required to provide a written request or follow a specific process outlined by the insurer. It’s a good idea to check your policy documents or contact your agent so you have accurate information on the cancellation process and any potential fees.
Keep in mind that while you can cancel your renters insurance at any time, it’s generally recommended that you have continuous coverage to protect your personal belongings and liability. If you no longer need the coverage or are switching to a different insurance provider, make sure to secure new coverage before canceling your existing policy to avoid any gaps in protection.
Frequently asked questions
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Yes, renters insurance is a common policy. There are about 45.2 million renters in the United States, and most financial experts agree that renters insurance is a prudent purchase. Because of the prevalence of renters in the country, many different insurance companies offer renters insurance.
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Everyone’s situation is different and purchasing any kind of insurance policy is a highly individualized decision. Renters insurance is not required by law in any state, but a landlord has the right to require tenants to purchase a policy. However, even if you are not required to, renters insurance does typically offer a decent amount of coverage for a relatively low cost. If your budget is particularly tight, you may be able to take advantage of discounts to lower the cost of a renters insurance policy while still getting valuable financial protection.
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The process of purchasing renters insurance is generally simple and there’s typically no waiting period, which means you may be eligible to get coverage on the same day you apply. For most people, the first step to getting a renters insurance policy is to obtain quotes from multiple insurance companies. Most companies offer personalized quotes online or by phone, or you could visit a local agency to speak to an insurance agent about your needs. During the quote process, you typically need to provide personal information like your name, address and date of birth.
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Because there are several insurers that offer renters insurance on the market, you may not know where to start your search. Determining what kind of coverage you need and what features you want — like a digital app, 24/7 customer service or a live agent — may help you to find carriers that fit your needs. You can then request quotes from several companies to compare prices, coverages, discounts and features.
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If you rent out a property, you may want to consider a landlord dwelling policy. This type of policy covers the structure of the home, detached structures and any personal property that you provide for the home (such as furniture). Your renters should consider purchasing a renters insurance policy, though, because a landlord dwelling policy does not provide any coverage for renters’ possessions.If you operate a short-term vacation rental, you may want to speak with your insurance agent to make sure you have adequate insurance coverage. Your short-term vacation rental tenants likely will not need a renters insurance policy. If they already have a homeowners, condo owners or renters insurance policy, their personal property coverage should transfer to a short-term rental, just as it would transfer to a hotel room.
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That depends on the situation. Your pets are generally not considered personal property, so damage or injury to your pets is not typically covered by a renters insurance policy. For that, you need pet insurance. However, your liability coverage may cover damage or injury that your pets cause to others. However, some dog breeds and exotic animals are often excluded, and any animal that you do not disclose to your insurance company could also be excluded from coverage. Discussing your pet with your insurance company is often the best way to confirm your carrier’s guidelines.
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