How to Get Renters Insurance in 4 Easy Steps

According to a recent report by SafeHome.org, about 55% of renters have insurance. However, a survey from the report finds that 16% of renters who don’t have a policy say they are likely to buy one in the coming 12 months.

If you’re buying renter’s insurance for the first time, you may be relieved to know that it’s fairly easy to buy. It’s also fairly affordable: the national average rental insurance policy costs around $15 per month.

Best ways to get renter’s insurance

To make sure you get the optimal policy for your needs, follow a few steps when shopping for renter’s insurance.

1. Understand what is covered by a renter’s insurance policy.

A standard renter’s insurance policy has four coverages:

• Personal property. Insurance for your belongings.
• Personal liability. Insurance in the event you're held responsible for someone’s injuries or property damage, and are sued.
• Additional living expenses. Insurance that applies if your rented home is uninhabitable due to a fire or other incident, and you need to pay for alternative living arrangements (such as a hotel).
• Medical expenses. Insurance for injuries sustained by guests visiting your rented home.

Your insurer may also offer optional coverage for earthquake damage, identity theft, pet medical, or flood insurance through the National Flood Insurance Program (NFIP).

2. Find out what is (and isn’t) covered by your landlord’s insurance

A landlord is typically responsible for insuring the structure of the building—the walls, floor, roof, windows, etc., along with any common areas. They should also be responsible for fixing and maintaining any appliances and other semi-permanent or permanent fixtures within the apartment that you do not own. Nevertheless, check with your landlord and make sure none of these items are your responsibility.

3. Estimate the value of your property

One of the main reasons for buying renter’s insurance is to have financial protection if your personal belongings are stolen or destroyed by fire or other catastrophe. An important step is to complete a home inventory that lists your belongings, their purchase price and date of purchase, and their current condition and estimated value. Save receipts if you can and take photos of each item.

You’ll use your home inventory to help decide on a coverage amount (limit) for your personal property coverage.

4. Compare insurance companies

A recent study of 12 insurers published by USA Today showed a $257 cost difference between the cheapest and most expensive rental insurance companies. So while renter’s insurance is relatively affordable, shop around to make sure you’re getting the best possible price for the coverage you need.

You can get renter’s insurance quotes from many companies online at their websites. You can also turn to an independent insurance agent. Independent agents represent multiple companies and can do much of the shopping legwork on your behalf.

Mistakes to avoid when buying renter’s insurance

Missing out on discounts and choosing insurance with the wrong coverage levels can cost you. Here’s what to watch out for.

Underestimating or overestimating the value of your belongings

It may be impossible to assign perfectly accurate value estimates to your belongings. But do your best to be realistic. Do a bit of research—online auction and classified sites may help—to get an idea what your belongings are worth.

Underestimating your personal liability

Personal liability coverage provides financial protection if you’re sued. A common amount of protection offered is $100,000. If you have savings and other assets worth more than that amount that could be targeted in a lawsuit, consider bumping up your limit.

Not looking into discounts

Many insurers offer discounts for bundling renter’s insurance with another policy, such as car insurance. They also extend savings to those who choose to pay their policy in full, get a quote in advance of when coverage starts, opt for a paperless policy, and live in a home or apartment with safety and security features (such as smoke detectors and burglar alarms).

Not buying optional earthquake or flood insurance if you live in an area where it's advised

Standard renter’s insurance typically excludes damage caused by earthquakes or watershed flooding, such as a flooded river or ocean storm surge. But coverage options do exist and are advised if you live in a place where these types of events occur. Many companies offer optional earthquake coverage that can be added to a renter’s policy, or as a separate policy. Your company may also be able to help you get flood insurance through the NFIP.

Not updating your policy as your needs change

It’s a good idea to review and update your home inventory at least once a year. Perhaps you’ve bought new furniture to replace the hand-me-downs you started with. Or you’ve spent some money on a brand-new laptop. Or you’ve inherited your grandmother’s pearls. The point is that your need for coverage may have changed in the past 12 months. Take a look at your inventory, research the value of newly added items, and contact your insurer to update your coverage accordingly.

More about renter’s insurance

Renter’s insurance picks up where your landlord’s insurance leaves off. A landlord’s policy typically insures the building itself (home, condo, or apartment building), any common areas, and any permanent or semi-permanent appliances and fixtures within your unit that the landlord owns. A renter’s policy provides coverage for the things you own, while also providing financial protection in the event you’re sued or forced to move out of your home temporarily.

Renter’s insurance is generally not required by state law (like car insurance). But it may be required by a landlord as a condition of the lease. Be sure to ask about any insurance requirements before you sign a rental agreement.

What renter’s insurance covers

A renters insurance policy has four standard coverages.

Personal property coverage

This helps cover the cost of replacing your belongings if they’re stolen or destroyed in a fire, storm, or other covered peril (the renter's insurance company will list its covered perils in their policy contract). A claim payout usually reflects the actual cash value (a depreciated value) of your items. Replacement cost coverage, which bases claims on the cost of a brand-new item, is often an option.

Personal liability coverage

This provides financial protection if you’re held responsible for another’s injury or property damage. Say you have guests over for a party. One of those guests slips in your bathroom and hits his head on the bathtub. He could hold you responsible for any medical costs and other related expenses, leading to a lawsuit. Your liability coverage would help you avoid having to pay out of pocket.

Additional living expense coverage

This helps reimburse your living expenses if your rented house or apartment is uninhabitable while being repaired due to a fire or other catastrophe. It would cover expenses beyond your normal rent and grocery budget for things such as a hotel room and restaurant meals.

Medical payments coverage

This pays medical bills and related costs if a guest is injured on your property. The coverage applies regardless of who is at fault.

What renters insurance doesn’t cover

A standard renters insurance may not cover the following, though you may be able to buy optional coverages and additional policies to fill any coverage gaps:

• Damage caused by flooding or earthquakes.
• Expensive jewelry, artwork, firearms, or other items.
• Business property.
• Injuries caused by pets.

Policies also typically exclude the following altogether:

• Pest damage.
• Intentional damage.
• Normal wear and tear or maintenance issues.

TIME Stamp: Buying renter’s insurance is a no-brainer

Renter’s insurance picks up where your landlord’s insurance leaves off. It provides coverage for your personal property, while offering financial protection if you’re sued or you’re forced to temporarily move from your rented home. A policy is easy to buy and fairly affordable. Whether or not renter’s insurance is a requirement of your lease, you owe it to yourself to consider buying a policy.

Frequently asked questions (FAQs)

How much does renters insurance cost?

The national average cost of renter’s insurance is about $15 per month. That average varies by state and can also be affected by your choice of company and coverage needs.

Do you need renter’s insurance?

An increasing number of landlords now require tenants to have renter’s insurance as a condition of their lease agreement. Beyond that, renter’s insurance is generally not required by state law. But even if it’s completely optional, renter’s insurance is worth considering for the financial peace of mind it provides.

What are the best renter’s insurance companies?

Many of the country’s best-known insurers, including Allstate, State Farm, Lemonade, Progressive, and Travelers, sell rental insurance. Whenever you buy insurance, shop around with at least three or four providers to find a policy that works for you at the lowest possible price.

What are some tips for choosing a renter’s insurance policy?

When shopping for renter’s insurance, consider the following:

• Shop around to get the best combination of coverage and price.
• Ask the insurer if the company offers any discounts.
• Consider bundling your renter’s and car or life insurance (if you have it). Many insurers offer generous discounts for having multiple policies.
• Save time and effort by talking to an independent insurance agent—an insurance expert who represents multiple insurance companies.