How Much Renters Insurance Do I Need?

by Team eLocal
illustration of a living room with price tags attached to various items

You might not think about getting insurance to cover your property when you're a renter. You're not responsible for the structure of your rented residence, but you still have to protect all your belongings.

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Your landlord's insurance won't pay to replace any of your belongings if fire, water damage or other covered losses destroy them. Find out how renters insurance coverage works and how much coverage you need.

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What Does Renters Insurance Cover?

Renters insurance typically provides three types of coverage: personal property, liability and additional living expenses.

The personal property coverage reimburses you to replace or repair anything you own, including your clothes and furniture. You'll get up to your coverage limit for these items. You can choose between actual cash value and replacement cost coverage. Actual cash value takes depreciation into consideration and compensates you for the used value of the item. Replacement cost pays you for what it would cost to replace the item today, even older items that are worth less now. You'll get more money from this option, but you'll also pay higher premiums.

Liability coverage pays someone else if you're at fault. For instance, if you damage someone else's property accidentally, your renters insurance will pay the owner for the repairs. It can also cover medical expenses if a guest in your home gets injured and you're responsible for the injury.

If your residence suffers a loss that makes it uninhabitable, the additional living expenses coverage will kick in. It covers the extra expenses beyond your normal expenses associated with having to live somewhere else. For example, it could help pay for a hotel room that you stay in temporarily until you can move back into your home.

Not all perils are covered by renters insurance. Things that are typically covered include losses from:

  • Fire
  • Smoke
  • Water damage from plumbing issues
  • Wind, hail and some other weather issues
  • Theft
  • Vandalism
  • Objects that fall on the roof

Damage due to floods and earthquakes isn't covered by standard renters insurance policies. You can buy separate policies if you live in areas prone to those issues. It also doesn't cover the structure or any permanent items in the rental, such as appliances, or any of your roommates' belongings.

What Amount of Coverage Is Typical?

Coverage amounts can vary significantly depending on your situation and needs. The standard liability amount for a renters insurance policy is $100,000. While this is typically enough liability coverage for a renter, you can increase that amount if you want additional protection, especially if you're a frequent entertainer. Having more liability coverage can give you peace of mind if you're in a situation where you're liable for injuries or damages.

The personal property amount can be more variable because everyone's belongings are different. A good amount for many renters is $30,000 in personal property coverage. That might seem like a lot, but you should think about a major peril like a fire that destroys everything in your home. Replacing everything you own would add up quickly — many articles of clothing and shoes, all your furniture and electronics like computers and TVs. Many people choose higher limits for their coverage to ensure they're well-protected.

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How Do I Know How Much Coverage I Need?

This is a common question many renters ask themselves when they look into starting a policy. The answer varies for each person, depending on how much they own and how they want to be reimbursed in case of a loss. You want to be as accurate as possible when calculating your coverage needs. Your renters insurance won't pay more than the limit you choose, even if you spend more to replace your items.

To determine how much coverage you need, start by taking an inventory of everything you own. Go through each room and write down your possessions. Assign an estimated value to replace each item. Total all of your belongings to get an estimated amount to replace everything.

If you have any high-value items, such as expensive jewelry or original artwork, you likely won't receive the full value under your regular renters insurance coverage. You can sometimes increase the coverage on those items through scheduled personal property coverage.

Your insurance agent can also help you choose the amount of renters insurance coverage you need based on the size of your rental and what you own. They can give you quotes for different coverage amounts, so you can compare the prices. You might find the renters insurance premiums don't increase much with higher coverage amounts. You can also adjust the deductible amount to lower the price. Find a balance between how much coverage you have and how much the insurance premiums cost.

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