Renters Insurance policy – what does it cover?

According to a 2015 Insurance Information Institute poll conducted by ORC International “Among renters, only 40 percent said they had renters insurance.”  This is a disturbingly low number and there is a significantly high value of uninsured personal property and liability exposure in our society.  We feel that a majority of people don’t understand, what a renters insurance policy is and why they need renters insurance.

Societal need

This non-insured exposure will continue to grow as the amount of renters continues to grow in our Rental Society.  Therefore it’s a big concern to understand the policy and what it covers.  

As part of most lease agreements, landlords specifically exclude responsibility for tenants personal property and landlords typically require that their tenants carry some form of insurance.   This requirement is typically included in the contract or lease agreement.  The renters insurance requirement applies to all style of rental units – from luxury apartments to rent controlled units.


Personal property coverage –

Renters insurance covers your property and possessions against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods).  An example is when the tenant upstairs leaves the water running in the bathtub and floods out your apartment’ or from a burst pipe.

Not covered

Most renters insurance policies, do not cover floods or earthquakes. Flood coverage is available from the National Flood Insurance Program and a few private insurers.. You can get earthquake insurance as a separate policy or have it added as an “endorsement” to your renters policy, depending on where you live.  As we have written previously, we recommend buying the earthquake endorsement.

Liability coverage –

Like homeowners insurance, renters insurance also covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet and pays legal defense costs if you are taken to court.  This coverage may help protect you from paying out of pocket for certain costs if you are found legally responsible for injuries to other people or damage to their property.  You may be able to buy Umbrella insurance on top of your renters policy, depending on your carrier limits requirement.

Additional living expenses –

Renters insurance covers your additional living expenses if you are unable to live in your apartment because of a covered peril. Most policies will reimburse you the difference between your additional living expenses and your normal living expenses but still may set limits as to the amount they will pay.

Medical payments

Property damage to others


As previously discussed, I recommend that all tenants buy Renters Insurance.   As I stated in a previous article, renters insurance is cheap as compared to the value.  At 10-20$ per month in expense, this policy can be a lifesaver in the event of a loss or law suit.

There will be plenty of more material and cost comparison tools coming soon.

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Arnold Smith

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