What Is Renters Insurance and What Does It Cover?

Dawn M. Smith
Written by Dawn M. Smith
Updated April 25, 2022
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  • Renters insurance includes personal property, liability, and additional living expenses.

  • You’ll choose between actual cash value or replacement cost renters insurance. 

  • Most renters insurance costs less than $200 per year.

  • You could qualify for renters insurance discounts.

Renters insurance is one of the best protections you can buy as a tenant. It's customizable, affordable, and often required by a landlord before signing a lease. Before you start to shop for renters insurance, use this guide to help you understand what to buy and estimate how much you’ll spend. 

What Is Renters Insurance? 

Renters insurance is property insurance that protects your household belongings from disasters like fire and weather damage. It can also protect you from potential liabilities such as lawsuits, and it covers your living expenses if you have to move out of your rental house after unexpected destruction.

You need a renters insurance policy to ensure you can replace all of your belongings in case of fire, smoke damage, water damage, burglary, vandalism, lightning, or a windstorm (not earthquakes). If you live in a flood-prone area, keep in mind that renters insurance doesn’t cover loss from flooding. You’ll need a separate policy from the National Flood Insurance Program.

Many renters may think their landlord's homeowners policy covers their belongings, but that isn’t the case. Your landlord’s homeowners policy covers the building structure they own, not your living room sectional or antique bedroom furniture.

What Does Renters Insurance Cover?

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A renters insurance policy usually covers personal property, liability, additional living expenses, and, in some cases, floater policies for expensive collections.

Personal Property 

Think about all of the items in your home, including clothing, furniture, and electronics. It would be difficult to replace everything at once if a disaster ruined everything. The insurance policy covers the cost of replacing or repairing your household goods according to the amount of coverage you buy. That’s why insurance companies recommend taking a home inventory to document your items and discover exactly how much renters insurance you need. Your policy also includes theft from your car or hotel room. 


Renters insurance includes liability for unpredictable accidents in life, such as when your child breaks your neighbor's window with a baseball or if your pet bites someone. Liability insurance also covers your legal fees and other people’s medical bills if you’re responsible for their injuries.  

Additional Living Expenses

Suppose your rental property experiences severe fire damage and you can’t live there until the repairs are made. In that case, your renters insurance would cover your additional living expenses like hotel stays, temporary rentals, and food. 

Floater Policy for Expensive Collections 

Insurance companies offer floater policies to cover expensive collections that need additional protection. If you own high-value items like furs, jewelry, collectibles, musical instruments, or sports equipment, you should consider buying a floater policy in addition to your renters insurance.

Types of Renters Insurance 

When shopping for renters insurance, you’ll choose between actual cash value and replacement cost policies.

Actual cash value: This kind of policy takes care of replacing your items, but there’s usually a depreciation deduction, meaning you won’t get the amount you paid for the item but instead what it’s worth today. 

Replacement cost: These policies are more expensive, but they cover the item’s total price if you were to repurchase your items today.

What Does Renters Insurance Cost?

The cost of renters insurance depends on several factors, including where you live, how much you need to insure, and your deductible. Renters insurance typically costs less than $200 per year.


You’re required to pay a deductible before your renters insurance kicks in. A standard deductible is $500, but it can be more or less depending on your policy. For example, if smoke damage ruins $5,000 worth of furniture, you’ll owe $500 before the insurance company pays the remaining $4,500. When researching renters insurance, keep in mind that your insurance premiums will be lower if you pay a larger deductible. 


Before signing on to an insurance policy, check whether you qualify for any discounts. Ask your insurance provider about discounts for:

  • Age 

  • A long history with the insurance provider

  • Good credit

  • Bundle prices, like auto and renters insurance

  • Security system

  • Smoke detectors

  • Deadbolt locks