Renters insurance is a type of homeowners insurance that replaces your belongings damaged or stolen. Your landlord has insurance that covers the building and structure, but your belongings inside the rental unit are your responsibility.
The biggest component of renters insurance is replacement of stolen items, under personal property coverage.
Does renters insurance cover theft
Renters insurance protects your personal property if it’s damaged by a covered event, known as an insurance peril. Common insurance perils include fire, theft, storms, hail, and lightning.
Theft of your personal property is covered even if it occurred outside of your rental unit.
If your personal laptop is stolen while you’re at a coffee shop, renters insurance will cover it. If your laptop was stolen from your car, renters insurance will cover the theft of the laptop but not theft or damage to your car — you’ll need comprehensive car insurance to protect your car from theft.
Not having renters insurance can have far-reaching effects. For instance, it ended director and actress Issa Rae’s stay in New York when she received a fellowship in the city after college. As The New York Times reported, “One night, thieves broke into her apartment and stole thousands of dollars’ worth of equipment, including her laptops, camera and all of her tapes.” It was a total loss and she ended up leaving New York and returning home.
Yael Wissner-Levy, vice president of communications at Lemonade Insurance, told Insider that renters insurance covers three things:
1. Things that happen to your stuff
2. Things that you’re responsible for
3. Events that force you out of your rental
If you rent in disaster-prone areas — where flood zones, hurricanes, tornadoes, wildfires, mudslides, hail, or earthquakes are common — you will have increased premiums, because these natural disasters aren’t included in basic coverage and require add-on policies, known as riders.
Specialty items may not be included
Specialty items like high-end electronics, special jewelry, furs, fine arts, firearms, specialty bikes, and cash may not be covered by renters insurance in the event of theft. According to Steve Wilson, senior underwriting manager at Hippo Insurance, these items may need a “personal article” endorsement or add-on rider.
Most renters insurance coverage for electronics is around $2,500. Jewelry limits are usually lower, at $1,500. If your electronics or jewelry exceed these limits, you should increase your limits or get an add-on rider.
It’s a good idea to take inventory of your furniture and personal possessions. Some renters insurance companies will have inventory lists for you to complete. If you have riders for fine art and specialty jewelry, you will be required to catalog and provide appraisals for them.
Renters insurance doesn’t cover roommates
Renters insurance doesn’t cover your roommate. If you have a roommate, each roommate should get their own policy. Renters insurance only covers the insured policyholder. It does not extend to other people living in the apartment or house.
Also, don’t be tempted to file claims for your roommate’s belongings. That can result in your carrier dropping you.
Actual cash value vs. replacement cost
Renters insurance policies cover up to a certain amount, usually around $20,000 or $30,000 worth of coverage. Determining the value of your belongings will help you decide how much coverage to get.
Renters insurance policies typically use “replacement cost” when paying out for covered damage. Replacement cost is the cost to replace the item with a new or used product.
Actual cash value (ACV) takes into consideration depreciation of the item. For example, if a five-year-old leather sofa is damaged by fire, the actual cash value considers the age of the sofa. Actual cash value is usually lower than the replacement cost value.
Flood insurance policies typically use actual cash value, but you can pay extra to use replacement cost. Check with your renters insurance to see which is used. Some providers offer “guaranteed replacement cost” as a perk.
For specialty jewelry and fine art, you will be covered for the appraised value minus any deductible.
How to file a claim if your belongings are damaged or stolen
Your deductible applies when you file a claim.
Treat stolen or damaged possessions like a car accident and follow these steps to report and file a claim.
1. Notify the police and file a police report if it is due to theft. Your insurance company may request a copy of the police report.
2. Take pictures of damaged possessions and what caused the damage (fire, storm, etc).
3. Contact your renters insurance company. Failure to timely notify your insurance provider can result in denying the claim.