What is Renters Insurance?

Renters’ insurance can be thought of as a specialized subset of homeowners’ insurance, covering many of the same liabilities, including the property of individual tenants as well as minor damage to the rented structure. While less common for small rented spaces, many landlords maintaining larger sizes of rental properties include renters’ insurance as a prerequisite for prospective tenants.

Because the coverage of the actual building is somewhat limited, renters’ insurance usually is much cheaper than homeowners’ insurance. Pricing also is heavily dependent on your location (different states in the US have different trends.) Perhaps most importantly, you can lower the cost of your renters’ insurance by choosing how much coverage you want. The price of an average policy will be in the low double digits. Don’t think that you have to buy coverage for the full value of your total possessions if it’s not worth it.

When choosing a renters’ insurance policy, you’ll also want to consider whether to go with replacement value or cash value-based coverage. The key difference between these types of coverage lies in depreciation: the decreasing value of your insured assets over time. Actual cash value is best used for belongings with little depreciation, while you’ll get a better deal with replacement value in cases of assets with high depreciation. For example, a stolen pair of worn-out shoes could be replaced with a brand-new equivalent pair under replacement value, but would net a paltry payment under actual cash value. Of course, since replacement value usually is preferable, it’s correspondingly more expensive!

However, renters’ insurance also is more than just what the tenant owns. Some other examples of items covered under renters’ insurance include:

  • Negligence-based bodily injuries.
  • Injuries without fault for individuals who aren’t related to the tenant.
  • Living expenses that are related to other covered incidents, such as needing to rent a hotel room temporarily.

One specific scenario worth emphasizing is the frequency of loss of tenant possessions due to theft. If a potential tenant is considering renting in a high-risk area for this crime, such as a large apartment complex, he or she will want to look into policies that provide good coverage for theft and related named perils, including vandalism. Remember, a policy always will mention what it covers specifically; any unmentioned scenarios should be assumed to be uncovered.

For more information, please do not hesitate to contact our agents. We would be happy to discuss!

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