If you live in someone else’s home and pay rent, you probably have renters insurance. If you don’t have a renters insurance policy, you should consider getting one as soon as possible. You may think you don’t own many things or you don’t own anything of value, but you’d be surprised at their value if a fire destroyed your home and you suddenly had to replace everything you owned.

If you have any doubts, sit down with a pen and paper (or your computer) and make a list of everything you own of importance. Go from room to room. When your list is complete, add up the value of all your possessions as though you were shopping for each item. Once you’ve come up with a total, I’m certain you’ll be shocked at how much it would cost you to replace everything.

What is Renters Insurance?

Renters insurance is an insurance policy that covers your personal belongings if you rent your home from another person or company. It does not cover the actual property, but covers your personal property like clothes, furniture, jewelry, food, or anything inside the home belonging to the renter.

A typical renters insurance policy will include the following coverage.

Personal Property

This coverage will pay to repair or replace your personal belongings if they’re damaged or destroyed by a covered peril like fire, storm, vandalism, or theft.


This coverage will help pay for someone’s medical bills if they’re hurt on your property or will pay to repair someone else’s property if you accidently damage it.

Additional Living Expenses

If your rented home is damaged or destroyed and you need to live elsewhere while it’s being repaired, this coverage will pay your living expenses. It may even pay for your food.

Many renters mistakenly believe that their personal property is covered by their property owner’s insurance policy. This is typically not the case. Although homeowner’s insurance covers a lot of different people living in the owner’s home, it generally does not cover renters. Renters are required to provide their own renters insurance if they want to protect their belongings from loss.

If the property owner is renting the property to you fully furnished, the furnishings might be listed under the homeowner’s policy. However, your personal belongings must be covered under a renters policy.

Renters insurance is relatively cheap when you consider what it all covers. Although the annual cost of renters insurance varies from state to state, the average annual cost for renters insurance in the U.S. is $187 as of 2017.

What to Look for in Renters Insurance?

For some reason, insurance is one item that no one wants to pay yet the one that is the most appreciated when needed. Not all insurance policies and companies are created equal, and this is particularly true with renters insurance.

When choosing renters insurance, people tend to look for policies that offer them the coverage they need while also looking for the cheapest policies. While saving money is always important, it should not be the deciding factor when choosing renters insurance.

Below are some things to look for in renters insurance.

What is covered?

When comparing policies, ask what is all covered. Even though they may say they cover all your personal belongings, some things may be excluded.

What perils are covered?

Most insurance policies cover the typical perils: fire, smoke, theft, water and smoke damage. Find out which are or are not covered.

For instance, natural disasters are typically not covered by renters insurance. If you live in areas that are more prevalent to specific perils like floods or hurricanes, you may need to purchase additional coverage.

How long has the insurance company been in business?

It’s generally a good idea to do business with a reputable company that’s been in business for a while.

Does the insurance pay for actual cash value or replacement cost?

Replacement cost pays what it would take to buy a new item while actual cash value pays what the item is worth and what price you could get if the item were sold.

How does the company handle claims?

When you lose your personal belongings, you want and need an insurance company that will pay as soon as possible.

What You May Not Know about Renters Insurance

Although there are many things you know about renters insurance, including things in this overview, there are probably many things you don’t know about renters insurance.

  • If your home or dwelling is damaged or destroyed by fire, the landlord’s insurance usually covers this. However, if you’re responsible for a plumbing or fire damage, you or your insurance may be responsible for damages.
  • Your renters insurance will only cover losses up to the limit of your policy. Many people don’t realize this but think as long as they have insurance, they’re protected regardless of the monetary loss. This is important to remember when choosing your liability coverage amounts.
  • Your home computer is generally covered under personal belongings. However, if you work from home, you may need a business policy to cover the computer.
  • Some breeds of dogs are not covered under a renters or homeowners insurance policy because they’re more prone to biting. If you have a dog, don’t assume it’s covered.
  • While renters insurance covers you when you’re renting, it typically does not cover a roommate who is renting a room from you.
  • Of all the personal belongings inside your home, your clothes are the most undervalued.
  • Your offered premium price may not be the final price. You may be eligible for many discounts the insurance company forgot to mention.

Popular Renters Insurance Providers

State Farm Insurance

Ranked among the best in terms of customer satisfaction, State Farm is also known for its affordable premium rates and claims process satisfaction. They offer renters insurance that can be customized to meet the customers’ needs and wallet.

Customers can also choose from deductibles of $500, $1,000 and $2,000. Renters insurance through State Farm also includes medical payments coverage.

Erie Insurance

Erie Insurance is ranked number one for customer satisfaction and has been recognized as one of the best by A.M. Best, Fortune 500, and J.D. Power for its claims processing satisfaction and as an insurance company in general. In addition to offering coverage for personal property, liability, and additional living expenses, Erie Insurance also offers renters personal valuables insurance to cover their valuable personal property, such as jewelry, guns, or collectibles.

Farmers Insurance

Farmers Insurance is ranked highly for both claims process satisfaction and overall customer satisfaction. They offer renters insurance policies that include the basics: personal property, liability, medical payments, and additional living expenses. Their Personal Articles Floaters allows renters to extend additional coverage to higher valued items. When providing coverage for damaged goods, they pay actual replacement cost.