Apartment dwellers: Don’t miss out on the protection that renters insurance offers


happy woman with boxes at a new aparment

Great, you have a great new apartment. You’ve thought of everything – the mover, the new furnishings, the utilities. You’ve got everything covered. Or do you?

Too few people are taking advantage of one of the most affordable and practical forms of property insurance available: Renters insurance, or sometimes also called tenant’s insurance. According to a 2016 poll by the Insurance Information Institute, while some 95% of homes are covered by homeowners insurance, just over 40% of tenants carry renters insurance.

Homeowners insurance, is, of course, required for a mortgage. Banks want to protect their assets! It’s much less common for landlords to require a renter to have an insurance policy – it’s usually optional. In either case, having an insurance policy that covers the loss of your possessions just makes sense. Most renters insurance policies also offer liability protection and coverage of additional living expenses.

Who need renters insurance?

If you rent, you do! Your landlord’s insurance does not cover your possessions. Their insurance covers the building and grounds, not the contents of each unit. Tenant’s insurance covers your belongings in the event of fire or smoke damage, vandalism or theft, lightning, and some specific types of water damage (such as a burst pipe or a forgetful upstairs neighbor leaving the tub running).

A great way to help determine what coverage you need is to make a home inventory. This will help you get an accurate picture of the value of your belongings, and that, in turn, will inform your renters insurance policy choices. Having your possessions accurately and thoroughly documented will also be a huge help if you need to file a claim. For help with making a home inventory, check out how to create a home inventory.

What else does renters insurance cover?

Many policies also offer off-premise coverage. This means that belongings outside your home (such as items in your car or hotel room) are protected just like they were sitting in your living room.

Renters insurance also offers liability protection. This covers you from lawsuits should someone be injured on your property. Your policy will cover the cost of a court defense, up to the limits of the policy.

Some tenant’s insurance policy also cover the costs associated with the aftermath of a home-destroying disaster: hotel rooms, rental cars, meals, and other expenses incurred while you home is rebuilt or you are able to relocate.

Determine your policy needs in consultation with your independent insurance agent. She can recommend additional policy provisions such as extra coverage for valuables like jewelry, art, or firearm collections; a policy deductible that suits your circumstances; and umbrella liability protection beyond the scope of your renter’s policy.

What isn’t covered?

While renters insurance offers significant protection from many common disasters, there are a couple of big exceptions. Most tenant’s insurance policies do NOT cover flood damage. Insurance for flood damage is available from the National Flood Insurance Program. Most rental insurance won’t cover earthquake damage. Policies specifically covering earthquake can be purchased separately or added as an endorsement to your renters insurance policy. You should also talk to your agent if you have any valuable collections that may need additional coverage.

How much does renters insurance cost?

The short answer is: not much, compared to the cost of replacing all your stuff. Your independent insurance agent can help you find a policy with the coverage that suits your needs. She’ll help you decide whether you need “actual cash value” or “replacement cost” coverage. Actual cash value pays out what your possessions are actually worth, including depreciation. It’s more affordable, but pays out less than a replacement cost policy, which would pay what it would take to replace the items if you bought them today.

Your independent insurance agent will also steer you toward any available discounts, too. Policies bundled with car or business policies are often discounted. Discounts are also sometimes available for having a security system, proper smoke detectors, and deadbolt locks. Your age, credit history, and length of time with the same insurer can also trigger significant policy savings.

Ask your independent insurance agent

If you have renters insurance already, it’s still a good idea to go over the policy once a year in consultation with your independent insurance agent. Your circumstances may have changed. Your insurance should reflect those changes. If you don’t have rental insurance, ask your insurance advisor for more information, make a detailed home inventory, and get some quotes. You may be surprised at how affordable tenant’s insurance policies are. And if the worst happens and you are a victim of theft, vandalism, or natural disaster, you’ll rest easy knowing that you were properly prepared.