As a house renter, renters’ insurance can offer peace of mind should the worst-case scenario occur. Protecting both the renter and their belongings, it’s a worthwhile investment. However, while there are many things that a good renters’ insurance policy will cover, there are some things that aren’t covered as standard.
Knowing what is and isn’t covered by renters’ insurance is crucial for ultimate peace of mind. In this guide, we’ll examine everything a typical renters’ insurance policy does and doesn’t cover, before looking at how renters can boost their protection.
How Renters’ Insurance Works
A comprehensive renters’ insurance policy typically offers three major types of protection: personal possessions and belongings, personal liability, and additional living expenses should the renter be required to move out temporarily.
1. Personal Belongings
Making up the bulk of most renters’ insurance policies, personal property damage refers to all of the renter’s belongings within their home. Should these belongings become damaged, stolen, or destroyed, the insurer will reimburse the renter. How much the renter can claim depends on the type of policy they’ve taken out:
- Actual cash value (ACV): covers the real cash value of the belongings, taking depreciation into account.
- Replacement cost value (RCV): covers the actual cost of replacing the items with comparable equivalents.
RCV policies are more comprehensive and cover the full cost of replacing any items lost, while ACV policies may leave the renter short of funds. ACV policies do tend to be cheaper, however.
Which Belongings Are Protected by Renters’ Insurance?
Personal belongings that tend to be covered by renters’ insurance include:
- Furniture belonging to the renter,
- Electronic devices, such as TVs, cell phones, and laptops,
- Bedding and towels,
- Musical instruments,
- Clothes,
- Art, jewelry, and other valuables — these are subject to coverage limits, typically around $1,500, but they can be increased.
- Bicycles and other sports equipment,
- Hired or borrowed items on the property.
If any of these items are damaged, destroyed, or stolen, the insurer will reimburse the renter. How much they’ll pay out depends on the type of coverage taken out.
What Isn’t Covered by Renters’ Insurance?
While most of the belongings within the rental house are covered, there are exceptions. Typically, renters’ insurance only covers the cost of replacing items belonging to the renter who holds the policy, and in most cases, their relations. So, for families, the possessions of all family members will be covered.
However, items belonging to roommates or the landlord generally won’t be covered, and they’ll need to take out their own insurance. In the case of roommates, their belongings can be covered, but they would need to be listed on the policy. However, adding a roommate to the policy can be somewhat risky, unless they’re a partner. When renters add a non-relative to their policy, the coverage will be split evenly between all named parties, regardless of who owns what. This can result in one party being out of pocket.
Other things that aren’t usually covered by renters’ insurance include:
- Vehicles: These should have their own separate insurance policy to protect against theft or damage.
- The structure of the property: This is the responsibility of the landlord and should be covered by their insurance.
- Items belonging to the renter but kept off the property: Such as tools for work.
- Pests and bed bugs: Pests are generally considered the responsibility of the landlord to deal with. As such, most renters’ insurance policies offer no protection against pet damage.
Understanding Perils: What Personal Belongings Are Covered Against
The personal belongings that are protected are covered against what insurers call perils. Perils are basically the different causes of damage that renters’ insurance will protect against, and can vary by location. However, most policies provide cover for the following perils:
- Fire and smoke damage,
- Wind and storm damage,
- Theft and vandalism,
- Sudden water damage, for example, caused by a burst pipe,
- Hail damage,
- Explosions,
- Snow and ice collapse,
- Falling objects.
Each policy is different, so it’s well worth checking exactly which perils are covered against. Most insurers do allow renters to tailor their policy to best fit their needs. However, this will often come at a higher cost.
Which Perils Aren’t Usually Covered?
There are some perils that most insurers won’t offer protection against as standard. Damage caused by the following perils typically won’t be covered by most renters’ insurance policies:
- Floods,
- Earthquakes,
- Sinkholes.
However, it’s worth noting that many insurers will offer flood and earthquake damage as an optional extra. This will increase the cost of the monthly payments, but add an additional layer of protection in higher-risk areas.
2. Renters’ Liability Cover
Beyond protecting the renter’s personal property, a standard renters’ insurance policy will typically also provide liability coverage. This covers the renter for any lawsuits raised against them concerning property damage issues or bodily injury that was caused by the renter or anyone else living in the home, including pets. Liability coverage covers the cost of court and attorney fees, as well as any damages that must be paid.
Most policies cap personal liability coverage at $100,000. However, it’s normally possible to increase this cap for an extra cost.
Personal liability cover generally protects the renter against lawsuits filed by visitors to their home who have had an accident or other medical mishap. This can include:
- Dog or other pet bites or attacks,
- Tripping hazards,
- Falling damage,
- Burns,
- Electrocution.
Additionally, damage to the property could see the renter sued by the landlord. Personal liability will also cover such issues.
3. Additional Living Expenses
If a renter’s house becomes uninhabitable due to a covered peril or loss, renters’ insurance will ensure that additional living expenses are paid for. Additional living expenses (ALE) typically include the following:
- Hotel bills,
- Restaurant meals,
- Temporary rental fees,
- Extra travel costs.
The amount paid out for additional living expenses is normally calculated by taking the difference between the renter’s regular living expenses and their additional living expenses. Limits are normally imposed, but these can typically be increased.
For renters living in expensive cities, it might be worth increasing the limit, as the cost of hotel stays and eating out can soon surpass the standard limit.
4. Other Things That May Be Covered by Renters’ Insurance
Many renters’ insurance policies will also include numerous additional features, provided the service is required due to an issue covered by the policy.
a. No-Fault Medical Expenses for Guests
Most renters’ insurance policies include no-fault medical payments coverage for guests who were injured on the property. This differs from liability cover in that it covers medical costs regardless of how the accident occurred, even if no party is at fault.
The coverage will normally pay out for things like hospital stays, x-rays, dental expenses, surgery, ambulance fees, and any other related costs. There will, however, be a policy limit, usually between $1,000 to $5,000.
This coverage only applies to guests, not to the people living at the property or listed on the policy.
b. Food Spoilage
Should a power failure in the rental home result in the loss of frozen or refrigerated food, most renters’ insurance policies will pay to have the spoiled food replaced.
c. Removal of Debris
If, after an event covered by the policy, the rental house is subject to debris, inside or outside, most renters’ insurance policies will help cover the costs of its removal.
d. Credit Card Fraud
Some renters’ insurance policies may cover any losses incurred by the policyholder as a result of credit card, or check, fraud. The amount covered is usually fairly limited, however, and is typically capped at around $1,000.
e. Additions or Alterations to the Building
If the renter has funded any upgrades to the rental house, renters’ insurance may cover the cost of repairs should the upgrade be damaged by a covered event. Caps usually apply, with 15% of the total personal property coverage being typical.
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