What Does Renters Insurance Cover?
A renters insurance policy protects your belongings in a rental property. This guide details what renters insurance covers, doesn't cover and the claims process.
Key Takeaways
- Renters insurance covers specific perils, such as fire, windstorms, lightning, explosions, theft, and vandalism.
- It provides coverage for your personal property, personal liability, additional living expenses, and guest medical expenses.
- Renters insurance doesn’t cover earthquakes, floods, bedbugs, mold, or damage to the exterior of the building.
Renters insurance protects your rental property from covered perils, such as smoke, fire, explosions, theft, vandalism, windstorms, lightning, and water damage from internal sources, like plumbing. However, it typically doesn’t cover damage from earthquakes or floods.
A typical renters insurance policy provides coverage for the following:
Renters insurance typically covers theft, and sometimes even when you’re away from your rental property. It also covers items stolen from inside your vehicle.
However, renters insurance doesn’t cover a stolen or damaged vehicle due to theft. Nor does it cover the structure of your rental property if it’s damaged due to theft.
Renters insurance extends coverage to personal belongings stored in a storage unit. It protects your items from a covered peril, such as fire, water damage, and vandalism.
However, note that the personal property coverage amount may be subject to sublimits, so your belongings won’t be covered up to the full coverage limits allocated in your policy. This can sometimes be only 10% of your total personal property coverage.
Renters insurance typically doesn’t cover bedbug damage or removal of a bedbug infestation. This is also true for pests and insects because insurers consider pest control to be preventable with standard home maintenance. However, state laws differ as to who’s responsible for extermination. In some states, it could be your landlord, and in others, it could be the tenant.
A standard renters insurance policy doesn’t cover damage caused by floods. However, it does cover water damage, like a broken pipe.
If your rental property is located in a flood-prone area, then you may consider purchasing flood insurance through an insurance company or the National Flood Insurance Program (NFIP).
A renters insurance policy doesn’t typically cover mold damage because it’s considered preventable with standard maintenance. However, if mold damage is caused by a covered peril, like water leakage from plumbing, it may be covered.
As part of your renters insurance policy, additional living expenses coverage will help cover temporary housing if you’re displaced from your rental home due to a covered peril. It will also reimburse you for living costs that exceed your normal housing expenses.
The personal liability coverage of your rental insurance policy can help cover medical and legal expenses if your dog bites a guest on your rental property. A guest refers to anyone who’s not part of the household, like a friend or mail carrier.
Renters insurance covers your personal property for damage up to policy limits. The personal liability portion of your renters insurance policy also covers accidental damage to someone else’s property.
Fire is typically a covered peril in a standard renters insurance policy, but check your policy details. This can include damage or loss due to fire or smoke. Or, if you’re temporarily relocated due to a fire, additional living expenses coverage will reimburse you for housing and food.
Theft of personal property from your car parked on your rental property is covered by renters insurance. However, if your car is damaged during theft, then it won’t be covered. Your auto insurance policy will kick in and cover vehicle theft or damage.
Renters insurance doesn’t cover moving costs unless you’re forced to relocate due to a covered peril. In this case, your additional living expenses coverage will help cover moving expenses.
Renters insurance doesn’t cover everything, and policies can vary in coverage. However, you may be able to purchase additional coverage for exclusions if you need more protection.
You can typically choose between two coverage options: actual cash value (ACV) or replacement cost value (RCV). The coverage option you select determines your compensation if you have a covered claim.
Chad Hannon, CLCS, Client Advisor for Owens Insurance and Financial Services, recommends purchasing replacement cost coverage. “It ensures you can replace your belongings as they were in the event of a covered loss.”
Actual cash value
An actual cash value policy considers an item’s depreciation when settling a claim. So, you likely won’t receive adequate reimbursement to repurchase a damaged item. For example, if your four-year-old $5,000 couch is damaged in a covered claim, then you could be reimbursed for $1,500 due to depreciation and your deductible.
Replacement cost value
Replacement cost coverage is more expensive than actual cash value coverage, because it doesn’t consider depreciation when settling a claim. Using the same example as above, this policy would replace your couch with a brand new one.
According to the Insurance Information Institute (III), replacement cost policies typically cost about 10% more than actual cash value policies.
When disaster strikes, file a claim immediately and document as much of the damage as possible. Note that the faster you file a claim and the better your documentation, the quicker your claim will be approved.
Consider these steps when filing a claim:
- Report: Call your landlord to let them know if a peril occurs. They may be needed to initiate repairs.
- File a police report: In the event of theft or vandalism, file a police report and save all documentation.
- Assess your current safety: Take pictures and videos of damage that requires immediate attention, such as broken locks. Keep receipts of repairs you make.
- Contact your insurance company: Call and make an initial report with your insurer to inform them you will file a claim, and see how long you have to file the claim.
- Document any damaged or destroyed belongings: Take detailed pictures and videos of all damage, and don’t throw out items.
- Complete and submit: File a claim as quickly as possible.
Keep in mind that it’s important to keep your personal belongings inventory up to date.
Typically, the quicker you file a renters insurance claim, the sooner you’ll be compensated if approved. You should file your claim within 48 to 72 hours of the incident.
Steven Weisbart, a non-resident scholar and retired senior vice president and chief economist at III, explains that you’ll typically be expected to document and submit your claim as soon after the event as possible. “Virtually every insurance company that I’m aware of really wants to settle claims quickly,” he says. “That’s a very high priority of theirs.”
Various factors can determine how long it takes to be compensated after a claim, including:
- How complicated your claim is
- The type of insurance you have
- Whether you have an ACV or RCV policy
- Whether you reopen your claim at some point to document an additional loss
Actual cash value claims
If your actual cash value claim is straightforward and well-documented, then the process can be quick.
Replacement cost value claims
This claim reimbursement can sometimes take several months, depending on whether you need to meet with a claims adjuster or provide more documentation. Most of the time, you’ll receive multiple checks rather than one.
Additional losses
You typically have one year to reopen your claim and submit documentation for additional losses, even if you’ve already accepted a check.