Who Needs Renters Insurance?

If you pay rent, you need renters insurance. If you have property you can't afford to replace, you need renters insurance.

Renters insurance protects your stuff if it’s damaged, stolen or destroyed by a covered event, and it protects your liability if you accidentally hurt someone or they accidentally get hurt at your home and sue you.

It’s an essential way to protect yourself and your personal belongings. But very few landlords require it, and just 40% of renters have it. So do you need renters insurance? Probably — and the 60% of renters who don’t have it very likely need it, too.

Why do I need renters insurance?

Renters insurance is important because it means you won’t have to pay to replace any property you lose in a covered peril, such as fire, theft, or some kinds of water damage. You’ll also be reimbursed for some of the medical and legal expenses you’re responsible for if a guest is injured in your house or apartment.

These costs can add up. If you don’t think you can afford to replace your expensive personal belongings out of pocket, then you need renters insurance. It’s very affordable, too. Many people pay between just $10 to $15 per month for full coverage of all their stuff. Your renters insurance needs vary depending on your living situation.

Your landlord requires coverage

Landlords frequently add getting renters insurance to the signing terms of your lease agreement. They may even specify the amount of coverage you need to purchase.

Your landlord has a form of homeowners insurance that covers damage to the building, but you may be liable for damage not covered by his or her policy. In that case, your renters insurance coverage could pick up some of the liability costs.

Your roommate has coverage, but you don’t

If you live in a shared house and your roommate has renters insurance, you are only covered by his or her policy if your roommate adds you as a named insured.

But it’s worth it to purchase your own policy instead. If you are added to your roommate’s policy, you’d also have to navigate the claims process together and your own claims could affect your roommate’s insurance rates in the future. With your own policy, you can make sure you’re getting enough coverage for yourself.

You live in a disaster-prone or high-crime area

There are many covered perils in your renters insurance policy. These are the situations for which you’re eligible to receive reimbursement if one of their causes your loss. Covered perils, also called named perils, include everything from bad weather (windstorms, hail, lightning) to elemental hazards (fire, smoke, ice) to dangerous human activity (riots, vandalism, car accidents).

If your policy doesn’t include a certain peril, then it likely isn’t covered. Fortunately, renters insurance companies offer an all-perils policy that essentially covers anything under the sun.

You’re a pet owner

Your renters insurance policy’s liability coverage protects you when your pet injures a guest under its provision for medical payments to others. This could include everything from dog bites to allergic reactions to those tiny fibers your pet tarantula launches at people it doesn’t know. Note that having an especially dangerous pet, like a pit bull, can cause your premium rates to increase.

You work from home

If you work from home, you do have coverage for anything you use for business, but it could be restricted to a certain dollar amount. These restrictions are called limits of liability, and you may be able to purchase a rider, or a separate commercial property policy, to make sure your business-related belongings are covered.

Who doesn’t need renters insurance?

Renters insurance can save you a financial headache, but not everyone needs coverage. Homeowners especially: if you own your home, you need homeowners insurance, not renters. But there are a couple of other situations in which you may already have renters insurance coverage.

People who live with their parents

If your parents already have renters insurance, then you’re already covered by their policy. In fact, any blood relatives who live in the insured residence enjoy this coverage.

College students, sometimes

Your parents’ renters insurance policy continues to cover you when you live in on-campus housing or dorms, up until a certain age (usually 24 or 25). Some limits of coverage may apply.

Who probably needs renters insurance?

In some situations, whether you need renters insurance is a grey area. You may still need to protect your property, but you may not have a permanent address or you may be using your current residence for various personal and business ventures that renters insurance may not cover.

Subletters

You can get renters insurance if you’re not on a lease. Whether your landlord lets you stay at the apartment off the books, or if you’re taking an empty room in another renter’s home, you may need coverage.

You won’t be covered by the leaseholder’s policy unless he or she adds you as an additional insured (also called a named insured). If you plan on subletting for a long time, or if you have a lot of valuable possessions, you should get renters insurance.

Airbnb hosts

Airbnb offers two types of insurance:

• host protection insurance, which protects you from injuries your guest incurs while staying in your home; and
• the host guarantee, which isn’t technically insurance but could reimburse some costs for property damaged or destroyed by your guest.

Take a look at the terms of Airbnb’s coverage. If they’re not robust enough for you, your renters insurance could fill in the gaps.

If you regularly rent out a room in your home, your renters insurance will cover your stuff, but not any of your guests’ stuff. You may also have liability coverage if your guest causes bodily injury or property damage to someone else, but it could be limited by the terms of the policy. However, if you don’t live in the home, your renters insurance doesn’t cover it at all. For that, you may need to get vacation rental insurance or short-term rental insurance.

Is renters insurance required by law?

No city or state requires you to have renters insurance. Most states do allow landlords to require you to get renters insurance as a condition for signing the lease. But, unlike car insurance, you have no legal responsibility to get renters coverage.

What types of renters insurance coverage do I need?

When you purchase renters insurance, you’re getting several types of coverage in one affordable policy. A licensed representative at Policygenius can walk you through the various ways your renters insurance protects you from damage and loss and help you choose a policy that fully meets your needs.

Personal property coverage

Provides protection for your personal possessions. Policies either provide the replacement-cost value or the actual cash value of your belongings after a loss. Replacement cost value is the cost to replace the item. Actual cash value is the replacement cost value minus depreciation. Replacement cost value policies are more robust, but actual cash value policies are much cheaper.

Liability coverage and medical payments to others

Liability insurance provides protection if you’re responsible for someone getting hurt and he or she sues you. Medical payments to others coverage helps pay their medical bills.

Loss-of-use coverage

Pays for additional living expenses if you need to stay somewhere else because your home is unlivable due to a covered peril.

Coverages not included

You may need to add some additional coverages to your renters insurance since they’re excluded from the basic policy. Exclusions include floods (you need flood insurance) and earthquakes (you need a separate earthquake rider or endorsement).

Some types of property are also excluded or have low limits of liability. You may need to add coverage for items like jewelry and firearms, which is called scheduling property.

How much renters insurance do I need?

Add up the value of your personal property. Then, try to calculate how much you can afford to pay out of pocket if a guest gets seriously injured in your home. Without renters insurance, you could struggle financially to pay these costs.

Each component of renters insurance has its own maximum coverage amount. Typical coverage maximums include:

• $10,000 to $25,000 for personal property coverage;
• $100,000 to $300,000 for personal liability coverage;
• $1,000 to $3,000 for medical payments to others; and
• $3,000 to $10,000 for loss-of-use coverage.

If you need more than that – or less than that – tell your insurer, and your premiums will be adjusted accordingly

This article originally appeared on Policygenius