How Much Renters Insurance Do I Need?

Your landlord might require that you carry renters insurance as part of your rental contract. However, they’ll likely only specify the amount of liability coverage you must carry, not personal property protection. That leaves many tenants asking, ‘How much renters insurance do I need?’ Protect your valuables, ensure you have a temporary living situation in case of a disaster and protect yourself from liability with adequate insurance coverage.

Understanding How Much Renters Insurance You Need

Renters insurance covers various aspects of liability and property replacement. Learn about the different coverage areas to understand how much coverage you need based on your specific circumstances.

Personal Property Coverage 

The building owner’s insurance only covers the structure, not your belongings in case of theft or damage. That’s why renters take out a separate renters policy. 

Your belongings get coverage from a variety of events through renters insurance, including fire, lightning, wind, hail, vandalism, theft, damage due to frozen pipes, building collapse from ice, snow or sleet buildup, and water backups. If you live in an area prone to earthquakes or flooding, consider additional policies to cover these events.

To determine how much personal property coverage you need, assess the value of your belongings. This ensures you have the necessary coverage in case of a covered event.

Personal Liability Coverage 

If your actions while using the rental property result in injuries to others or damage to someone’s property, liability coverage will help pay for it. For example, if your dog bites someone, your liability insurance will pay their medical bills. Or if a game of catch goes wrong and damages your neighbor’s property, the policy will pay to repair the damage.

Loss of Use Coverage

When you can no longer use your rented property due to a covered event (such as a fire), your policy can pay for loss of use to allow you to find another living arrangement until your rental is available again. Loss of use coverage can pay for a hotel or short-term rental as well as meals at a restaurant, to help offset the costs while you can’t use your rental property.

Medical Payments Coverage

When you welcome guests into your home, you might be liable for injuries they sustain while visiting you if you’re found at fault for the accident. Renters insurance often includes $1,000 to $5,000 in medical payments coverage.

How to Determine How Much Renters Insurance You Need

Follow these steps to determine adequate renters insurance to cover you in the event of a covered incident.

Evaluate the Value of Your Personal Belongings and Assets 

Spend some time reviewing your personal property. Complete a full home inventory and add the details to a spreadsheet. Your spreadsheet should include the following information:

• Item description
• Estimated value estimate for each item or group of items
• Purchase date
• Receipts, if available
• Details on electronics, including their serial number, make and model
• Photos of the belongings

Add up the total of the items to ensure you have adequate contents insurance to replace your items should you need to file a claim.

Factor in Replacement Costs for Theft, Damage or Loss

Some items would cost more to replace than their current value. This is where replacement cost coverage is beneficial. Depreciation can reduce the value of your valuables, but it doesn’t mean you could find items in the same condition at a depreciated value.

For high-value items, consider scheduling your belongings with add-on policies. This is advisable for jewelry, watches and furs, firearms and high-value silverware.

Consider the Need for Additional Coverage

In some cases, renters require additional coverage types to cover their belongings properly and protect them from liability in case of a lawsuit. An umbrella policy can help increase your liability coverage for various instances, including auto accidents, libel, and slander.

Individuals who travel frequently might also benefit from off-premises coverage. This helps protect your expensive belongings, such as the technology that you carry with you. Consider this coverage in case you take expensive sporting equipment, such as a nice bike, on trips. This way, the coverage you enjoy while at home will follow you on the road.

Adding a floater to your policy can cover collectible items, such as artwork, antiques or sports memorabilia. This provides coverage for expensive items from loss, damage, theft and more.

Assess the Potential Liability Risks 

If someone gets injured while on your rented property, you could be liable if the injury could be foreseen, such as in the case of a slipping hazard that you knew about or should have known about. That means you need additional liability insurance to protect you from lawsuits. 

Most renters insurance policies come with a standard $100,000 in liability coverage. If you believe you need more due to regularly welcoming guests in your home, consider increasing that amount or taking out an umbrella insurance policy to cover legal fees, settlement costs and medical payments.

Take Into Account Any Additional Living Expenses 

If you are displaced from your home due to a covered event, you might incur significant expenses for a short-term rental, hotel or dining out. Your renters insurance can cover the difference between your regular rental expenses and what you incur when using a short-term rental and living away from your normal home.

Review Your Landlord's Insurance Coverage 

Part of your rental contract will outline the coverage your landlord has on the property. Look for gaps between what that will cover in case of a covered event and what you’ll need to recover. 

Decide on the Ideal Deductible for Your Situation

Your insurance company will require that you shoulder some of the burden of a claim. This is known as the deductible, the portion you must pay in you file a claim. The most common deductible for renters insurance is $500, but if you can afford to pay a higher deductible, it will likely make your insurance more affordable annually.

How Much Does Renters Insurance Cost?

Renters insurance costs an average of $15 per month. However, several factors will impact your specific rates. These factors include the following.

• Deductible
• Discounts available through your insurance company
• Location
• If you own pets
• Size of the unit you’re covering
• The unit’s security and fire systems
• The value of your personal belongings
• Whether the policy is insured using actual cash value or replacement cost value
• Your insurance credit score

The insurance company you select will also be a factor in the cost as will the other insurance products you have through that insurer. For example, bundling your home and auto with the same insurance company often produces better rates.

How to Save on Your Renters Insurance Premium?

No one wants to pay more for insurance coverage than they have to. Get the best rates by following these tips.

• Shop around: The most affordable coverage will vary based on the insured. While your friend or family member might get great rates with one insurance company, your experience might differ. The best way to get great coverage is to shop around and request insurance quotes from many carriers.
• Look into discounts: As rates vary from carrier to carrier, so do available discounts. Ask your agent if you qualify for discounts to make the coverage more affordable.
• Get the highest deductible you can afford: The higher your deductible, the less your insurance will cost. Ensure you have adequate savings to cover the deductible in case of a covered event.
• Only get the coverage you need: Some people seek out as much insurance as they can. However, you only need coverage in line with the value of your property and your likelihood of liability. 

Compare the Best Renters Insurance from Benzinga’s Top Providers

Start quoting policies from these leading insurance providers to find the best, most affordable coverage.

Ensuring You Have Adequate Renters Insurance

Never blindly select an insurance policy. Take the time required to evaluate the best coverage based on your unique circumstances and the value of your personal belongings. Talk to your insurance agent about whether additional policies might help enhance your coverage and get the protection you need to stay financially sound in case of a claim.

Frequently Asked Questions