Renters Insurance – How it Works and Why You Need It

Renters Insurance – How it Works and Why You Need It


When you buy a home or car, one of the first accessories you purchase is insurance. In many states the law requires you to have car insurance in place before a vehicle can be registered. Many mortgage lenders mandate that borrowers have homeowners insurance to protect the lender’s investment in the home. What about the people who rent an apartment or a home? Those people cannot get homeowners insurance, but they still need coverage. The answer is renters insurance.

There are several reasons why people who rent an apartment or a home should look into renters insurance. It offers protection on several different levels that can come in extremely handy when an unfortunate incident occurs to a rented property.

Property Protection

Renters insurance offers protection for property such as furniture, electronic equipment and jewelry. If a storm blows through the area and rips the roof off of an apartment building, then it would be the landlord’s insurance that would cover the damage to the building. But the property of the tenants inside each apartment is not covered by the landlord’s insurance policy. It is up to the tenants to get their own insurance.

A renters insurance policy can protect you in case someone breaks into your apartment and steals your new television and stereo and it can compensate you for furniture or other items lost in a fire.

There are a few factors that renters should keep in mind when it comes to renters insurance premium rates. If you live in a neighborhood that is prone to robberies, then your rates will be higher. If the previous tenant made several claims on his renters insurance policy for theft and damage, then that can affect your premiums as well.


There are several reasons why legal professionals recommend that tenants and landlords have a signed lease contract. One of the main ways that a lease protects the tenant and the landlord is that it outlines the property maintenance responsibilities that each party has. For example, if the tenant is responsible for taking care of ice build-ups on the sidewalk, then it is the tenant that can be sued if someone falls on unattended ice.

This is another reason why renters insurance is an excellent idea for tenants. There is a liability portion to renters insurance that will pay for any damages or lawsuits that occur in areas that the tenant is responsible for. In the case of the ice, the tenant with renters insurance would be completely covered for any damages, both medical and civil, that may come up as a result of the accident.

Temporary Accommodations

One of the examples we discussed earlier is of an apartment building roof being damaged in a storm. The landlord is covered by his insurance for the cost of the repairs, but those repairs will take time. Where are you supposed to go while there are contractors working around the apartment building and the storm debris is being cleaned out of the building?

One of the coverage options offered in renters insurance is reimbursement for temporary accommodations. The exact process varies from insurance company to insurance company, but the general premise is that the insurance company will either put you up in a hotel while the repairs are being made or reimburse you for the hotel costs that you accrue. Ask your insurance agent about the details for temporary accommodations as most insurance companies have limits on how much they will reimburse.

Getting the Protection You Need

Renters insurance is a way for tenants to protect their personal property and themselves in case an unfortunate incident occurs while renting a home or apartment. A renter should never assume that the landlord’s insurance policy will offer ample coverage because, in most cases, the landlord’s policy offers no coverage at all to tenants.

But how much does renter’s insurance cost? That is the question frequently asked when this topic comes up, but most people are shocked to learn how inexpensive it really is. Of course it varies on location, but the average renters insurance premium is typically between $10 and $25 a month. Now consider that cost with the value of the items in your apartment or rental home. You probably have electronics such as TVs, computers, cell phones, a DVD player, and so on. How many thousands of dollars do you have invested in that equipment? Then take a look at other items such as furniture, clothing, cookware, jewelery, and so on.

You probably have tens of thousands of dollars worth of possessions in your apartment and never really thought about it that way. Combine the value of those things with the liability protection offered by renters insurance and the few bucks a month for coverage is a no-brainer.

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.

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