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Does Renters Insurance Cover Everything?

Many tenants wonder if they should get renters insurance. There is often a lot of confusion about what the policy covers or if a person even needs it. Tenants should know that the property owner’s plan does not protect their personal belongings. The landlord's insurance covers the structure and gives the landlord liability protection in the event someone is hurt in the common areas of the property. Tenant's personal items, such as electronic devices, appliances, and furniture, are not covered by the property owner’s insurance. It is up to the tenant to protect and insure his or her items. Events that can occur unexpectedly are fire, leaking water damage, and theft. Renters insurance would provide protection under these situations. Another benefit that can be added to a tenant’s protection policy is liability insurance. If someone gets hurt inside the rented dwelling, the tenant, not the landlord, may be held responsible and liable for the injured parties medical and legal expenses. One common question both tenants and landlords ask is, “Does Renters Insurance Cover Everything?” The answer is broad.

Answer: Basic renters insurance will not cover everything, but adding riders and other supplements can offer additional protection.

The standard renter’s insurance policy covers most of the tenant’s personal property up to the dollar amount they were insured for. Tenants should keep a running list of personal property. There are two methods to determine how much the value is: replacement cost and standard value. Replacement cost is how much it would cost to go to the store and buy a similar item today. For example, if a two-year-old microwave oven was damaged or stolen and the tenant went to the store to buy a similar model. The amount paid that day is the replacement cost. The standard value model would be the value of a two-year-old microwave considering it has been depreciating over time. Choosing one payout over the other will affect the policy cost, but can make a significant impact on payout in the event of a disaster.

Some items not covered by a basic policy are expensive jewelry, art, rare items, or property categorized as collectibles. Check with each company for descriptions of what things will fall under this non-covered category. Loss of property caused by earthquakes, floods, or other natural disasters will not be covered unless a separate policy was purchased to include the specific event. Unnatural disasters, such as war and acts of terrorism, are not covered events. There is an extra fee to receive this type of coverage. Injuries occurring to visitors inside the dwelling will not be covered unless there is liability coverage in place.

Additional Resources

This is a quick breakdown of what is and is not covered by a renter's insurance policy. There are many free resources available for tenants to gather more information and facts. Some sources to investigate are:

  1. USA.gov – USA.gov is an information site ran by the US federal government. It provides unbiased information for consumers. The site discusses what renters insurance can and cannot do for tenants, and it gives some guidelines on how to select an insurance company. There is also a section on how to buy flood insurance.
  2. Consumer Reports - A not-for-profit company, Consumer Reports researches and reports on material goods, vehicles, and services. The site offer suggestions on selecting the appropriate amount of liability coverage to avoid over or under insuring property. They recommend how to check out and review insurance companies before choosing one.
  3. National Association of Insurance Commissioners - This organization regulates policies and acts as a consumer advocate. At this website, there is advice on how to get discounts on insurance. If there will be dogs or cats in the rental, the NAIC discusses how the type of animals may affect the cost of the policy.