Do I need renters insurance — and what are the benefits?

 If — like us — you’re currently renting, then you may be wondering what the deal is with renters insurance. Whether you’re just moving into your first place or just ready to take on more "adulting" responsibilities, you might wanna know what renters insurance actually covers and if it's right for you.

The fact is that with more and more people hunting for rental apartments, renter’s insurance is becoming increasingly common. To get you the answers you need, we’ve done a little digging and put together all the important info that every renter needs when it comes to renters insurance. 

And, in a bid to get straightforward answers, we’ve chatted to a few real estate professionals who’ve given us their expert views on the ins and outs of renters’ insurance. 

What is renters insurance?

Let’s start with the easy stuff, what exactly is renters insurance? Renters insurance is, put simply, insurance for renters that protects you and your stuff. 

Interestingly, it turns out that a lot of renters (we asked around) are under the impression that their landlord’s insurance policy covers their belongings, but this isn’t actually the case. The reality is, your landlord’s policy covers the building itself, but it doesn’t include your belongings. That’s where renters insurance comes in. 

Put the right renters insurance policy in place and you can ensure that all of your personal property is protected should the worst happen. Whether a fire breaks out in your home, a pipe bursts and drenches everything you own, or someone breaks in and steals all your valuables, renters insurance will give you a vital lifeline. 

Why do renters need renter insurance?

Renter insurance comes with a range of benefits and usually covers any unexpected damage or loss of your personal belongings. Plus, many renters find that their landlords insist on renters insurance as a condition of their lease. 

“While it’s not a legal requirement, you should take it out," Tomas Satas, the  Founder, and CEO at Windy City HomeBuyer and a real estate investor, landlord, and professional house flipper explains. "In fact, landlords often require it as part of the lease agreement.”

For some landlords, renters insurance is non-negotiable, while for others it’s a personal choice left up to tenants, and tends to vary from area to area.

Satas personally does require renters insurance from his tenants, although he comments that,“ thankfully, none of my tenants have had to use theirs while renting from me.”

Whilst Houston-based real estate expert and owner of House Cashin Marina Vaamonde, says that in her experience, most landlords don’t require renters insurance. So, it appears that whether or not renters insurance is a requirement for renters, very much depends on the landlord. 

What are the benefits of renter’s insurance and is it worth it?

If you're worried about any damage or loss of your belongings, renters insurance could be a huge benefit to you. The protection this kind of policy offers gives you peace of mind that should something happen, you're covered and don't need to stress. 

And, it's not just covering the cost of your own damaged or lost possessions. “Renters insurance protects you from paying certain expenses if you are found legally responsible for injuries to other people or for damaging their property,” Vaamonde explains.

It’s important to note that liability coverage — aka, the kind of coverage that protects you if you accidentally damage your landlord’s fixtures, fittings, or furniture — isn’t automatic on all renters insurance policies, but it can be added as a separate clause if it’s not included. So, it always pays to check what is and what isn’t included in your policy. 

Satas agrees that renters insurance is definitely worthwhile and gives you good value for money — with most policies costing $10 to $20 per month. “The cost is minimal, especially when packaged with other lines of insurance from your provider, and provides everyone with peace of mind.” 

Something to consider here is how much it would actually cost you to replace your belongings, should they get damaged in some way. The reality is that replacement costs can quickly add up — and if you’ve lost a large proportion of your belongings, you’ll have to come up with a lot of funds all at once, which can be difficult.

What does renters insurance not cover?

As with all types of home insurance, there are exclusions to be aware of. Sigh. 

The most significant exception is flood damage. Most policies will not cover damage to your belongings by flood water, although some may cover water damage from a burst pipe inside the home. If you happen to live in an area that's at risk of flooding, you may want to consider taking out separate renter flooding insurance. Obvi, with some policies you can actually bolt on extra coverage for flooding onto your normal renters insurance policy, so it's always worth checking with your provider. 

The same restrictions unfortunately apply to earthquake damage. Generally speaking, anyone who lives in an area prone to severe damage from these types of natural phenomena needs to consider additional coverage. You will be covered against wind, hail, and rain damage, however. 

Interestingly, another exception is bed bug damage, which isn’t normally covered by renters insurance. And actually, most household pests and any damage they may cause are not usually covered.

It's also worth being aware that when a policy says it covers "damage" that does not normally include day-to-day wear and tear. And, renters insurance can’t be used to cover end-of-tenancy repairs or cleaning.