Everything You Need to Look for in a Renters Insurance Policy

Editor’s note: This is a guest post by Jeanine Skowronski, senior editor of personal finance at PolicyGenius. 

Many apartment dwellers go without renters insurance, and it’s pretty easy to see why. renters insurance is confusing. For starters, a policy doesn’t cover all types of damage to your apartment. It covers damage to your stuff, notably in cases where something disastrous happens at your apartment, but there are cases where you’ll be left out to dry if you don’t have the right insurance policy. We’ll break down what makes a solid renters insurance policy and help you choose the right one.

Know your coverage limits

Coverage limits come in two varieties: an overall limit (which specifies how much your policy covers in total) and individual limits (which specifies the amount your policy covers for particular categories). So, for instance, you might get a $20,000 in total property coverage (overall limit), but a cap of $1,000 to put toward lost, stolen, or damaged electronics (individual limit).

How much coverage you need depends on how much “stuff” you have, but as a good starting point, people usually opt for policies that cover $25,000 in personal property and $300,000 in personal liability with a $250 deductible. If you own a particularly pricey item — like, say, a DJ turntable — you can purchase higher individual coverage limits for that category (which, in this example, is electronics).  

Make sure your liabilities are covered

You might have noticed “personal liability coverage” mentioned above. That’s because a solid renters insurance policy also protects you from mishaps or accidents that may happen at your apartment. Say you’re having a party and someone slips in your kitchen, injuring themselves. You could use your policy to pay for their medical bills or your legal bills if they take legal action against you.

Some renters insurance policies will also cover damages you accidentally do to someone else’s apartment. For example, if you’re hanging pictures in your apartment and you accidentally drill a hole in the wall all the way through your neighbor’s wall, your insurance could cover the damages.

Consider a replacement cost value policy

Get ready for some jargon. When it comes time to collect money for an insurance claim you filed, you’ll have two options for how you want to get reimbursed or paid. 

1. An “actual cash value” policy pays you the amount the item is worth today, not how much you paid for it when you bought it. 
2. A “replacement cost value” policy, conversely, covers the cost of repairing or replacing insured property at its current price.

Replacement cost value policies cost more than actual cash value policies, since that coverage is more robust, but if you have expensive items, it could easily be worth the added expense. Otherwise, you’ll be covering the cost of depreciation out-of-pocket.  

Understand which “perils” are covered — and which aren’t

The term “peril” is a catch-all word for the incidents your renters insurance covers. Perils typically covered by insurance policies are fire, electrical surges, water damage, theft, vandalism, falling objects, and some weather, like breakage due to hail, wind, and lightning. Major natural disasters, like floods and earthquakes, are commonly excluded, though you can usually add coverage for an additional fee if you live in an area prone to certain weather conditions. Your renters insurance might even reimburse you for temporary living expenses, like hotel stays or meals, if you can’t stay in your apartment due to a covered peril.      

You can figure out what perils are covered by reading a policy’s fine print, but it helps to know some jargon. 

• An “all-risk” renters insurance policy covers any peril that isn’t listed as an exclusion. 
• A “named peril” policy covers only perils that are listed. 

If you’re still a bit confused, it helps to ask an agent or broker which protections a particular policy provides before choosing one. 

Aim for affordable premiums

While you should opt for a renters insurance you can afford, it’s good to know what’s considered a reasonable premium. Truth be told, renters insurance is generally pretty cheap. In most states, a basic policy costs less than $20 a month.

Keep in mind that the more coverage you buy, the higher your premiums will be. And if you have a lot of stuff or need extra coverage for a few particularly pricey items, you’ll pay an above-average price. Of course, it helps to shop around. Take a proper home inventory to figure out how much your property is really worth before you buy more renters insurance than you actually need.

Ready to find your next place and choose an insurance policy? Search thousands of apartments for rent on Zumper and get settled into your new home.