11 Facts you should know about renters insurance

Many people rent homes at some point in their lives, from college students in their first off-campus apartments to retired couples who are downsizing. If you’re a new renter, you might not be clear on what renters insurance is, and whether you need it.

Are you renting your home and unsure if renters insurance is really worth it? Imagine coming home to find your apartment damaged by a burst pipe, or realizing your laptop was stolen while you were traveling. These unexpected moments can turn your world upside down—but with renters insurance, you have a safety net that helps you bounce back quickly. From protecting your favorite gadgets and furniture to covering your living expenses if disaster strikes, renters insurance is designed to give you peace of mind when life throws you a curveball. 

In this article, we’ll reveal the often-overlooked benefits of renters insurance, share real-life scenarios where it can make all the difference, and explain why every renter should consider this essential coverage. Let’s dive in and discover how a simple policy can safeguard your belongings and your future.

Renters insurance basics

Renters insurance has three main components:

• Personal property coverage: This part of your renters insurance protects the contents of your home including everyday essentials like clothes, dishes, and furniture to valuable electronics such as TVs and computers. If your belongings are damaged or stolen due to events like fire, theft, or vandalism, your policy helps you recover the cost, so you don’t have to worry about replacing everything out of pocket.
• Liability coverage: If someone is injured in your home or if your pet causes harm to another person, liability coverage steps in. It can cover legal expenses and settlements if you’re sued, shielding you from potentially devastating financial losses. For many renters, this is one of the most important reasons to have insurance, it’s your safety net against unexpected accidents.
• Additional living expenses coverage: Should a disaster like a fire or burst pipe make your apartment uninhabitable, this coverage pays for temporary housing and related costs. You’ll have support for hotel stays or other accommodations while your home is being repaired, ensuring you’re not left scrambling for a place to stay during a crisis.

Must-know facts about renters insurance coverage and costs 

1. Standard renters insurance policies only cover named perils, or events that may damage your possessions. These include fires, lightning, windstorms, hail, smoke, vandalism, theft, freezing, and damage from aircraft, vehicles, and riots.
2. On average, renters insurance costs $15 to $30 per month. The cost of your premium will depend on a few things, like where you live and the type of coverage you choose.
3. Deductibles for renter’s policies tend to start at around $500 and can go up to $2,000. Higher deductibles tend to mean lower premiums but also higher floors before coverage kicks in.
4. Your belongings are covered away from home for the risks listed in your policy. If a thief swipes your luggage from a hotel room, you are covered. This off-premises coverage is usually limited to a portion of your total coverage for personal belongings, such as 10%.
5. You may have some coverage for personal property stored in your car. For example, if someone steals books or electronics out of your car, your renters insurance may cover them.
6. Your landlord may require you to buy renters insurance. Your landlord’s insurance covers their building and grounds, but not your belongings. A growing number of landlords require tenants to purchase renters insurance to reduce potential liability on their end and ensure tenant protection.
7. You can choose to be reimbursed based on actual cash value (ACV) or replacement cost value (RCV). ACV is what the item is worth, factoring in depreciation. ACV is generally less than what it would cost to replace the item. Conversely, RCV is what it would cost to replace the item with a new one of similar kind and quality. For this reason, RCV is more expensive than ACV.
8. Roommates must be named on the policy. A renters insurance policy will not extend coverage to any of your roommates. If you want shared coverage, their names must be specifically written in the policy. However, most experts recommend individual policies tailored to each tenant’s needs.
9. Floods aren't automatically covered. Damage to your possessions from flooding is excluded under standard tenant insurance policies. However, flood coverage is available as an endorsement from some private insurers.
10. Earthquakes aren't automatically covered. As with flooding, standard renters insurance policies do not cover earthquake damage. Coverage is available as an endorsement or a separate policy. Earthquake insurance provides protection from the shaking and cracking that can destroy personal possessions. You can buy it from a private insurer.
11. You can add a "floater" to cover more costly valuables if they are lost or stolen. If you have expensive jewelry, collectibles, sports equipment or musical instruments, consider adding a floater to your policy to protect against their loss.

How renters insurance can help you save on future home insurance

When transitioning from renting to owning a home, many people overlook the potential benefits of having affordable renters insurance. Not only does renters insurance provide valuable protection for your personal belongings while you rent, but it can also positively impact your future home insurance premiums.

Establishing a positive insurance history: Having renters insurance shows home insurance providers that you are a responsible individual who values protecting your assets. This positive insurance history can make you eligible for discounts on your home insurance premiums when you purchase a home.

Bundling discounts: Many insurance companies offer discounts for bundling multiple policies. If you have an existing auto insurance policy with a provider, you may be able to bundle it with your renters insurance policy, resulting in savings for affordable renters insurance.

Claims-free discounts: If you have maintained renters insurance without filing any claims, you may qualify for a claims-free discount on your home insurance. This is because insurance companies view you as a lower risk, which can lead to lower premiums.

Loyalty discounts: Some insurance companies reward long-term customers with loyalty discounts. If you have been with the same insurer for your renters insurance, you might be eligible for a loyalty discount when you switch to home insurance.

Understanding coverage needs: Having renters insurance helps you understand the types of coverage you need, making it easier to choose the right home insurance policy. This knowledge can prevent you from over-insuring or under-insuring your new home, ensuring you get the best value for your money.

Set yourself up for future savings 

With renters insurance, you’re not just protecting your belongings while you rent, you’re also building a foundation for future savings on home insurance. By maintaining coverage and a positive insurance history, you show providers that you’re a responsible tenant, which can lead to discounts and better rates when you transition to owning a home. It’s a smart financial move that can pay off in the long run. 

The best time to secure renters insurance is before disaster strikes. By talking to your insurance broker, you can find the right type and amount of affordable coverage for your needs. Protect your peace of mind today and set yourself up for a safer, more secure future.

Take the next step with Orbit Insurance Services

Ready to protect your home with the right coverage? Contact an Orbit insurance broker today to learn more about how renters insurance can benefit you now and in the future.

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