Renters insurance is an investment. Not an expense.
When you rent, renters insurance is an inexpensive way to protect your belongings.
I say “inexpensive” because it usually does not cost much, and while some plans may not cover everything in case of a disaster, having renters insurance is 10 times better than having none at all.
If you’re planning on renting an apartment while you attend college this fall, renters insurance is a must-have.
What does renters insurance cover? By the end of this article, you will know the answer to that question.
What Does Renters Insurance Cover?
Every company is going to call their renters insurance program something different.
Additionally, companies will have different add-ons that may or may not be relevant to you.
However, what you’re looking for with renters insurance, regardless of company, is whether your property is protected.
So, make sure your personal effects are protected in case they are destroyed and the dollar amount is up to the amount needed for the company to cover your destroyed belongings.
A typical renters insurance policy will cover:
- Fire damage
- Smoke damage
- Lightning damage
- Water discharge such as when water sprinklers go off
Under theft, there are policies that will cover your stolen item even if it does not happen in your rented apartment. Make sure to ask about this as well.
Let’s say a friend of yours visits your apartment and accidentally falls down while they are there. If they later decide to sue you for damages, renters insurance can cover that. This is called a personal liability.
Other personal liabilities include:
- Dog bites: There are over 18,000 dog-bite claims in the U.S. each year and each claim can cost up to $35,000.
- Swimming pool injuries.
- Intoxicated guests: If you serve alcohol in your rented place and a guest hurts themselves while drunk, this is a personal liability as well.
- Falling trees.
- Injured workers: They are also covered under renters insurance. If there is a repair person working on your rented property and they get hurt, your renters insurance would cover that.
A falling tree cannot be prevented. But most of these liabilities can. So apply common sense, especially when you have guests over.
Accidents That You Cause
If you accidentally left a candle lit and that causes a fire in your rented apartment or house, renters insurance may cover that as well.
Make sure to clarify this with your renters insurance before signing on.
Additional Living Expense Coverage
If for some reason you have to evacuate your rented space and go live at a hotel, your renters insurance may cover those costs as well.
What If You Have a Roommate?
If you have a roommate, your renters insurance policy does not cover their belongings. And if a disaster happens, they will not receive anything.
Therefore, I highly recommend that you encourage your roommate to get their own renters insurance.
Thankfully, it is inexpensive enough to afford. And if they are already paying for car insurance, they might be able to get it through their insurance company for an even reduced rate.
What Does Renters Insurance Not Cover?
As annoying as pests are, renters insurance does not cover the damage they cause. This also means your renters insurance will not cover the cost of an exterminator. So, if there are pests in your apartment, talk to your landlord so they can take precautions against them.
Renters insurance covers your belongings. It does not cover the building that was holding your items. And so again, if you have a leaking roof, it will be in your best interest to talk to your landlord about fixing it.
As I mentioned before, your renters insurance will not cover your roommate’s belongings. Encourage them to get their own renters insurance.
Any items that are not documented as yours will also not be covered by renters insurance.
What does this mean? It means you should keep receipts of all your expensive personal effects. This will help you prove how much those items are worth. In addition, you can take pictures of all the items in your apartment so that you can give them to the insurance company when a disaster strikes.
Keeping a record of your belongings — especially expensive ones — will make your claims go way easier!
If someone steals stuff from your car, those items will be covered by renters insurance, but damage to the car will not.
If You Live in a Place That Regularly Has Natural Disasters
If you live in an area that is known to experience floods, hurricanes, or fires regularly, renters insurance in these areas will look differently.
In fact, in those instances, most renters insurance companies will not cover damages from these disasters. If this is the case for you, ask your insurance agent about add-ons — for example, flood insurance — so that you are covered in case of such an event.
The cost of replacing all of your things after they have been stolen or destroyed by fire is expensive.
You can get renters insurance for as little as $5 per month.
With the right protection, you will save yourself the heartache of replacing all your items after an unfortunate event.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.