Do you need renters insurance? Factors to consider

If you’re a new tenant, landlords will often require you to have a certain level of renters insurance coverage. Even if it’s not required under the terms of your lease, it might be a good idea. We’ll go over some considerations if you’re asking yourself, “Do I need renters insurance?”

Do you have to have renters insurance?

While no law requires renters to have an insurance policy, you may be contractually required to have it. Even if you aren’t, you may want renters insurance because it protects your personal property, often even in the event of theft.

Also, it can protect you if someone is injured on your property. Further, you can buy coverage to pay for temporary living arrangements if your current apartment is unusable.

Can my landlord require renters insurance?

Although it would be advisable to always check local laws surrounding renters in your area, landlords can usually require renters insurance. This helps shield them from liability for things that happen in your unit. The insurance typically carried by landlord’s generally covers damage to the structure of the building itself and not much beyond that.

If your landlord requires you to have coverage, you’ll need to check the terms of your lease to determine if there is a minimum coverage amount and how soon you’re required to provide proof of insurance.

How much renters insurance do you need?

This is extremely variable depending on the person because everyone’s liability from an insurance perspective is going to be different. If you have a pet, you’ll want coverage in case there’s a bite. Then it might come down to how much personal property you have.

The most difficult part of figuring out your coverage is probably going to be taking an inventory of your items in trying to put a value on everything. The best advice we can give is to take plenty of pictures and keep receipts when you can. If you can’t put a value on everything, think about your most expensive items in the difficulty of replacing them in determining your coverage level.

The other thing to think about is the type of flexibility you want to give yourself in case you have to make a claim. For example, if you have to be out of your rental for a while, you may want enough coverage to at least provide for living quarters with similar amenities to what you have normally.

Reasons to get renters insurance

beyond when you’re required to have it, here are some big reasons to get renters insurance.

1. It covers damaged or stolen items

no one expects theft, but it does happen. This is one of the common covered losses when it comes to renters insurance. You’re also protected in the event of things like fire and smoke damage, vandalism and water damage not related to flooding. Flooding is typically excluded even on homeowners policies and you have to get a rider – additional optional coverage.

It can be important to have this because the policy carried by your landlord likely only extends to coverage of the structure itself.

When thinking about your personal property coverage, you’ll want to consider not only the level of coverage that you have but also any limits on that coverage. You may need riders for high-value items like jewelry and you have to pay a deductible.

Depending on the insurance company, you may have the option at the time you sign up to opt for replacement coverage or actual cash value. Replacement coverage could be more expensive because of inflation over time.

2. It might cost less than you think

According to an analysis from Insure.com, the average monthly cost for $40,000 in personal property protection, $300,000 in liability coverage and a $1,000 deductible was $22 – $264 per year. There were all those caveats because all of that is going to impact your cost.

Additionally, that’s a national average, but insurance is regulated differently in every state, so where you’re living matters.

3. Limits your personal liability

If you have insurance and someone gets injured on your property, your insurance company will defend you and negotiate on your behalf in the event of any lawsuit or settlement negotiations. It should be noted that this is where your limits really matter because if you have higher limits, your insurance company is more likely to vigorously defend you if they have a lot at stake.

You may very well still personally be sued, but the difference is the insurance company will help with your legal strategy and defense and the settlement comes out of your insurance money if necessary.

4. Covers loss of use

Whether you live in a house or an apartment, you’ll need to find a backup plan if for any reason your rental is temporarily inaccessible. Your renters insurance can provide funds for living expenses if you elect that option and you have to vacate your rental. The amount you get for this may depend on the level of coverage elected.

5. Pet liability protection

If you have pets, you may want to make sure that your insurance policy covers them in terms of liability if there’s an incident where someone gets hurt after interacting with your pet. Landlords may require this as a condition of bringing a pet into the rental unit.

While this covers you in terms of bites, it’s not something that funds medical care for your furry friend. For that, traditional pet insurance will be necessary.

The bottom line

Renters insurance isn’t legally required, but landlords may require it as a condition of your lease. Even if they don’t, you may choose to have it for the ability to cover your personal property in the event of theft or damage. You can get liability coverage so you have some protection in case someone gets hurt on your property. Finally, there’s coverage for alternate living arrangements if needed.

If you’re interested in learning more about rental insurance and what you can expect, check out our pricing guide.