Renters insurance covers costs associated with damage to your personal property, personal liability damages, emergency medical expenses for guests and living expenses if your apartment becomes unlivable. However, not every event related to these categories will be covered by your renters insurance policy, as certain events or “perils” are excluded. Before you make a claim, read on to be sure it will be accepted by your insurance company. Your agent can also advise you. We recommend anyone renting a residence to consider purchasing a policy as an affordable way to protect you from the financial impact of these events.
What is Renters Insurance?
A simple definition of renters insurance is a policy for people who don’t own the property they live in that will protect them from unexpected personal property damage costs and legal liability. Renters insurance can be bought by anyone renting an apartment, condo, home or other living space. Although the policy is similar to homeowners insurance, key differences include:
- Renters insurance does not cover the structure, or dwelling, of where the tenant lives. Damage to the building is the landlord’s responsibility, who will likely cover these risks with a landlord insurance plan.
- Renters insurance is much more affordable than homeowners insurance.
What Does Renters Insurance Cover?
Renters insurance generally provides financial protection through four coverage types.
- Personal Property Damage: If your personal property is damaged in a covered peril, your renters insurance company will cover the cost of the damage up to your policy’s limits. A covered peril is a damaging event listed in your policy such as fires, wind and theft.
- Personal Liability: If someone is injured on your residence, and the event is found to be due to your negligence, your policy will cover the costs of legal liability. A standard policy covers up to $100,000 in liability costs.
- Additional Living Expenses: If your rental home or apartment becomes uninhabitable, your renters insurance policy will cover the expenses.
- Medical Payments: Coverage for medical costs if a guest is injured on your property. Combined, these coverages provide tenants with substantial financial protection against unexpected events, but it’s important to understand which situations you’ll be covered under these categories, and which you won’t be.
Your Personal Property is Covered by Renters Insurance for Common Perils
The central feature of renters insurance is coverage of your personal belongings form common sources of unexpected damage. Personal property includes almost everything you own in and outside your rental unit or home. You may be thinking that you don’t own many things, so why would you need to get them insured?
When you tally it all up though – your furniture, bed, computer, electronics, clothing and other items – you may find you own more than you think. For example, Allstate estimates that for a standard two-room apartment, the value of the average renter’s personal property in the U.S. is approximately $30,000. That is not an easy amount to replace. Renters insurance will give you the peace of mind that you will be reimbursed for your stuff. Before purchasing your policy you should take inventory of everything in your home to understand how much you’ll need to get covered. Estimate the worth of all your belongings from the smallest item to the largest and save that list somewhere.
Finally, you should know that not everything that causes damage will be covered by renters insurance. It’s generally true that if your stuff is damaged in a fire, it’s covered by renters insurance, but if it’s damaged in a flood, it’s not covered. However, coverage can be specific to your insurer and its policies so you should always double-check to make sure.
What is Covered by Renters Insurance?
- Fire and Lightning
- Wind and Hail
- Smoke Damage
- Water Damage
- Falling Objects
- Storage Units
- Snow and Ice Collapse
Renters Insurance Covers Fire and Smoke Damage
Costs associated with fire and smoke damage are covered by every renters policy. According to the National Fire Safety Administration, residential fires average over $7 billion in damages per year, with the largest single cause of damages coming from electrical malfunction, averaging 15% of all dollar losses per year. However, every type of accidental fire will be covered. It doesn’t matter whether a fire started because a pet knocked over a candle or something was left on the stove.
Renters Insurance Covers Storm Damage by Wind, Lightning and Hail
Damage caused by storms is also covered in all renters insurance policies. If a storm rolls into your town and your personal belongings are damaged by wind, lightning or hail, your insurer will reimburse you.
Renters Insurance Covers Theft
If you ever worry about your stuff being stolen, a renters insurance policy can calm your fears. Your theft protection starts in your apartment and follows you anywhere you go. So if your stuff is stolen from you, inside or outside your home, your renters policy will take care of it – up to the limits of your coverage. For people who live in areas with a high rate of theft, such as college towns, renters insurance should be a must.
Renters Insurance Also Protects Against Vandalism
Damages due to vandalism are also covered. If your personal property is damaged by some mischievous egg-throwing teenagers, your insurance will pay for the costs associated with the damage. Just be aware that you likely have a deductible on your policy, which is the amount of damage you’ll have to cover out of your own pocket. You’re unlikely to find a renters insurance deductible below $250, and a few eggshells on your porch is unlikely to have caused damage exceeding that number. Also, renters insurance companies will generally exclude any coverage if the event takes place after a home has been vacant for more than 90 consecutive days.
Renters Insurance Protects Against Water Damage but Not Flooding
In the eyes of insurance companies, water damage and flooding are two different things, and only water damage is covered by a renters insurance policy. Water damage to your belongings may be caused by leaking water or a burst pipe. In this case you’re covered. If it is a flood, an act of nature resulting in water coming from outside your house, you generally are not covered. So if you live in Manhattan and there is a storm surge, flooding your downstairs, you won’t be covered unless you have separate flood insurance.
Renters Insurance May Cover Mold – To a Point
Mold damage will be covered as long as the mold is caused by another peril covered in your policy. For instance, if water damage leads to mold growth, your insurer will cover the cleanup. Policies may automatically include mold coverage up to a certain limit, such as $5,000, or offer it as a policy add-on at an additional price. However, it’s important to capture the infestation early. If you catch mold before it festers, not only will the standard $5,000 coverage likely be enough to cover the costs, but you will ensure that you don’t lose coverage of the mold due to negligence. A renters insurance policy will never cover a peril if you’re negligent, meaning that you allowed a foreseeable issue to come about. Finally, if mold is caused by a building defect, then it becomes the property owner’s responsibility, and your landlord’s building insurance will have to cover those damages.
Renters Insurance Protects Items in a Storage Unit up to Specified Limits
If you have property stored off premises in a storage bin, it would still be covered under your renters policies up to a certain amount. Usually a renters policy will limit coverage for storage unit items up to 10% of your total coverage. So if your policies gives you $30,000 worth of coverage for personal property, the items in your storage unit will generally be protected up to $3,000.
Renters Insurance Covers Liability Damages
Most renters insurance policies include $100,000 of liability protection covering the costs associated with a lawsuit filed against them, the damages can be extensive in the rare instance it happens. Say a visitor trips and injures themselves. They could potentially file a lawsuit against you to cover their medical bills. If someone were to pass away in your home, you would be financially shielded from any potential lawsuits from the person’s next of kin. Attorney fees will account for most of the cost of a lawsuit itself, but liability will also cover any bodily injury or property damages a policyholder might be ordered to pay a plaintiff. The only caveat is that insurance companies commonly write into their policies that it will only cover the expenses of an attorney of their choice. The attorneys appointed by insurance companies are generally experienced litigators and do work in favor of their assigned clients.
Renters Insurance Covers Additional Living Expenses
If your apartment were to become unlivable, your renters insurance will pay or help pay for the cost of living somewhere else. You should note that this coverage only applies if your dwelling becomes unlivable due to a covered loss – in other words, one of the perils named in your renters insurance policy. If your apartment in San Francisco or Manhattan burned down, it would be pretty costly to have to live in a hotel in one of those cities. Eating out every night would only add to that bill as well. If you have renters insurance though, both are covered up to the limits of your policy. If you live in an expensive city, it may be prudent to increase the limit on this part of your policy.
Renters Insurance Covers Emergency Medical Payments
Renters insurance policies include medical payments to cover guests if they are injured on your residence. This might include their hospital stay, surgical procedures, x-rays, dental expenses and other related costs. Unlike liability coverage, the fault of the injury does not matter, so regardless of cause your guest can be covered under this category up to policy limits, which usually range from $1,000 to $5,000. This coverage extends exclusively to guests so it won’t cover anyone who lives on the property or is listed on your policy.
Miscellaneous Things Covered by Renters Insurance
In addition to the four primary coverages, renters insurance policies often provide other supplementary coverage. Debris removal (if necessary after a covered loss) is typically included, along with emergency repairs necessary to protect covered property. An example of this might be if a fire destroys the interior of a renter’s unit and they are responsible for removing what is left of their belongings. A necessary emergency repair would also include boarding up a door or window to secure a residence after someone broke into it. Renters insurance usually covers service charges up to about $500 from a fire department, as long as a service call was related to a covered event. You cannot file a claim for this otherwise.
Although uncommon, some renters insurance policies will cover building additions and alterations a renter might have made to their home. The majority of building owners or landlords do not allow such changes to be made to a rental, at least without their permission. However, if a renter did invest their own money in an addition or alteration, they might be able to file a claim for it if it were damaged. If you do make an addition to the property, you should inform your insurer in advance so they’re aware of the change. This coverage will usually be limited as a percentage of your overall policy limits. For example, an insurer may cover damages to improvements made by you to the building up to 10% of your policy’s personal property coverage limits.
Optional Renters Insurance Coverage
There are a number of optional add-ons, or endorsements, a renter can add to their policy to bolster their coverage. These might be necessary to expand a category limit or cover a peril that otherwise would not be covered. For example, a renters insurance policy may offer a sinkhole endorsement that would protect your belongings against that peril. If the coverage you need is not available, you might need to purchase an additional, separate insurance policy to ensure they are adequately covered.
What Does Renters Insurance NOT Cover?
The personal property and liability coverage provided by renters insurance won’t cover all your risks. For example, property damage due to floods won’t be covered and liability coverage for more dangerous dog breeds may also be excluded. Coverage may also be more limited for specific high-value items, such as jewelry. Below we’ve listed some of the more common coverage exclusions and limits in renters insurance policies. Renters insurance will rarely – or never – cover damage to your personal property for some specific perils, such as natural disasters and pests.
- Bed bugs and other pests
- Damage to your car
- Your roommate’s possessions
Renters Insurance Generally Does not Cover Bed Bugs and Other Pests
Most renters insurance policies will not cover damage costs associated with bed bugs, with limited exceptions. Along with other pests, such as rodents, they are considered a maintenance issue, and not covered under your standard renters policy. You will likely have to pay for extermination services out of pocket.
Renters Insurance Does Not Cover Earthquake Damage
Renters policies do not cover much in the event of an earthquake. Whether the earthquake causes damage to your personal property, or the quake causes a water leak that floods your apartment, you will not be covered. You will need a separate earthquake insurance, or a policy endorsement, in these cases.
Renters Insurance Does Not Cover Damage To or Theft of Your Car
If you own a car, its damage or theft will not covered by your renters policy. You will need a car insurance policy with comprehensive coverage. Belongings inside your car at the time of the theft, however, are covered by renters insurance.
Renters Insurance Does Not Cover Your Roommates
Renters insurance policies generally do not cover damage costs associated with your roommate’s belongings. In order for them to be covered they have to be listed on the policy, in which case you could split the cost of renters insurance. We would recommend not adding them however, unless they are related or a spouse. Adding a non-relative to your policy may save you some money, but it will split coverage among all those assigned to the policy. So if your policy insured up to $20,000 in damage, you and your roommate would split that coverage for all your possessions.
For more information about policy limits and what is and isn’t covered by renters insurance, talk to your insurance agent, or give us a call at American Heritage and we can help you get a policy started.