Does Renters Insurance Cover What You Think It Does?

Renters insurance can be your saving grace in many different situations, and it’s something that you may want to investigate. If you have heard of this kind of insurance, what it covers may be a mystery to you.

While it has a great amount of merit, many people don’t understand or appreciate how valuable it is. Some people believe that their personal property doesn’t warrant the need for an insurance policy, while others think that their property is covered under the landlord’s policy.

A landlord’s homeowners’ policy does not provide coverage for your belongings. This means that you’re in a dangerous situation without a renters insurance policy since unexpected damages are always a factor.

The Cost of Renters Insurance

When many people hear about renter’ insurance, the assumption is that they cannot cover such an “extravagant” cost. However, this belief is purely fictitious, since renters insurance is built to be cost-effective.

Consider the value of your individual items. If renters insurance is such an astronomical cost, wouldn’t that mean that your premiums would add up to a figure that’s more expensive than replacing your belongings?

If that were the case, then there’d be no need for these policies. However, there are policies that cost no more than $20 monthly. Such policies could give you coverage of as much as $100,000 in liability coverage and $10,000 in personal property coverage.

Unless you’re very wealthy, the chances are that you’re in no position to replace your lost belongings in the event of a disaster. Renters insurance provides you with an affordable way to protect your most valuable possessions.

Extent of Coverage

Renters insurance may be more comprehensive and inclusive than you think. Check out the information below on various areas that you are insured for if you choose to grab such a policy.

Personal Property Coverage

One of the most common and most basic components of renters insurance is known as personal property coverage. Once your items are covered, this is the component that allows you to get assistance from your insurance provider to replace them in the event of damage or destruction.

Theft is also covered here, so any stolen items can be easily replaced. The theft is typically only covered if it occurred in the home that you rent. However, there are some policies that cover replacements if the items are stolen from places such as your vehicle.

While this coverage item goes a long way in helping you replace your valuable items, the cost is not completely covered here. There is a deductible, which means that insurers only pay when the insured person pays a percentage upfront.

Note that not all your belongings are usually covered by these policies. Certain valuables, such as precious stones and limited edition coins, are not completely covered. Some insurance companies allow you to take care of this by adding scheduled personal property coverage. This provides the additional coverage that you need to insure such items fully.

Liability Coverage

Another popular component of your renters insurance agreement is known as liability coverage. This type of coverage deals with damage to property belonging to third parties or injuries to others. Of course, it must be proven that you are legally responsible for the occurrence or there is no coverage.

A scenario that could call for this is damage caused to a neighbor’s window by one of your dependents during a normal course of action, such as playing with a ball, or when guests are injured during a visit to your rented property. Having such coverage allows you to take care of these unexpected happenings without the need to worry about the matter being taken to court.

Short-Circuit Damage

This is one of the less popular areas of renters insurance. Note that this may not be offered everywhere, and you should ideally validate this when taking out your policy. This coverage is offered when electrical failures cause you to incur certain expenses.

An example of this is a fridge that is affected by a sudden power cut. The assumption here is that the appliance functioned normally prior to the electrical event. In this case, there are food items in the fridge that may end up going bad.

There are some insurance policies that would allow you to make a claim for the value of the grocery items lost.

Externally Stored Items

Though renters insurance is taken out to cover the possessions you have in a rental property, there are other instances in which it can apply to items that you have in other places.

One such scenario is the one mentioned above, where items are stolen from your vehicle. Another potential application is the property that you have stored in a storage facility. Of course, claims in these situations are processed on a case by case basis, so you may not always be entitled to coverage for items in external locations.

Forgery and Fraud

Not everything covered by renters insurance is tangible. A thief could break into your home and take off with your credit card. While the card is tangible, the damage that it does is not.

This thief could start spending heavily, and you would be put at a large inconvenience. If this were to occur, your insurance policy might offer you the coverage you need to reimburse you for the amount that you lost.

What Is Not Covered by Renters Insurance?

While renters insurance covers a lot under its umbrella, it’s important for you to know that coverage isn’t provided for every scenario that you can imagine. Being able to account for the areas that are not covered allows you to put the necessary strategies in place to ensure that you are adequately covered. This is a look at the areas to which your coverage does not extend under a renters insurance policy.

Pest Damage

Pest damage can be unpredictable; however, it is preventable in many cases. You need to take all the precautions possible to ensure that your belongings are not damaged by pests. This is because insurance companies are not usually willing to cover the damage they cause under renters insurance. This includes pests such as bugs, rodents, and other vermin.

If your property is destroyed by any of these creatures, the best you can do is start thinking about how you can go about replacing it out of your own pocket.

Natural Disasters

This is a very important one, as you can be subject to various disasters, depending on where you live. While there are coverage options available for natural disasters, they do not fall within the realm of renters insurance, so you may want to investigate purchasing some additional coverage for yourself so you don’t have to worry about such unpredictable events.

Sinkholes, earthquakes, and flooding tend to be excluded from policy coverage. Surprisingly though, you may be covered for windstorms and volcanic eruptions.

Nuclear War and Terrorism

This was different many years ago. Back then, insurance policies spoke specifically to the protection that you were offered from acts of war and terrorism. There was no additional cost associated with this.

However, the tragic events of 9/11 forced insurance companies to rethink this aspect of coverage, so they removed it altogether.

It’s not impossible to get covered for this, but you’d be looking at an extra cost. Terrorism coverage is available, which protects the building that you are living in. Such coverage is best purchased by landlords since the whole building is covered that way.

Unfortunately, many landlords don’t opt for such coverage, so you may need to pay an additional cost to be covered for terrorism. If you do so, however, only the section of the building that you occupy is covered.

Motor Vehicles

Since renters insurance can cover the property that is stolen from a motor vehicle, many people assume that the vehicle itself is also covered. This is not the case, so don’t plan on relying on your renters insurance in the event of car theft. This is what auto insurance is for, so that is what you should lean on for the protection of your vehicle.


This is where things can get a little tricky. Based on the way renters insurance was explained, the assumption is that all property in the rental property is covered once you have decided to take out a policy.

However, if you have a roommate, a distinction is made, and that person’s property is not covered. Therefore, any destructive event would only lead to reimbursement for you. The policy is intended for the protection of the person who is paying the premiums only.

If your roommate wants to have coverage that is like yours, they would need to take out a policy that is independent of your own. Another option is to get a joint policy. If you are comfortable with the idea, you can choose to get a policy with the person. It’s important to talk to each other and understand the parameters though. One of the most important such parameters is the claim payout. A single payment is split between the policy owners in this instance. So you should understand the coverage amount and how much each person is entitled to.

Renters Insurance Considerations

You should never take out a policy before you know how much coverage you need. The only way to get this information is to take stock of everything you own. Even if doing that is a struggle for you, you should at least try to take an inventory of anything that you would want to be covered in any unforeseen event.

Once you have that, you need to put a value to all these items. The sum of these figures tells you how much coverage you need to be adequately protected. There’s no need to have $50,000 worth of coverage if you own $20,000 worth of stuff, right?

Remember that it is also very important for you to have an in-depth understanding of your policy. Find out what is covered and how the process works so you’re not dead in the water if something does happen.

Finally, shopping around is always a good idea. Compare the prices and benefits that different providers are offering before you settle on one.

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