Renter's insurance is a policy for renters that covers the replacement value of possessions. Though your landlord probably carries insurance on the building you live in, that insurance is unlikely to cover your belongings: clothing, furniture, stereo, and other personal possessions. In the event of a fire or break-in, you could still face repair or replacement costs—not a small feat, as the average person's belongings are valued at over $20,000.
Renter's insurance can include liability coverage, as well, to protect you if someone gets hurt at your residence—something else your landlord's policy may not provide. Renter's insurance may also provide legal defense costs.
What does renter's insurance protect?
In terms of coverage, most renter's policies are similar to homeowner's policies. A renter's policy should cover your furniture, clothing, TV, stereo, appliances, and other personal property. It's wise to look for policies providing replacement value coverage, which will reimburse you for the replacement value of your damaged or stolen property, rather than for the property's current (usually lesser) value. You should expect to pay a deductible; choosing a higher deductible can lower the overall cost of your policy. Protection under your renter's insurance policy is fairly broad: For example, if your clothing is stolen from your car while you're on vacation, your renter's policy will cover the replacement costs. However, you are only protected from hazards specifically listed in the policy. These typically include fire
and lightning; windstorms; hail; explosion; riot or civil commotion; aircraft or vehicle damage; smoke damage; vandalism or malicious mischief; theft; falling objects; and artificially generated electrical current.
"Special limits" in renter's insurance
Coverage for certain types of property has a dollar limit.
Here is a typical list of the types of property that may have "special limits" in a renters policy:
Money, bank notes, coins
Business property (on- and off-premises)
Securities, negotiable instruments
Watercraft, including boat trailers, furnishings, and equipment
Trailers (other than boat trailers)
Jewelry and furs
Firearms (limitation applies to theft only) Silverware and goldware (limitation applies to theft only) If you have this type of property, you may need special coverage either an endorsement or a personal articles policy. Ask your insurance
agent about these items.