Is Renters Insurance Worth It? What It Covers and What It Doesn’t

Because only 37% of renters have renters insurance, it may not appear to be something that every renter requires — but it is. You can protect everything you own from theft and damage for as little as $12 to $15 per month, and it covers a lot more than you might think.

Before you buy renters insurance, here's what you should know about it.

What Is Covered by Renters Insurance?

Renters insurance's overall purpose is to cover a renter's personal property if it is damaged or stolen, so if it falls within those parameters, it is usually covered.

Most insurance companies will cover everything you own and include in your policy, even if it isn't in your apartment. This includes anything you bring with you on vacation, whether it's in your car or anywhere else. If it is damaged or stolen, it will be covered by your renters insurance as long as you own it.

Some renters insurance policies cover damages to other people's property for which you are responsible, whether it is property in a friend's apartment or property in other units in your building. If it's the latter, your insurance will cover any damage to other units that isn't covered by your security deposit. Renters insurance, on the other hand, does not cover damage to the rental itself. The repair will be paid for by the person who caused the damage, your landlord, or your security deposit.

Renters insurance also covers the cost of temporary lodging in a hotel or elsewhere if your apartment and its contents are destroyed by a natural disaster. This money would cover the costs of temporary housing, food, laundry, and so on.

Finally, if your renters insurance policy includes a liability clause, it may cover personal injuries or property damage that occur in your apartment or are caused by you. That is, if you decide to include a personal liability clause in your policy, your renters insurance will cover the medical or legal expenses of anyone injured in your apartment.

What Doesn’t Renters Insurance Cover?

When shopping for a renters insurance policy, it's critical to understand what each plan does and does not cover so you can determine which one is best for your needs.

Certain common natural disasters may not be covered by renters insurance in some states, necessitating the purchase of a separate policy. For example, earthquakes are not covered by California renters insurance, and flooding is not covered by Florida renters insurance.

In general, renters insurance will not replace damaged or stolen items without proof of ownership because the insurer will never know if the item is truly yours. This can be challenging, especially if you do not keep physical or digital receipts for each item purchased. It is not necessary to have a receipt for a stolen or damaged item, but you must prove that the item was once yours. All expensive purchases should be documented (physically or digitally); for inexpensive purchases, have photos, receipts, credit card statements, or detailed descriptions of the items for your insurance provider.

Unless you are married or related, renters insurance plans will not cover your roommate's property.

Pest infestations are also not covered by renters insurance, which means that the cost of pest-related damages, as well as the cost of an exterminator, will be borne by you as a renter or your landlord, depending on the circumstances.

Renters insurance will not cover pet damages to your personal property, but it will cover pet damages to other people's property. For instance, if your dog destroys your neighbor's chair, the cost of repair is covered. It will also pay for veterinary care or medical bills if your pet injures another animal or person inside or outside your home. Some breeds are not covered by insurance policies, so check your policy to see if your pet is covered.

When it comes to renters insurance, package theft can be a confusing subject. Because theft of personal items is covered by renters insurance, package theft should be covered as well, as long as you can prove that your package was stolen. This can be accomplished by providing proof of purchase, delivery, and even a statement from the company stating that it was delivered, depending on the limits of your policy.

That being said, filing a claim with your insurance provider for the stolen package may not be worth it if it is not worth more than your deductible, as you may end up paying more money just to have it covered. If the cost of the package exceeds the amount that your renters insurance will cover, you can be reimbursed for a portion of it or add a rider to your policy that will specifically protect that item.

Is Renters Insurance Required?

Most of the time, you have a choice. It's probably a good idea if you live in an area where there are a lot of thefts. Yes, it makes sense to purchase renters insurance if you have a lot of valuable items in your apartment or simply want peace of mind. Depending on the plan, it can be reasonably priced and extremely useful when required.

Because renters insurance can provide just as much protection for your landlord as it can for you, your landlord may require you to have it before signing the lease. It lessens the likelihood of your landlord having to pay for any damages, pet injuries, relocation costs due to a natural disaster, or possibly stolen property.

How Much Renters Insurance Do I Need?

When selecting a renters insurance policy, you must decide on the amounts of coverage for 1) personal property, 2) loss of use, 3) personal liability, and 4) medical expenses.

To determine the amount of coverage for personal items, consider all of your possessions and how much it will cost to replace the items you will require in the event of an emergency. For example, if your laptop is damaged, you will most likely need to replace it before considering the cost of smaller items such as kitchenware. If you think in this way, you can set aside an amount that is both realistic and worthwhile.

Budget for all necessary living expenses for an extended period of time when deciding how much money is needed for loss-of-use or temporary living expenses if your apartment isn't livable for some time. This total will tell you how much money you'll need to maintain your lifestyle until your apartment is habitable again.

The amount of coverage you want for personal liability and medical expenses can be difficult to determine. There are numerous factors to consider, such as where you live and whether or not you have a pet. In order to rent from your landlord or building association, you may be required to have a certain amount of personal liability coverage. That being said, consider how much money you want to set aside to cover potential medical bills, legal fees, or damage costs. Be realistic about how expensive medical and legal bills can be, and budget enough money so that you won't have to shoulder that financial burden on your own.

We frequently believe that our belongings will always be safe; that they will never be damaged or stolen. Why spend money protecting it if there is only a chance that things will go wrong? However, when you consider the value of all your belongings and the cost of replacing them, getting renters insurance may be the simplest decision you make.

If you believe renters insurance is appropriate for you, or if your landlord or building requires it, begin with a low-cost renters insurance option like Lemonade. Lemonade offers low monthly payments, competitive coverage, and an easy-to-use app to assist you in obtaining the insurance plan you require. If you already have insurance but are dissatisfied with it, Lemonade can assist you in switching.