Renters insurance provides a safety net for renters in the case of theft, natural disasters or even car break-ins. For example, if you went on vacation and your apartment was robbed, you could use insurance to replace your personal items, such as clothing, appliances, furniture and electronics.
The average cost of renters insurance is about $16 a month, and a typical policy may cover your personal property against theft for $25,000 and liability insurance for up to $100,000.
Even if you don't think you have a lot of expensive items, having to replace everything you own adds up. According to Esurance, the average person has about $20,000 worth of stuff.
Some apartments actually require you to get renters insurance as part of the agreement, and a landlord can require you to hold a policy to live under their roof. Dealing with replacing tenants' belongings isn't their business, and making tenants have the insurance makes sure that they don't have to deal with the problems that can cause.
Pro tip: During a move-out inspection, if damages to your apartment exceed the security deposit, your landlord can go after your renters insurance.
Mostly, renters insurance covers damages and theft, but there are also circumstances that may arise that would force you to move out of your apartment and live elsewhere for a while. In this instance, it could help pay for your housing (see No.3 below).
Renters insurance typically provides the following:
You probably have a lot more things in your apartment than you realize. All of your belongings are covered if something is damaged or stolen.
Liability covers you if you're responsible for an accident or someone else gets injured on the rental property.
If your apartment becomes unlivable and you're forced to stay somewhere else, your insurance can help out with hotel bills and other living expenses during that time.
This is the area that varies most from place to place, but some natural disasters can be covered by renters insurance. If you live in an area particularly prone to specific natural disasters (for example, earthquakes in California), you may need a separate insurance policy for that.
The best policies may provide a wider option for coverage, including:
When looking for the best insurance that's right for your situation and needs, there are two basic types of coverage to consider:
This protects your personal belongings in the event of a fire, theft or other damage. Keep in mind, this doesn't cover earthquakes or floods. If you live in areas that are prone to both, make sure to ask your insurance provider about that. Some policies will pay replacement costs, while other policies cover what your property was worth at the time of the theft, damage or loss.
This kind of coverage shields you against damage caused by you. For example, let's say you accidentally left the water in your bathtub running and it overflowed and caused damage to your neighbor's unit. You would be on the hook for everything from the repairs, medical bills and legal fees.
Their insurance only covers the building itself. Your belongings are your responsibility, not covered by your landlord's insurance.
In an ideal world, you may never experience a break-in. That's not the only thing that can be a problem though — there's fire, flooding or someone injuring themselves on your property. These can all cost you a lot of money, and having renters insurance will cover you in that situation.
Most insurance companies sell renters insurance. Don't forget to ask about the company's bundling policy for a discount.
If something were to happen to you, your property or possessions, you don't want to be left uncovered. Renters insurance can be a low-cost way to protect yourself and your wallet.