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Renters insurance covers damage to or theft of your personal property. It can also protect you in liability suits. Renters insurance tends to be an affordable way to protect you as a renter. It is an attractive policy because it can offer a high value of coverage in the event of an incident in your rental.
What Renters Insurance Covers
Renters insurance protects your belongings, mitigates liability costs and gives you coverage for living expenses after a disaster. Most policies are divided into three main subsections, including:
1. Property damage: Damage or loss of your belongings is covered by renters insurance. This ensures that you'll be compensated if, for example, a burst pipe in your apartment destroys your couch. It can even protect your belongings outside of your rental, such as theft of your phone at work.
Your policy will outline specific covered events. Some of the events that your personal belongings may be covered under with renters insurance include:
- Fire and smoke
You can calculate the amount of insurance you need by inventorying your belongings. You can use this total to decide how much renters insurance to buy.
Some policies compensate you for the actual cash value of belongings, or their depreciated value at the time of the damage. Others compensate you for the replacement cost, or the amount it would take to replace your belongings brand new today.
Estimate how much money you would want to replace your belongings if a serious catastrophe struck your home, such as a gas leak explosion. You'll want to purchase a renters insurance policy for at least this amount.
2. Personal liability: Your renters insurance can also protect you in events where you may be held liable for bodily injury or property damage caused by you or a member of your family. This can help protect you if someone is injured at your rental or if you accidentally set fire to a friend's kitchen.
Personal liability coverage is often $100,000 or more. This coverage can apply to both defense costs and damage awards.
3. Loss of use: Known as "additional living expenses," your renters insurance can provide funds to support you during a period of loss of use of your rental, such as if you must stay in a hotel after a burst pipe floods your apartment building.
This coverage can be used for hotel bills, temporary apartment rentals, eating out and costs related to being displaced.
What Renters Insurance Doesn't Cover
While renters insurance is a great option to cover your belongings, there are some events and items possibly excluded from your coverage. These may include:
- Undocumented items
- High-value items, such as jewelry or artwork
If you are concerned about an event not covered by your policy, you can buy supplemental insurance. For example, if you rent a basement apartment in a flood zone, consider adding a supplemental flood insurance policy.
To make sure your items are properly documented, keep proof of purchase for items. This is important for items you will need replaced. You can submit this documentation to your insurer to prove you owned the items.
Do You Need Renters Insurance?
You may need renters insurance if replacing your belongings after an incident such as a fire or burst pipe would be impossible or burdensome out of pocket. Similarly, if you do not have liability protection under another type of policy (such as an umbrella policy), renters insurance is a good idea.
The relatively low cost of renters insurance makes it appealing. For an average of $15 to $30 a month, you can protect the elected value of your belongings. Replacement cost policies tend to cost 10% more than actual cash value policies, but can offer significantly higher coverage.
How to Boost Your Credit With Rent Payments
Once you've protected your rental with renters insurance, get something out of paying your rent each month: a boost to your credit score. Now you can add qualifying rent payments to Experian Boost®ø and potentially see an increase to your score in minutes.
When you sign up for Experian Boost, you can grant access to the bank account or payment card you use for your rent. The Experian Boost feature will check your account for your rent payment as well as any utilities, telecom or video streaming services you elect to add too. These on-time payments can then be added to Experian Boost and give your credit score a bump right away.
The Bottom Line
Renters insurance helps make sure you're covered if your belongings are damaged in an incident at your rental. It can also help replace items stolen outside your home. Similarly, if you're held liable for damage to someone else, renters insurance can help with related costs. Renters insurance policies are generally affordable and can offer a high value of coverage for their cost.
And renters insurance isn't the only smart move you can make with your rental. You can also add your eligible rent payment to Experian Boost and potentially see your credit score increase immediately.