What is renters insurance? | Renters Insurance 101 Roost
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What is renters insurance?

Learn about renters insurance, what it covers and why you need it

Thinking about getting renters insurance? Whether your landlord requires it or you’re just curious, you probably have some questions. Like, what is renters insurance and do you really need it?

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What is renters insurance? 

First things first. Renters insurance is a backup plan for you and your belongings in the face of disaster, and picking the right policy is key. You don’t want to be without it. Renters insurance protects your stuff in a rented apartment, condo, or home from things like:

  • Theft/Burglary
  • Fire or lightning
  • Sewer backup
  • Water damage
  • Power surges
  • Vandalism
  • Smoke
  • Falling objects
  • Bed bugs

Your landlord’s policy will typically cover the structure itself, but not your valuables. Renters insurance coverage will reimburse you for lost or damaged possessions minus a deductible, which can range anywhere from $500-$2000. It can also protect you from liability (legal responsibility, in other words) if someone gets injured on your property.

Roost Tip! Depending on your policy, renters insurance may also cover belongings stolen from your car, like your phone or laptop. 

Do you really need renters insurance?

You only need renters insurance if your landlord or building requires it. But, if you rent an apartment, duplex, condo, studio, or townhouse, then it’s generally a good thing to have, especially if you live on a ground floor or in a high crime area.

Examples of how renters insurance works 

The most important protection your renters insurance provides is usually personal liability protection, not property reimbursement.

“Although the coverage and protections offered by renters policies differ by carrier and state, the primary purpose is the same: to compensate the renter for damage which occurs to their personal property, renters often mistakenly assume that the landlord’s insurance policy covers their personal items; it does not. In addition, renters policies often cover liability to other people; in other words, if someone gets injured on your property due to your negligence (you accidentally left wax on the floors and the pizza-person slips and falls), the policy will generally cover costs associated with that accident.”

– Stacy Giulianti of the Florida Peninsula Insurance Company

Damages and losses can add up to tens of thousands of dollars in an instant. In cases like these, renters insurance can be the difference between a smooth recovery and huge financial loss or even bankruptcy.

Make sure you understand your coverage, in any case. All policies are different, so read your terms carefully and talk to an agent before you buy.

What does renters insurance cover? 

Renters insurance includes several types of protection, such as:

  • Personal property: This coverage is for your stuff if it’s stolen, damaged, and/or destroyed by a covered event.
  • Liability and medical expenses: This is for financial risk if someone is accidentally injured and you’re at fault. It’s available if something happens at your place or somewhere else. 
  • Additional living expenses: This is also called loss-of-use coverage. It takes care of accommodations if you can’t live in your home due to a covered event.
  • Other coverage: Some plans also include stolen credit card protection, lock replacement, military uniform replacement, and more.

How much does renters insurance cost?

Renters insurance is among the most affordable types of insurance you can buy. The average cost of renters insurance is $12-18 per month for policies that offer between $10,000-$25,000 in property protection.

Check your policy and think about the total value of your property before you buy. For example, if you don’t have more than $10,000 worth of property, save money by getting a lower coverage amount. Lemonade is an example of an insurer that offers super flexible coverage options at lower rates.  

How to evaluate renters insurance policies 

You’ll find renters insurance from both newer startups like Lemonade, mentioned earlier, and major insurers like Allstate. The right choice will depend on what you’re looking for. 

Established rating companies like A.M Best and J.D Power can help you find trustworthy insurance providers without wading through conflicting stories online.  Below, we’ve highlighted a variety of options ranked by A.M. Best and J.D. Power according to what might be most important to you, from app experience to cost.

Cheapest renters insurance

State Farm is rated by the industry as the cheapest renters insurance. You’ll get affordable premiums with reliable customer support.

J.D. Power Rank: 2nd (of 14 insurers)

A.M. Best Rating: A++ (Superior)

Best For: Low rates and wide availability

Cost is a concern for most renters, and State Farm offers cheap policies for people around the country. It gets excellent customer reviews and allows you to customize your plan. The online quote form also helps find discounts that could save you more money.

State Farm insurance is available nationwide, which is convenient, but their online presence and app experience isn’t as robust as some of the other providers on this list.

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Mobile app experience  

Allstate uses mobile apps to give renters control and flexibility with their policies. They’re at the top of the industry for digital convenience.

J.D. Power Rank: 5th (of 14 insurers)

A.M. Best Rating: A+ (Superior)

Best For: Mobile apps for claims, bills, and documenting property

No other insurers on this list approach apps quite like Allstate. Allstate Mobile allows you to review your coverage, pay your bill, and file claims. Their Digital locker app will let you store photos of your belongings, so you’re ready if you have to file a claim. You can even apply for your policy online without speaking to an agent.

If you’re on a tight budget, Allstate also allows you to adjust your coverage to save money. Opting out of off-premises theft protection, for example, could save you about 22%.

Best customer service

American Family Insurance (AmFam) maintains some of the best satisfaction ratings in the industry. If you want to make sure you get your money’s worth, look at an AmFam policy.

J.D. Power Rank: 1st (of 14 insurers)

A.M. Best Rating: A (Excellent)

Best For: Top-rated customer satisfaction

If you’ve ever had to discuss a problem or make a claim with an insurance company, you get why a provider that’s customer-focused matters. AmFam won first place for the 2019 J.D. Power Rankings for customer satisfaction for renters insurance.

They take a user-friendly approach with transparency, service interactions, and billing. And with replacement cost coverage, you’ll receive enough to replace your stuff with new items. Unfortunately, they’re not available in all 50 states, so check their website to see if they’re an option for you.

Best for quick coverage

If you need renters insurance NOW, Lemonade has you covered. They provide the fastest quotes and claims on the markets, and with pretty darn low rates too.

Demotech Financial Stability Rating: A (Exceptional)

J.D. Power Rank: Not included

Best For: Adjustable coverage limits and rapid claims payouts

Lemonade is a newcomer to the market and they’re focused on making everything fast and easy. If you want renters insurance with them, you can download the app, get a quote, and pay for coverage in minutes. Quick service can come in handy (you know, in case you forgot to get the insurance your landlord requested). Lemonade makes this work by using an AI bot instead of a human insurance agent, which probably makes it easier for them to offer cheap coverage and adjustable limits.

On the downside, Lemonade is new to the insurance market. Their coverage is only available in Washington D.C., and about half of U.S. states. Check out the expanding list of states that have coverage!

Best for renters in the military

If you’re a veteran or an active serviceperson, USAA is probably the way to go. They offer military-friendly services and fantastic customer service.

J.D. Power Rank: Score tied for 1st (of 14 insurers)

A.M. Best Financial Strength Rating: A++ (Superior)

Best For: Military-only service and rates for all products

USAA is a favorite insurance provider among the U.S. military community. It offers renters policies with replacement cost coverage and natural disaster protection, the latter of which is usually excluded by other providers. They also provide unique services like deductible-free coverage on lost military uniforms.

Renters insurance deductibles  

Cost and customer service aside, one of the most important renters insurance choices is your deductible. A deductible is what you pay out of pocket when you file a claim. You pay the specified amount first, and then your insurance company pays the rest.

Let’s say you have a $400 deductible and are responsible for $3,500 worth of damage in your apartment after your Valentine’s Day dinner caught fire. You’ll pay your $400 deductible, and your insurer pays the remaining $3,100.

Deductibles usually apply to property loss and damage, not to the liability portion of your insurance. This creates a shared risk between the policyholder and the insurer, and it reduces the number of small claims filed.

When do renters insurance deductibles apply?

Thankfully, you won’t have a deductible on all of your coverage. Let’s look at the types of coverage from earlier:

  • Personal property coverage
  • Liability and medical expenses coverage
  • Additional living expenses coverage
  • Other coverage

The first type, personal property damage, is the only area where you have to pay a deductible. You won’t have to pay it for medical or liability expenses, additional living expenses, or most other coverage offerings. But if you file a claim for your belongings, your deductible will apply. 

Renters insurance discounts 

Most carriers have several ways to lower your renters insurance premiums. Raising your deductible, for example, will lower your monthly bill, BUT, it costs you more money if you’re in a claim situation.

Policy discounts, on the other hand, allow you to reduce your premium with no downsides. See our article on rent insurance discounts for detailed tips and examples. 

Finding discounts that you qualify for is a reason to work with an agent. However, most apps and online forms can also help you find discounts. Compare discounts offered by different providers to get the lowest price. And if you find a company you like but want something offered on another policy you got quoted for, it never hurts to ask for a price match.

Why do landlords require you to have renters insurance? 

Landlords often require renters insurance to avoid liability claims from tenants. Renters insurance also helps with:

  • Relocation expenses: Some renters insurance policies will pay for the cost of temporary housing or relocation caused by covered disasters like mold making your apartment uninhabitable.
  • Protection against property damage: Some tenants might sue their landlord if their stuff is stolen, but renters with their own insurance are less likely to do so.
  • Damage or injuries from pets: Many renters policies cover damage or injury caused by your pets to other people’s properties, like if your dog runs into someone or scratches their car. Read carefully, though, policies don’t often cover damage that your pet does to your own apartment.
  • Rental dwelling insurance premiums: When tenant’s renter policies cover damage to the renter’s things, it can lower the claims against a landlord’s rental dwelling policy.
  • Screening: Just like your credit score, proof of renter insurance can indicate your ability to pay rent on time.

If your landlord requires you to have renters insurance, you’ll likely see a clause in the lease like this:

“Lessee is required to provide proof of active renters insurance within 14 days of lease start date.”

Why renters insurance makes good dollars and sense

At an average price of $12/month but as low as $5/month, renters insurance is some of the most accessible coverage you’ll ever buy. You don’t want to leave your stuff unprotected if something unexpected happens. Your coverage could be what gets you through a tough time, and we want to make sure you get the best possible policy that fits your life and your budget. 

The sooner you get your quote, the sooner you’ll be protected from the unexpected, so what are you waiting for? And if you already have renters insurance, give it a go and see if you could save a little more.

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Last Updated: September 23rd, 2021