Guide to Renters Insurance: What It Covers and Why You Need It

A photo to accompany a story about renters insurance Photo by Getty/Illustration by NextAdvisor

We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

If you’re renting, you are not required by law to insure the apartment or home you live in. But you should still be concerned about your belongings within the property, and that’s where renters insurance comes into play. 

Renters insurance is essentially a scaled-down version of a home insurance policy, but for people who rent their home. The biggest difference is that renters insurance doesn’t cover the structure of the apartment or home, and tends to be much cheaper because of that.

According to experts, having a renters policy is critical. 

“Everyone who rents should have a renters policy to protect their finances,” says Laura Adams, an insurance expert with Clearsurance, an online insurance marketplace, and host of the “Money Girl” podcast. “It covers your personal belongings from damage or theft, additional living expenses if you have to move out due to a covered event, such as a fire or windstorm, and liability if you get involved in a lawsuit.”

It’s common for landlords to ask for proof of renters insurance before you sign a lease, or within a certain time after signing a lease. Yet, a surprisingly low number of renters — roughly 35% — have renters insurance, according to the Insurance Information Institute (III). 

“It’s absolutely critical for everyone renting a piece of property. If something ever happens, you have protection. It’s too inexpensive and too important to not have,” says Jeremy Ousley, vice president of sales operations at Tidal Creek Insurance Agency.

Here’s everything you need to know about renters insurance, from what it covers to how much it costs.

What Does Renters Insurance Cover?

A standard renters policy will protect you and your possessions if someone becomes injured in your apartment, there is a theft or break-in, or other accidents occur. For example, if your home is burglarized or your dog bites someone, your renters policy will kick in.

“The two important things that renters insurance is going to protect are your belongings and you against any property damage or bodily injury that you cause to others,” says Ousley.

While renters insurance won’t cover the damages done to the building you’re renting, most companies will cover your living expenses if your apartment becomes unlivable. It will also usually cover any personal property stolen in your car or outside your home, even though it won’t cover your vehicle. And just like coverage on replacing or repairing your personal property, there’s still a maximum limit. 

You can configure how much your coverage should be by estimating the cost to replace or repair all the things you own. Items like expensive jewelry or art will have a limit, usually up to $1,000 to $1,500 total, but that limit varies from company to company. If you want extra protection, you can pay for additional coverage to cover more expensive items. 

These are the four types of coverage included in most renters insurance policies.

  • Personal property: Covers your clothing, furniture, electronics and other belongings
  • Additional living expenses: Pays living expenses, such as a temporary rental, hotel, and meals, when your rental home is uninhabitable due to an insured loss. 
  • Liability: Pays out if you’re responsible for injuries to other people or damage to their property
  • Medical payments: Covers medical bills for injuries to other people in your home, regardless of fault

What Doesn’t Renters Insurance Cover?

There are a number of things renters insurance doesn’t automatically cover, including floods and earthquakes. Renters insurance policies also don’t cover losses because of intentional acts of destruction or negligence, pest infestation, or high-ticket valuables such as diamond jewelry or rare artwork.

How Much Does Renters Insurance Cost?

The cost of renters insurance varies by company, the deductible you choose, and how much coverage you purchase. In general, it’s more affordable than you may think, costing an average of about $179 per year, or roughly $15 per month, according to the latest III data.

Depending on where you live, renters insurance could be higher or lower than the national average per year. Below is the average cost of renters insurance in every state for both annual and monthly premiums, based on $25,000 in personal property coverage.

StateAverage annual cost
Alabama$222
Alaska$175
Arizona$175
Arkansas$211
California$178
Colorado$164
Connecticut$188
Delaware$157
Florida$185
Georgia$214
Hawaii$181
Idaho$152
Illinois$166
Indiana$172
Iowa$144
Kansas$172
Kentucky$166
Louisiana$234
Maine$149
Maryland$161
Massachusetts$191
Michigan$185
Minnesota$140
Mississippi$252
Missouri$179
Montana$147
Nebraska$149
Nevada$182
New Hampshire$148
New Jersey$160
New Mexico$186
New York$189
North Carolina$158
North Dakota$126
Ohio$169
Oklahoma$236
Oregon$161
Pennsylvania$157
Rhode Island$185
South Carolina$184
South Dakota$127
Tennessee$195
Texas$225
Utah$155
Vermont$153
Virginia$152
Washington$160
Washington, D.C.$157
West Virginia$189
Wisconsin$143
Wyoming$146
Source: Insurance Information Institute

Pro Tip

Consider bundling renters insurance with your other insurance policies. For example, if you’re getting renters insurance from the same company as your car insurance, the insurance company will often give you a discount.

How Much Renters Insurance Do You Need?

People often underestimate how much coverage they need and select an amount that is less than what it would take to completely replace all of their belongings, experts say.

“Here’s what people need to be aware of: renters insurance quotes from most companies default to the lowest amount of coverage. Low prices are reflective of low coverage in most cases,” says Earl Jones, a Farmers insurance agent in Sunnyvale, California.

Most companies offer policies that cover from $15,000 to over $100,000 for personal belongings, but it’s important to take into consideration how much your personal items are worth and how many people are in the family. Everyone has a wardrobe and personal items, which can add up quickly.

It’s also standard for policies to come with $100,000 to $300,000 in liability coverage, but Jones recommends choosing a higher liability limit, especially if they live with an animal who may cause injury to others. 

“People should get at least $300,000 in liability limits without pets or $500,000 with pets,” says Jones, “because of the high medical costs in the United States — even if they have an umbrella policy.”