As a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Written By Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Lead Editor, Insurance Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
| Deputy Editor, Insurance
Updated: Mar 4, 2024, 8:51am
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
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You might rent your living space, but it’s your belongings and personal touches that truly make it home. Perhaps you have a comfy couch and a few cherished items, like a work of art or a favorite piece of jewelry. And on occasion, you like to have a friend over for dinner.
But thieves, clumsy guests, fires and other unexpected events can disrupt your home and damage your belongings. Getting the best renters insurance can protect you when the unexpected occurs.
Renters insurance isn’t required by law, but a landlord may require you have a renters insurance policy as part of your lease agreement.
Property owners have landlord insurance, which covers the owner or management company for property and liability issues related to the structure and common areas, such as sidewalks and stairways. Landlord insurance doesn’t cover damage to your personal items and it doesn’t cover accidental injuries or property damage to others that you are liable for.
Why would landlords demand renters insurance? Typical reasons are:
Renters insurance can be a wise financial decision even if it’s not required. Renters insurance costs only about $14 a month on average for $15,000 worth of personal property coverage. It covers a wide range of problems such as stolen items and accidental injuries to others. A renters insurance policy:
Tenants who may need renters insurance include:
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As a renter, one common mistake you might make is underestimating how much you actually own. Or you might think you don’t own anything of significant value. But chances are you have a fair number of essential belongings that you can’t live without and that can cost a lot to replace.
For example, what would you do if a thief swiped your laptop? Or a fire destroyed your furniture and clothes? Would you be able to afford new items at a moment’s notice?
Renters insurance is a good way to get coverage for all your personal belongings. It pays to repair or replace your damaged items and covers a wide range of problems, like theft, fires, smoke, vandalism, accidental overflow of water and explosions. It can even cover items stolen while you’re away from home, such as a laptop stolen from your car or hotel room.
You can assess what you have with a good home inventory, which can be as simple as a written list. Or you could walk through your home while recording a video on your smartphone.
Personal property insurance covers your belongings, but you also want to consider the type of coverage you need.
Replacement cost vs. actual cash value
When you buy renters insurance, you have the option to choose between replacement cost or actual cash value (ACV) coverage.
If your belongings are damaged or destroyed due to a problem covered by your policy (like a fire), replacement cost coverage will pay for new, similar items. But actual cash value coverage takes depreciation into account and will only reimburse you for the depreciated value of your items.
For example, if your 10-year-old sofa is damaged by a fire, replacement cost coverage will pay for a new, similar sofa. ACV will only pay the depreciated value of the sofa, which means you’ll need to buy a cheap sofa or pay the difference in cost yourself.
Replacement cost coverage is more expensive, but it’s generally the better option.
Certain items have special limits
Some items have what are called sub-limits or “special limits” for certain types of losses, like theft. For example, a renters insurance policy might only cover $1,500 for stolen jewelry. If your $5,000 watch is swiped by a thief, you’ll only be reimbursed $1,500.
Here are some examples of special limits in a standard renters insurance policy:
It’s a good idea to schedule high-value items like jewelry and other valuables. “Scheduling” an item is optional and extends your coverage to ensure you get paid what your items are worth if they are damaged or stolen.
A renters insurance policy includes liability insurance. This essential coverage pays for property damage and injuries you accidentally cause to others. For example, your liability insurance would cover your guest’s medical bills if they took a fall in your apartment and you are found to be legally responsible. It also pays for your legal costs, settlements and judgments if you are sued because of an accident.
A common default liability coverage amount is $100,000, but if you need more, you can typically buy up to $500,000. If that’s still not enough coverage, you can buy additional umbrella insurance of $1 million or more. Generally, you want enough liability insurance to cover what could be taken from you in a lawsuit.
Let’s say a guest suffers a minor injury, like they stub their toe against your coffee table and need to get an X-ray to find out if it’s broken. The “medical payments to others” portion of your renters insurance can pay for their trip to urgent care.
Medical payments to others coverage is designed to cover small medical expenses for others, no matter who is at fault for the accident. It’s usually sold for coverage amounts between $1,000 and $5,000. Larger medical bills will be covered by your liability insurance, if you’re legally liable.
If you are displaced from your home due to a problem like a fire, renters insurance pays for temporary housing and other costs under the additional living expenses (ALE) portion of the policy. This coverage is sometimes called “loss of use.”
ALE covers any necessary increase in living expenses needed for you to maintain your normal standard of living. This could include hotel bills, the cost of restaurant meals and services, such as pet boarding or laundry service.
You might be thinking, all this coverage is great, but there’s no way I can afford it.
Renters insurance is more affordable than you think. You can typically find cheap renters insurance for about $14 a month. The national average cost of renters insurance is $173 per year for $15,000 in personal property coverage, according to Forbes Advisor’s analysis.
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