Do You Have Enough Renters Insurance Coverage?

Some of the most common questions we get from our clients are: do I have enough renters insurance? do I really need this much coverage? and am I fully protected?

In this article, we’ll go through exactly how much renters insurance you need to be protected—without overpaying on coverage you don’t need.

If you want more information about renters insurance, check out our learning center.

Is renters insurance required?

Most landlords and property management companies will require their tenants to hold renters insurance. This ensures the landlords aren’t on the line for their tenants’ responsibility. If your landlord requires renters insurance, they may also define the minimum coverage requirements needed. Keep in mind these are just minimums, but you may still need more renters’ insurance for your individual needs.

Even if you aren’t required to have renters insurance, it’s highly recommended to hold renters insurance. The coverage it provides can help reduce your risk (and financial impact) if your belongings are damaged or if you are found at-fault for someone else’s injuries. Renters insurance is a good way to help protect against financially devastating situations, so you can live day to day with greater peace of mind. And with renters insurance, such valuable coverage costs comparatively little for an annual policy.

Read: It’s My First Time Buying Renters Insurance, Where Do I Start?

How much renters insurance do I need?

There are two main types of renters insurance that you’ll want to consider when determining if you have enough coverage: personal property damage and liability.

In most cases, you aren’t responsible for any damages to the outside of your rental unit. You may also not be responsible for damages to structural aspects, like bathroom and kitchen fixtures or plumbing. Double check with your landlord and renters policy to see if you’re required to cover any dwelling costs.

Personal property damage

Personal property damage can cover damage or theft of your belongings due to covered perils. So, how much would it cost to replace all of your personal belongings if they were destroyed in a disaster? That’s how much personal property damage coverage—also called contents coverage—you should have.

Your personal property coverage should cover the value of your belongings.

You should make a personal inventory of your possessions to see exactly how much it would cost to replace everything. An inventory can help you ensure everything is accounted for without overpaying on your premiums for items you don’t need covered. Make sure to keep this inventory updated whenever you purchase or change items in your home; if it’s not accounted for, it may not covered.

We like to remind our clients that they own more than they think they do. A lot of people feel like they don’t have that many possessions of value, so they skimp on contents coverage. But the average two-bedroom rental has $30,000 worth of possessions. If you had a total loss today, would you be able to completely refurnish your home on your own dime? If not, it’s critical to accurately value your contents and to consider renters insurance.

Sub-limits and exclusions

It’s also important to note that there may be category or sub-limits for certain high value items. This includes jewelry, furs, fine art, electronics, firearms, collections, and other specific items. For example, your policy might have a sub limit of $3,000 for jewelry. Anything over $3,000 would then be your responsibility. Your policy may also have a limit on how much it’ll cover per item, so that $3,000 may not go as far as you think for higher-priced items. It’s important to know any exclusions or sub-limits, so you can ensure your goods are entirely covered. If you need additional coverage, you can purchase a rider or floater for specific high-ticket items. Consult your insurance agent for the details of your policy.

Another note. Your renters insurance likely does not cover flood and earthquake. Be sure to inquire about specific exclusions, so you can find supplemental coverage (like flood insurance) to ensure full protection.

Read: How Much Personal Property Coverage Do You Really Need?

Liability

This portion of your renters insurance helps cover your legal liability if you are found responsible for another party’s injuries or damages, both in your residence and, in some cases, off. It can cover medical bills and lost wages up to your coverage limits, and it can also cover your legal expenses if you have to defend yourself in a lawsuit. This includes incidents that happen on your rental property—like if someone trips on your carpet and breaks their arm—as well as incidents elsewhere, like your dog biting someone.

Liability cases can be a significant financial burden. One incident can cost tens, if not hundreds, of thousands of dollars. So you want to make sure you have enough liability coverage to protect all of your assets, so you aren’t personally responsible in the case of a serious incident. If you had a liability lawsuit against you, someone could theoretically come after everything you own. Ideally, you want enough renters liability insurance to protect against someone “cleaning you out” of your assets.

The standard liability coverage for renters insurance is $100,000. For a lot of tenants, this number is enough insurance. However, it’s important to consider your individual situation, risks, and risk tolerance.

For example, if you have a dog, you might want more liability insurance in case of a dog bite. If you have a window AC unit, it could fall out and injure someone, which would cost much more than the $100,000. If you entertain frequently, you have a higher risk of someone getting injured on your property. In higher risk cases, you’d want to up your liability insurance as a safeguard.

Remember that your insurance company will pay not a penny more than your coverage limits. So if there’s any doubt in your mind that your limits are enough, raise them. It’s only a few extra dollars a month to raise your liability limits by $100,000 increments. You can also consider purchasing an umbrella policy to raise your liability limits to a minimum of $1,000,000, depending on your risk tolerance and assets.

Renters insurance myths busted

We hear a lot of misconceptions about renters insurance. So, we’re going to dispel some of these myths with the following renters insurance truths.

Your landlord is responsible for the building, unit, and appliances (usually). They are not responsible for your personal property or any liability that occurs within your apartment.
Renters insurance can apply outside your residence too. If your laptop is stolen from a coffee shop, most renters insurance policies can protect your property up to the specified limit. Or you accidentally trip someone on the street, your renters’ insurance can help cover the costs of their medical expenses, up to your liability limits.
Renters insurance can also cover loss of use. If your residence becomes uninhabitable due to a covered event, loss of use coverage can help cover living expenses for the time being.
Everyone needs liability coverage, even if you never have guests over. Even a deliveryman or solicitor could sue you if they get injured on your property (unless it was due to the negligence of the landlord). Liability is the best way to protect against the unforeseen incidents of life.
Some renters insurance can also cover short-term rentals, like Airbnb.
You can bundle renters insurance with other forms, like auto and boat. This is one of the best ways to save money on your insurance.
You have control over your renters insurance deductible. Learn how to choose the right deductible here.

Most important, renters insurance is not expensive. It’s one of the cheapest insurance policies you can purchase, with some of the greatest protection and highest limits.

With renters insurance, you get a lot of coverage at a reasonable price.