Small cost, big protection: Why renters insurance is worth it — plus 5 steps to getting covered

You come home after a long day at work to find your apartment flooded from a burst pipe upstairs. Your furniture is soaked and your electronics and cherished items are ruined. Now imagine facing thousands of dollars in replacement costs — all on your own. While unpleasant to think about, this type of scenario is more common than you may think.

The good news? For about the cost of a weekly coffee, you could be protected from this type of financial disaster. The fact is, renters insurance is one of the most affordable – yet underutilized – types of insurance available. Despite approximately one in three Americans renting their homes, yet under 40% carry renters insurance coverage.

So, why the gap? Well, many renters mistakenly assume their landlord’s policy extends to their personal belongings or underestimate the true value of what they own. But this can be a costly oversight.

With that in mind, let’s explore what renters insurance actually covers and how this relatively affordable safeguard can help protect everything you’ve worked hard to acquire.

What is renters insurance – and why it’s worth it

Renters insurance is a policy designed specifically for people who rent their homes or apartments. Think of renters insurance as homeowners insurance minus the coverage for the physical structure: It protects everything inside your four walls (and more).

Safeguards extend beyond property protection. Coverage also includes liability protection that pays for medical bills and legal expenses if you’re found responsible for injury to another person or damage to their property. And if you’re temporarily unable to live in your home after a fire, storm or other covered event, your policy covers hotel stays or short-term rentals, rental cars, storage fees and more until you’re able to return. All this for about $15 a month on average, depending on your needs and where you live.

What renters insurance typically covers

A standard renters insurance policy — sometimes called an HO-4 policy — generally includes four main types of protection.

1. Personal property coverage

While your landlord’s insurance covers the physical building structure, it provides zero protection for your personal belongings.

That’s where personal property coverage steps in. This cover protects your personal belongings like your furniture, clothing, electronics, appliances and other personal items — up to your policy limits — against such covered perils as fire, theft and certain water damage, like that from burst pipes.

🏡 Expert tip: Many people underestimate the value of their possessions. Take a walk through your home and add up replacement costs for everything from your couch to your socks — the total can be surprisingly high!

2. Liability protection

Just as your belongings aren’t covered, a landlord’s policy doesn’t protect you from personal liability either. Renters insurance includes this essential liability protection, shielding you when you’re legally responsible for injuries to others or property damage. Say a delivery person trips on your stairs and decides to take legal action — your coverage could pay for both their medical costs and your legal defense up to your policy limits.

This key protection extends beyond your home too. For example, if your normally friendly golden retriever escapes and bites your neighbor, or if you accidentally break a $7,500 Lalique vase while visiting a friend’s house, your renters liability coverage would typically help cover the resulting costs.

⚠️ Warning: Not all dog breeds are covered by standard renters insurance or homeowners policies. Many insurers exclude certain breeds they consider high-risk, so be sure to check your policy for any exclusions.

3. Additional living expenses (ALE)

Also known as loss of use coverage, this benefit pays for temporary housing and related expenses if your rental becomes uninhabitable due to a covered loss or disaster.

While often overlooked, having to vacate your apartment for weeks during repairs (like after a burst pipe) can quickly become costly. Hotel bills, restaurant meals and other expenses above your normal living costs could amount to thousands without this coverage — adding stress during a time when you least need it.

4. Medical payments

Medical payments coverage can help if a guest gets hurt on your property, regardless of who’s at fault. For instance, if a visitor trips, falls and needs an X-ray to check for a fracture, this protection could cover their medical expenses up to your policy limits. This differs from liability insurance, which typically comes into play when you’re legally responsible for someone’s injuries.

💡 A real-life renters insurance scenario (and some important takeaways)

A Reddit user shared their eye-opening experience with renters insurance following a home break-in.

What renters insurance won’t cover

When it comes to insurance, knowing what your policy doesn’t cover is equally important as knowing what it does. Despite their comprehensive coverage for many loss scenarios, renters insurance policies typically exclude:

• Flood, earthquake and landslides damage. Standard policies won’t cover most natural disasters, though you may be able to purchase separate flood, earthquake and earth movement policies as a renter.

• High-value items. While renters policies cover personal belongings, limits up to $1,000 or $2,500 typically apply. If you own expensive jewelry, art, collectibles or electronics, you may need additional scheduled personal property coverage to ensure you’re covered in a loss scenario.

• Intentional damage. Damage you deliberately cause to your own property or to someone else’s is never covered by insurance policies. This applies to your home, your personal belongings and your vehicles.

• Pet damage. While your policy’s liability coverage might protect you if your pet injures someone outside of your household — like a mail carrier or guests — damages or injuries your pet causes to your own family members or property typically aren’t covered.

• Business property. Items used in your rental for business purposes are generally not covered by a personal renters policy. If you’re a consultant or work from home in retirement, consider adding a business endorsement to your policy or buying a separate business or commercial policy to cover these items.

• Roommates’ belongings. Unless they’re specifically named on your policy, your roommates’ possessions won’t be covered by your insurance.

• Building structure damage. Damage to the physical structure of your rental property is covered by your landlord’s insurance — not your renters policy.

5 steps to getting renters insurance

Follow these five steps to secure your belongings with a new policy — and without breaking the bank.

1. Assess your coverage needs

Before shopping for renters insurance quotes, take time to determine how much coverage you actually need. This preparation will help you avoid overpaying for unnecessary coverage or finding yourself underinsured when you need to file a claim.

• Calculate your approximate total replacement costs for all possessions

• Choose an appropriate level of liability coverage (experts recommend $100,000+)

• Select a deductible you can comfortably afford

💡 Expert tip: If you don’t have one already, consider building an emergency fund for small losses to avoid filing for minor claims that can trigger big premium increases.

Learn more: Life-proof your savings: How to build an emergency fund on any budget

2. Research insurance providers

Before starting a policy, it’s a good idea to check the financial rating of the provider from agencies like A.M. Best. Companies with ratings of A+ or higher generally demonstrate strong financial stability.

Also read recent customer experiences on sites like Trustpilot, Reddit and the Better Business Bureau, focusing on claims-handling patterns that can reveal how the company performs when it matters to you most.

3. Compare at least three quotes

To get the best deal, compare three to five quotes from different insurers. Start with your current car or other insurance provider to see if you qualify for bundling discounts. Be sure to weigh not just prices, but also coverage limits, exclusions and available policy discounts. You could work with an independent agent to help navigate your options, although you might be able to find better deals on your own.

💡 Expert tip: Make sure you’re comparing identical coverage levels across providers. A seemingly cheaper policy might offer significantly less protection.

4. Choose and customize your policy

Once you’ve narrowed down your preferred insurance company, fine-tune your selected policy:

• Select replacement cost coverage over actual cash value when possible for better protection.

• Choose your preferred deductible — for example, higher deductibles can lower your premium but often require higher out-of-pocket expense when filing a claim.

• Add endorsements for high-value items that exceed standard limits, like electronics, jewelry and collectibles.

• Consider additional coverage for regional risks, such as flood, earthquake or hurricane coverage that standard renter policies exclude.

• Review liability limits to ensure you’re adequately protected against potential lawsuits.

• Add a business endorsement if you consult or work out of your home.

• Adding identity theft protection if it’s not included in your standard policy quote.

⚠️ Carefully read any policy exclusions — including flood damage, earthquake damage, sewer backups and other water damage exclusions — to understand what you aren’t covered for.

5. Purchase and maintain your policy

Complete and submit your application, and set up your payment plan. While many insurers let you pay monthly, most offer discounts if you pay your six-month or annual premium up front. Be sure to store digital copies of your policy and home inventory somewhere easily accessible, and remember to update your coverage after significant purchases or upgrades to your living space.

Learn more: How to switch your car insurance: 5 simple steps — and why it pays to shop around

How much does renters insurance cost?

Renters insurance is remarkably affordable for what you get, costing an average of $15 a month (or $170 a year), according to the Insurance Information Institute.

Factors affecting your premium:

• Location factors. Higher crime rates, disaster-prone areas and older buildings typically increase costs, while proximity to fire stations can lower premiums.

• Personal factors. Those with better credit scores and clean claims history typically snag age lower rates, while higher coverage amounts, lower deductibles and owning a pet can increase them.

• Policy choices. Replacement cost coverage costs more than actual cash value but provides better protection. Additional endorsements for high-value items and higher liability limits also increase premiums.

Learn more: Can your credit score affect your car insurance rates?

Filing a claim: The basics

Though most renters fortunately never need to file a claim, knowing the process in advance can make things easier.

Here are six general steps you’ll follow after an incident to file a successful insurance claim with your renters policy.

1. Document everything. Take extensive photos and videos of your damaged items before cleaning up or making repairs.

2. File a police report. For theft or vandalism claims, contact your local police department immediately. Most jurisdictions allow reporting either in person or through their website.

3. Contact your insurance company. Notify your insurer as soon as possible – most policies require prompt reporting.

4. Complete claim forms. This step involves providing detailed information about damaged or stolen items, including their approximate purchase dates and values.

5. Meet with an adjuster. After you file a claim with your insurance company, they’ll assign a claims adjuster to your case. Typically, the adjuster will visit your home to assess the damage, document losses and verify your claim details.

6. Receive payment. After your claim is approved, you’ll receive compensation based on your policy terms, minus your deductible.

💡 Expert tip: “It’s usually best to avoid filing a claim for small losses that you can afford to cover out of pocket. Most insurance companies increase your rates after a claim, and you might even be dropped if you have multiple claims within a couple of years,” says Rob Bhatt, Licensed Insurance Agent at LendingTree.

How to save on your renters insurance

While renters insurance is cheaper than a traditional home insurance policy, these strategies can help you maximize value while minimizing costs.

• Shop around for at least three quotes. The single most effective way to save is by comparing offers from several insurers. Insurance pricing varies significantly between companies, even for identical coverage.

• Bundle policies for discounts. Most insurers offer multipolicy discounts of 5% to 15% when you combine renters and auto insurance.

• Increase your deductible strategically. Moving from a $500 to $1,000 deductible could save you on your premium. Just be sure you can afford to cover the deductible from a healthy emergency savings fund if needed.

• Improve your credit score. In most states, insurers use credit-based insurance scores in determining rates. The higher your score, the lower your rates should be across all types of insurance policies.

• Install safety features. Smoke detectors, fire extinguishers, deadbolt locks and other home security upgrades may qualify you for discounts. Always check with your landlord before installing any permanent devices.

• Opt for paperless billing and automatic payments. These digital conveniences can save you on your premium while ensuring you never miss a payment.

• Check for affiliation discounts. Many insurers offer reduced rates for members of professional organizations, alumni associations or specific employer groups.

• Maintain a claim-free record. Avoiding small claims can help maintain lower renewal rates over time.

• Ask about age-based discounts. Some companies offer reduced rates for renters and retirees.

• Shop around every 6 to 12 months. The insurance market changes regularly, so requesting new quotes periodically can pay off. Many insurers streamline the process of getting multiple quotes.

Learn more: Is bundling your insurance worth the discount? The pros and cons of one-stop policies

Other stories in our insurance series

• When’s the best time to shop for car insurance? (It could be right now)

• What happens if you outlive your term life insurance policy? 4 key options to consider

• Top home security upgrades that can lower your insurance premiums

• 5 common pet insurance myths: The truth about cost, coverage and exclusions

• 8 health insurance options for early retirees: Ways to stay covered before Medicare kicks in

FAQs: Renters insurance and protecting your assets

Learn more about renters insurance with these commonly asked questions. And take a look at our growing library of personal finance guides that can help you earn money, save money and grow your wealth.

What’s the difference between replacement cost and actual cash value coverage?

Replacement cost coverage pays to replace damaged and stolen items with new ones of similar quality, without deducting for depreciation. Actual cash value coverage pays only what items are worth at the time of loss (original cost minus depreciation).

If I work from home, does renters insurance cover my business equipment?

Standard renters policies may or may not cover business-related property (up to certain limits). If you have expensive equipment or regularly conduct business from home, consider adding a business property endorsement or purchasing a separate business insurance policy.

Does renters insurance cover items in storage units?

Most policies provide some coverage for belongings in storage facilities, typically 10% of your personal property limit. For example, if you have $50,000 worth of personal property cover, you would only have $5,000 worth of cover in storage.

How quickly can I get coverage?

Most insurers can provide same-day coverage after you’ve completed your application and made your payment.

I’m a pet owner. How is renters insurance different from pet insurance?

Renters insurance protects you with personal property coverage, liability protection and benefits like payments for temporary housing or medical bills after a covered event. For pet owners, a typical renters policy may cover liability costs if, say, your pet hurts a guest or damages your rented property, yet it won’t pay for your pet’s illness or injuries after an accident.

That’s where pet insurance comes in. This coverage pays for unexpected or emergency veterinary care for your pet, along with other benefits like reimbursement for preventive care, depending on your policy. Learn more about costs, coverage and exclusions in our guide to common pet insurance misconceptions.

Will filing a small claim increase my premium?

Very likely yes. Insurance companies typically raise rates after claims, so for minor losses barely above your deductible, it might be more economical to pay out-of-pocket rather than risk a premium increase.

Sources

• 100+ U.S. Rent Statistics and Trends [2025], Apartment List. Accessed May 30, 2025.

• Number of Renters Is On The Rise—But Few Of Them Have Insurance, Insurance Information Institute. Accessed May 30, 2025.

• Renter’s Insurance – wanted to share my experience, Reddit. Accessed May 30, 2025.

• Facts + Statistics: Renters insurance, Insurance Information Institute. Accessed May 30, 2025.

About the writer

Kat Aoki is a seasoned finance writer who’s written thousands of articles to empower people to better understand technology, fintech, banking, lending and investments. Her expertise has been featured on sites like Lifewire and Finder, with bylines at top technology brands in the U.S. and Australia. Kat strives to help consumers and business owners make informed decisions and choose the right financial products for their needs.

Article edited by Kelly Suzan Waggoner

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