By Angela Colley

Aug 5, 2022

(John Tlumacki / The Boston Globe via Getty Images)

Renter’s insurance is an important safety net. Having a policy can save you from big expenses—and even bigger headaches—if disaster strikes your rental. But what are those disasters, exactly? Does renter’s insurance cover everything?

Whether you are signing up for the first time or you have had a renter’s insurance policy for years, here’s what you need to know about your coverage:

Your landlord’s insurance

Many renters assume they don’t need their own insurance because they do not own the building they live in, but that thinking could cost you.

“Your landlord’s insurance should cover losses to the structure that you are renting, but not your personal items,” said Troy Thompson, an insurance agent with Pinnacle Insurance Agency in Coon Rapids, MN.

So, if you do not have renter’s insurance and disaster strikes your apartment, you will have to pay to replace all of your belongings that are damaged or destroyed. Your landlord or his insurance company will not be responsible for them.

What does renter’s insurance cover?

Renter’s insurance covers the most common situations. For example, if your building catches fire, your insurance company will cover replacing your furniture and personal belongings, and it may also pay for a hotel stay while your apartment is being repaired.

However, not all natural disasters are covered.

Floods, earthquakes, landslides, hurricanes and wind [damage] may not be covered in all states,” Thompson said.

If you live in an area prone to those perils, you may need additional coverage.

If your rental is robbed or your personal property is vandalized, your insurance company will cover that, too. However, it’s a good idea to consider what you own beforehand.

“For antiques and jewelry, you should get an appraisal and have a rider on your policy to make sure you get the full value of said items,” Thompson said. Without a rider, your basic insurance policy may not pay out enough to replace your more expensive possessions.

Actual cash value vs. reimbursement

“One thing that is important to consider is that you have replacement cost on your items,” Thompson said.

Renter’s insurance policies come in two varieties. One type of policy pays actual cash value—or the full replacement value—if you ever need to file a claim. The other type of policy pays a reimbursement amount, or a depreciated value for your belongings based on factors such as the initial value and age.

For example, “That couch you paid $1,500 for may be only worth $300 without replacement cost coverage,” Thompson said.

While actual cash value policies may cost more—“about $10 per thousand in coverage,” Thompson said—the cost may be worth it if you own a lot of furniture or other expensive items you can’t afford to replace with a depreciated value.