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Renters Insurance

Whether you're saving up for a down payment, test-driving neighborhoods, or steering clear of household repairs, renting your home makes sense.

But what about renters insurance?

While many view it as an unnecessary hassle and expense, rental insurance is actually an essential part of your long-term financial security, whether you hope to end up with a mortgage or live in a new city every year.

So What Is Renters Insurance?

Renters insurance can cover three types of expenses: replacement costs for property, liability costs for injured guests, and temporary living expenses if your home becomes inhabitable. You can find rental insurance for any type of rental unit, including…

  • Apartments.
  • Townhomes.
  • Condos.
  • Single-family homes.
  • Duplexes.
  • Lofts.
  • Studios.

As a renter, you're more likely to make a liability claim than a property claim on your policy, so let's start there. Even though you're just leasing, you can be responsible for:

  • Paying medical expenses after a tipsy partygoer falls off your porch.
  • Replacing damaged appliances after a knocked-over candle starts a fire.
  • Repairing the window your child cracked with a baseball.

Without renters insurance, the medical bills, repair costs, and legal fees that follow these accidents would come out of your pocket.

Your rental insurance also comes with property coverage for your personal belongings. It can pay to replace items damaged by:

  • Theft.
  • Vandalism.
  • Fire.
  • Wind.
  • Hail.
  • Lightning.

Finally, it can foot the bill for a hotel room or another apartment if a covered event makes your place unlivable.

Also worth noting: lots of renters policies can protect your belongings when they aren't in your home. So if your bike is stolen from outside your office, renters insurance may pay to replace it.

You're most likely to use renters insurance for liability claims.

My Stuff Isn't Valuable. Why Would I Buy Renters Insurance?

Maybe you could replace one or two items — even major ones — on your own. But what if a fire destroyed all your earthly possessions in a few hours? Even if you only have a one-bedroom apartment, replacing everything in it could cost about $13,000.

Now let's think about your neighbor. If that fire sends spread, you could have two apartments' worth of furniture, electronics, and clothing to replace. And don't forget your landlord's belongings. You may be responsible for replacing any appliances damaged by the blaze.

The takeaway: after an accident, expenses can be high — but a renters insurance policy can cover them.

It costs about $13,000 to replace everything in a one-bedroom apartment.

I'm Really Careful, So I Don't Need Renters Insurance, Right?

You could swaddle yourself in bubble wrap, ban candles, and triple-lock every door, but you'd still need rental insurance. No matter how careful you are, you can't bank on other people taking the same precautions.

Let's flip that fire scenario: now it's your neighbor's fire that damages your apartment. You've done nothing wrong, but everything you own is now ruined.

If you have renters insurance, this is no problem: your policy can cover replacements.

But if you don't? You'll have to sue your neighbor for benefits. And if your neighbor doesn't have insurance, you're unlikely to receive anything at all.

Doesn't My Landlord Have Insurance?

Yes, but it doesn't cover you or your stuff. Your landlord's insurance covers the actual building and the permanent fixtures in it. For example, say a tree crashes through the roof of your rented home. Your landlord's insurance pays to repair the roof, but it's up to you to replace your destroyed furniture and find a temporary place to stay.

Luckily, renters insurance can replace your property and pay for temporary shelter while things are being fixed.

Renters insurance starts at about $20 a month — probably less than you spend on your weekly caffeine fix.

Isn't Rental Insurance Expensive?

Renters insurance is surprisingly affordable. Most policies cost about $20 to $40 a month. That's about what you'd spend on:

  • Buying a latte before work for a week.
  • Going out for lunch twice a week.
  • Buying a round at happy hour.

All of these are fun, but none of them give you the security your renters coverage offers.