Is Renters Insurance Required?

Quick Answer

Renters insurance is not legally required for tenants, but some landlords may request it in a lease. Whether it is required or not, renters insurance offers a high value of coverage for an affordable price, which can help protect both a renter and their landlord.

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While not required by law, many landlords require their tenants to purchase renters insurance. Renters insurance offers coverage for property damage, personal liability and additional living expenses if something happens at or to your rental. It can be a smart policy to hold, whether it's required or not.

When Is Renters Insurance Required?

Some landlords may require that you carry renters insurance as their tenant. Your lease may specify if it is required. When tenants carry renters insurance, it protects landlords. They feel safe from a lawsuit if your belongings are damaged, as you'll already have coverage for the items.

But renters insurance benefits you even more than it may benefit your landlord. It can protect your belongings inside your apartment, but also if something like theft happens to them outside of your home.

Renters insurance also extends liability coverage to you if you damage somebody else's property. It can also cover you if you can't stay at your rental for a little while, such as after a fire.

So even if renters insurance is not required, it can be a good idea to take out a policy as a renter.

What's Included in Renters Insurance?

Renters insurance is designed to protect your belongings and other assets. Policies are divided into different parts, each of which offers you a certain type of protection. Renters insurance generally includes three parts:

  1. Coverage for property damage: If a pipe bursts, flooding your apartment and destroying your couch, you can make a claim under your renters insurance. Some examples of possible damage events that would be covered:
    • Water damage
    • Fire and smoke
    • Lightning
    • Explosion
    • Windstorms
    • Theft
    • Vandalism
  2. Coverage for personal liability: Did a friend fall down your steps? You're covered when it comes to liability with renters insurance. Personal liability coverage options should equal at least the value of your personal assets to protect them in case of a lawsuit.
  3. Coverage for additional living expenses: If a hurricane blows the roof off your rental and you must seek shelter elsewhere, renters insurance can help. It will cover your additional living expenses due to the loss of use of your rental.

Some things are not included in renters insurance, including coverage for:

  • High-value items like artwork or jewelry
  • Earthquakes
  • Floods
  • Items not documented in your insurance

How Much Renters Insurance Do I Need?

How much renters insurance you need is based on estimated required coverage for property replacement and personal liability coverage. You want to purchase a renters insurance policy that satisfies your coverage needs. It is important to balance the value of the policy with the cost of the premium.

There are two types of coverage for personal belongings that you can choose between:

  • Full replacement cost: This coverage offers you enough money to replace damaged belongings at their current cost. Associated premiums tend to be more expensive, about 10% more than actual cash value policies.
  • Actual cash value: This coverage offers you compensation for the depreciated value of your belongings as they were on the day they were damaged. These policies tend to be more affordable.

Typical amounts of personal liability coverage include $100,000, $300,000 and $500,000. You should opt for coverage that can adequately cover your assets should you be sued.

Renters insurance tends to be relatively inexpensive, with costs ranging from $15 to $30 per month. With these low costs you can purchase a high amount of coverage. It makes sense to purchase the highest coverage that will fit your budget so you are protected from both physical events in your rental and liability outside your home.

Remember, purchasing renters insurance may involve a credit check, so make sure your score is in good shape before enrolling.

Not Required But Recommended

Even though renters insurance is not required by all landlords, it can be a good idea to carry a policy big enough to replace your belongings or protect you against paying out of pocket in a liability suit. Making a smart choice to protect your rental can pay off if there's ever an accident or damaging event.

It's not the only good choice you can make as a renter. You may also want to consider adding your eligible rent payment to Experian Boost®ø. Using Boost, you could improve your credit score just by paying your rent on time.