Does renters insurance cover theft?

Imagine finding that your apartment window has been smashed in and a thief has stolen your favorite sunglasses, your golf clubs and your computer. As you review the damage, you realize your possessions are a total loss.

Or are they? After a few minutes of processing your anger, you realize that the renters insurance you purchased to cover your apartment might also apply to your possessions. Let’s do an overview of how basic renters insurance works, the different coverages available, how much you can expect to pay and whether renters insurance covers theft of your personal possessions.

Will your renters insurance cover theft?

Many renters insurance policies include theft coverage, which protects your personal belongings as they’re transported and once they’re inside your home. So your policy should have you covered whether your personal items are stolen from your vehicle, hotel room, storage unit or moving truck. While a majority of renters insurance policies include theft coverage, it is important to read through your policy to ensure that you’re protected. It should operate like any other insurance claim, in that the cost to replace your stolen items will have to exceed your deductible in order to get a check from your insurance provider.

What is renters insurance?

Renters insurance provides replacement value on your personal property while you occupy a dwelling owned by someone else. While policies and their costs vary, renters insurance typically covers property lost due to fire, smoke, theft, natural disasters, vandalism and water damage from internal problems such as burst pipes (natural floods from rivers, weather and the like aren’t typically covered by renters insurance, but flood insurance could cover such losses).

In addition to property coverage, renters insurance can cover the holder’s liability in the case of accidents occurring on the rental property. It also can provide compensation in case a renter is forced to relocate temporarily due to a disaster that is covered by the policy.

Is renters insurance required?

According to the National Family Housing Council, there are more than 44 million American households being rented in 2021. Unlike homeowners insurance, which is required by your mortgage lender, renters insurance is not a requirement – although some landlords will insist that you get insurance as a condition of the lease. Regardless, many people who lease their homes do purchase a renters insurance policy for added protection.

What does renters insurance cover and what does it not?

Each renters insurance policy can differ in what it covers. With that in mind, here are some things you can expect most renters insurance to cover in some capacity:

• Personal property: Renters insurance covers any of your personal possessions that are stolen or damaged by a covered disaster such as fire or vandalism. However, damage caused by an earthquake or flood aren’t typically covered, so you may want to look into separate earthquake and/or flood insurance policies if you want coverage for those events. For coverage of high-dollar items, such as fine artwork or expensive jewelry, you can itemize these possessions and pay a higher premium.

• Personal liability: This covers your expenses if you’re found legally responsible for someone else’s injuries or property damage in your rented home. This coverage also pays for another person’s medical bills, along with repairs or replacement of their damaged or stolen property. This coverage doesn’t apply if the injuries or damage described in the claim are deemed intentional.

• Additional living expenses or loss of use: This protects you from having to pay living expenses if your home becomes uninhabitable, as in the case of a fire or burst pipe. For example, this can provide coverage for bills you’ve accrued at a hotel you stayed at while your apartment is being fixed after a gas fire. Again, be mindful that many renters insurance policies don’t cover everything, and could exclude coverage for damages caused by bedbugs, earthquakes, natural floods and the like. You may need to pay for additional protection through a rider, endorsement or a separate policy to get insured for such events.

How renters insurance works with different types of theft

Although we’ve gone over the basics of renters insurance, you may still have questions about how it works with particular types of theft, including car theft, bike theft and theft that occurs outside of your home.

Does renters insurance cover car theft?

A renters insurance policy will not cover the theft of the actual vehicle or parts of the vehicle (such as wheels), but will cover things that are taken from inside the vehicle. Theft of the vehicle is usually covered by an auto insurance policy. However, the most basic auto policies, such as liability insurance, often do not cover vehicle theft.

Does renters insurance cover theft of other vehicles?

Also note that renters insurance will not cover the theft of other vehicles, such as motorbikes, RVs, boats or other personal watercraft, snow machines, etc. – whether these machines are trailered to your vehicle or sitting on your driveway. This applies whether they’re in or on the vehicle (like in the bed of a pickup truck) or on a trailer being hauled by the vehicle. There are separate kinds of policies that cover each of these types of vehicles as well as enclosed cargo trailers and the items they carry.

Does renters insurance cover bike theft?

In general, yes. Most renters insurance policies will cover the theft of your bicycle, whether it’s stolen from your garage or from a public bike rack. Some plans will also cover the loss of an e-bike or scooter, but be sure to make note of the details in your policy. Your renters coverage will not replace a stolen motorcycle.

Does renters insurance cover theft outside the home?

Almost any of your personal possessions that are stolen when they’re not in your actual home are still covered by your renters insurance. Examples would be if your watch was snatched up off your beach towel, your luggage is stolen off the baggage carousel at the airport or if you’re mugged. Yes, cash is also covered, but in many policies, there is a limit to the amount of cash you can claim because it is difficult to verify.

The difference between actual cash value and replacement cost

The language of your renters insurance policy will likely refer to its covering of your lost or stolen items as either replacement cost value (RCV) or actual cash value (ACV).

What is RCV?

RCV is defined as the amount it will require to replace the lost item at today’s cost. This is more desirable – and therefore offered at a higher premium – because it restores the policyholder’s situation to what it was before the loss.

What is ACV?

ACV refers to the market value of your property with depreciation cost considered. For example, say an expensive rug you purchased 5 years ago is destroyed in a fire. The rug would be valued at the market rate as a 5-year-old rug and not a brand-new rug. Coverage at ACV comes at a lower premium because claim payments are lower than the replacement cost option.

Should you get renters insurance?

Though it can be affordable, renters insurance is still an expense that you must be comfortable paying for within your budget. Keep in mind that, as mentioned earlier, some landlords may require you to have renters insurance as part of your lease agreement.

If you’re the type of person who has highly expendable possessions or very few belongings, you might not feel the need for a renters insurance policy. But if you have some valuable items, whether they are expensive or just have personal value, it is probably worth getting renters insurance coverage.

Don’t forget, your renters insurance can also cover you for liability should someone get injured due to an accident in your home. Also, if there is damage to your home that makes it temporarily uninhabitable, renters insurance can cover your living expenses somewhere else.

Renters insurance and theft FAQs

Here are some things to consider when trying to decide if you need to purchase renters insurance:

How much does renters insurance cost?

The exact cost of a renters insurance policy varies by location and the amount of coverage you want. According to Forbes, the national average cost of renters insurance (known as the premium) with $15,000 worth of personal property coverage is just over $14 per month, or $173 annually. $30,000 worth of coverage costs an average of $19 per month, while $50,000 worth of coverage costs about $25 per month. 

What determines the cost of renters insurance?

Things that contribute to higher or lower renters insurance rates include state laws and regulations, as well as crime rates and the likelihood of natural disasters. Forbes also notes that the state with the lowest average premium for renters was Alaska at $48 per year, while renters in Louisiana paid the most at $294 for a year.

How do I get renters insurance?

You can get a free renters insurance quote online, over the phone or in person. It’s best to get quotes from numerous companies so you can compare costs and coverage. If you use the same insurance company that covers your car, you may get a discount for bundling the policies together.

How do I know how much renters insurance I need?

Before you start really considering a particular policy, you should be aware of the different kinds of coverages and which ones you really need. You should also add up the value of your possessions. These can include furniture, artwork, jewelry, clothing, accessories, sporting goods/equipment and any appliances that do not come with the home. This will help you determine how much coverage you need.

What happens if my belongings are stolen while traveling or away?

Any possession covered by your renters insurance is covered if stolen, no matter where you or the items were when they were lost or damaged, or for what reason. The only exception is if the loss is by your own intent.

Does renters insurance cover damage from a house or car break-in?

Only if the break-in results in the loss of or damage to your personal property. In the case of a car break-in, the smashed window would be covered by your auto insurance. But if the person who smashed your window also stole your laptop that was in your bag on the passenger seat, your renters insurance would cover that loss. Same thing with your home. Your landlord’s homeowners insurance would cover the broken-down door, but anything stolen in your unit is covered by your renters insurance.

The bottom line on renters insurance and theft

When you own a home, your homeowner’s insurance covers not just the structure but also your possessions. This isn’t the case if you lease or rent your home. Your landlord’s insurance policy covers the apartment building or house you live in, but it does not cover anything that you keep inside. Renters insurance is necessary if you want that type of coverage for your possessions. The good news is that this kind of insurance typically protects your possessions whether they are in your home, your car, your place of work and even when you are on vacation.

While renters insurance is relatively inexpensive, rent usually isn’t. In fact, many people are surprised that, once they do buy their first home, their monthly mortgage payment is significantly less than their last rent payment. If you feel like you are on firm financial ground and thinking about homeownership, learn how to decide if you should keep renting or buy a home.