What is covered by renters insurance?

Individuals and families who are renting their homes are in a unique position when it comes to insurance. The house or apartment building in which they live is insured under the landlord’s or owner’s insurance policy.

However, the renters’ personal belongings are not covered by the landlord’s or owner’s policy. For coverage on belongings, occupants need to obtain renters insurance. Personal injury may be covered by either the landlord’s insurance or the renters insurance, depending on the circumstances.

This multi-layered arrangement of insurance and liability can lead to overlapping coverage as well as unexpected coverage gaps. Misinformation and confusion about what situations and possessions are covered and under which policy is common among renters. Thoroughly reviewing their policies is the crucial first step for renters who want to make sure their homes, families and possessions are properly protected from the unknown. Here are the key things to look for and consider when reviewing a policy.

Qualifying Damage and Emergencies

Emergencies come in many forms, from the mundane to the rare and terrifying. To complicate matters further, a single source or cause of damage can inflict harm on property or possessions in several different ways. For example, a storm might result in both wind damage and water damage. Most renters insurance providers offer coverage designed to accommodate the wide variety of emergencies and damages a home might endure.

  • Storms. Renters insurance typically covers damage from excessive wind, hail, snow, sleet and ice. Renters should check their policies to verify their coverage includes both the direct or immediate impacts of such elements as well as any delayed damage caused by the weight of snow or ice that might accumulate in the aftermath of a storm.
  • Fire. Renters insurance covers not only the first-hand effects of fires but related damages incurred through exposure to excessive smoke. It also usually includes coverage for lightning strike damage.
  • Vandalism. Both garden-variety vandalism and damage resulting from riots and other forms of civil unrest are generally covered by renters insurance.
  • Vehicles. Renters insurance protects residents from damages caused by vehicles, including aircraft.
  • Theft. Renters insurance covers the costs of personal items that are stolen from renters’ homes. Many policies also cover the theft of clothing and other effects that are stolen while policyholders are traveling. Renters insurance does not cover vehicle theft but will pay for any items that were in a policyholder’s vehicle at the time it was stolen.
  • Plumbing, electrical, environmental and fire suppressant systems. the event that the plumbing, electrical wiring, environmental control or fire suppressant (e.g. sprinkler) systems in a property malfunction, freeze, overflow, crack, break or overload, extreme damage can result. Renters insurance will reimburse policyholders for belongings ruined in any of these events.
  • Other disasters. Most renters insurance policies offer protection against relatively less common disasters as well. These may include explosions, volcanic eruptions, falling objects and other uncommon occurrences.

Renters insurance also encompasses injury liability coverage. If a guest, visitor or service provider (e.g. the cable guy) is injured while in your home, then you may be legally liable for the cost of their medical expenses when they seek treatment for that injury. Renters insurance will cover those expenses, protecting your household from unexpected and burdensome medical bills. It is important to know the landlord’s responsibilities, as some incidences may be his or her obligation.

Optional Coverage

Although the basics of renters insurance, as listed above, are largely the same across insurers and policies, there can be significant variations in coverage as well. Insurers recognize that different households will have different needs. To accommodate diverse incomes, circumstances and geographies, most insurers provide a suite of customization options to help renters put together coverage appropriate to their personal situations.

One key form of optional coverage is Additional Living Expenses (ALE) coverage. ALE insurance provides extra financial assistance in the event that some qualifying disaster forces renters out of their homes for a period of time. It may also pay the difference between a household’s standard expenses and their new expenses during that time. For example, a family living out of a hotel room for a week while their home is repaired will need to eat out at restaurants or find other pre-prepared food for that time. This will inherently be more expensive than their usual pattern of eating primarily at home. ALE insurance would cover those additional dining costs.

Renters who own pets may need to review their policy options with their insurers to clarify what coverage, if any, the policy extends to damage or injuries caused by family pets. In some cases, supplemental coverage for pet damage may be available at a slightly higher cost.

Insurance coverage for costs associated with mold varies significantly between insurers and policies. While landlords and their insurance are typically responsible for cleaning up mold on or affecting the building itself, reimbursement or replacement funds for renters’ personal property that has been damaged by mold are often available only if the mold is the direct result of a qualifying emergency or incident. Insurance riders or clauses for general, non-incident-related mold damage may need to be specifically negotiated or requested when insurance coverage is purchased if renters want the reassurance of that coverage.

Other Factors to Consider

Renters can take comfort in knowing that their families, guests and possessions are covered by renters insurance in the event of an emergency. However, to make sure that they have the best possible experience with renters insurance, policyholders should keep the following tips in mind when selecting or updating their policies.

  • Choose the right deductible. If an emergency occurs, then renters will be required to spend a certain amount of their own money on repairs or replacement items before they will qualify for assistance under their insurance policies. It can be tempting to set a high deductible in hopes of slightly lowering the monthly or overall costs of the policy. However, before selecting a deductible, renters should carefully consider their household’s cash flow and reflect on how well positioned they will be to meet unexpected costs in an emergency.
  • Replacement value vs. cash value. Renters may opt for insurance policies that will pay the full replacement cost for lost items. They may also choose policies that will reimburse them only for the cash value of lost items at the time they were damaged or destroyed. Policy purchasers should thoughtfully consider the impact of this difference on their finances and quality of life before deciding which type of coverage to purchase. Renters should appraise their items to determine their worth.
  • When in doubt, ask questions. Insurance coverage can be influenced by geographic area, the policies of the company issuing the insurance policy, the makeup of the household purchasing the coverage (e.g. whether or not there are pets in the home) and many other factors. Renters should never make assumptions about what is and is not covered by their insurance or their landlords’ insurance. A few minutes spent on the phone or online with customer service representatives from the relevant insurance company or companies can mean the difference between coverage being there when it is needed and unpleasant surprises in the wake of an emergency. Knowing what is not covered by renters insurance is equally as important.

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