What Is Renters' Insurance and What Does It Cover?

Most homeowners know that they need home insurance to cover loss or damage to their property — and if you have a mortgage, you usually have no choice. But if you’re one of the more than 100 million Americans who are renting instead of buying, don’t overlook the value of renters' insurance.

As more and more seniors choose to rent in retirement as a way to free themselves of the responsibilities of homeownership, it's more important than ever to brush up on what renters' insurance is, what it covers and when you need it.

If your rental home is damaged during a fire or a break-in, your landlord is responsible for repairs to the property you’re renting, but not for fixing or replacing your personal possessions.

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That’s where renters' insurance comes in. Policies typically cover up to a limited dollar amount for clothing, furniture and electronics. Here's what you need to know before you shop for renters' insurance.

What does renters' insurance cover?

Happy Senior Couple Playing Guitar Together in New House Surrounded With Boxes After Moving

Most renters insurance policies cover your personal belongings, including furniture, electronics and appliances. If your things are destroyed in a disaster, stolen during a break in or otherwise damaged by a covered peril.

Particularly valuable items, such as jewelry, artwork and collectibles, may require that you get additional coverage, known as a rider or a floater.

When shopping for a policy, be sure to tally up the value of your belongings as accurately as possible and determine whether the policy’s limits are adequate.

You'll also often have the option to add coverage for additional living expenses or liability. The first covers your costs if you're forced to move out temporarily while your unit is being repaired.

Renters' liability insurance protects you from being sued for injuries or property damage that happen in your rental unit. For instance, if your pet bites someone, your policy could cover medical expenses.

Renters' insurance may also cover the belongings of your roommate or significant other, as long as their name is on the policy.

But many insurance companies will require roommates to have separate policies, rather than one for their combined property. Theft by a roommate is generally not covered by renters' insurance, so choose your roommates wisely.

Renters' insurance generally won’t cover damage to your personal property from natural disasters, such as hurricanes or earthquakes, says Janet Ruiz, spokeswoman for the Insurance Information Institute. For that, you’ll need to purchase special coverage.

How much is renters' insurance?

Although renters' insurance could save you a lot of money, it doesn’t require a big investment. “It’s one of the most affordable products you can get — often as low as $300 a year,” Ruiz says.

Unlike homeowners insurance, which can cost as much as three times the national average in some states (such as Florida), renters' insurance is usually inexpensive no matter where you live, Ruiz says.

Tips to cut the cost of renters' insurance

A mature couple walking up to a house with a "for rent" sign in front of it.

There are a number of strategies to cut the cost of renters' insurance.

You may be able to get a discount by buying a policy from the same company that insures your car, for example.
You may also get a discount if you take steps to make your rental property safer from break-ins, such as installing a security camera, says Dustin Lemick, an industry expert and founder of BriteCo, a jewelry insurance company.
It’s important to shop around. You can compare coverage and costs of various renters' insurance policies at sites such as TheZebra.com and Gabi.com.
And keep an eye on changing premiums. “Insurance companies are notorious for raising rates, and policyholders don’t even know it,” Lemick says. “Put a note in your calendar every eight to 10 months to review your policy and make sure your premiums haven’t gone up.”

Emma Patch joined Kiplinger in 2020. She previously interned for Kiplinger's Retirement Report and before that, for a boutique investment firm in New York City. She served as editor-at-large and features editor for Middlebury College's student newspaper, The Campus. She specializes in travel, student debt and a number of other personal finance topics. Born in London, Emma grew up in Connecticut and now lives in Washington, D.C.

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