What Is Renters Insurance and What Does It Cover?

Renters insurance, sometimes called tenant insurance or HO4 insurance, is a type of property insurance designed to protect tenants. Although it’s legally mandatory, your landlord or lease terms may require it. It covers your personal belongings, offers liability coverage, and may pay for Additional Living Expenses (ALE) if your rental becomes uninhabitable. 
 
In simple terms, if there’s a fire, theft, or accident in your rental space, your renters insurance will cover the costs. And don’t expect your landlord's insurance will protect you. Landlord insurance only protects the building, not your furniture, clothing, electronics, or even your groceries. 
 
Let’s say a kitchen fire destroys your laptop and forces you out of your apartment. In this case, your renters insurance covers your damaged items and helps pay for a hotel stay. 
 
Renters policies are typically affordable. Usually, it costs around just $15 to $30 per month, depending on coverage limits and location. 
 
It's also flexible. You can choose between actual cash value or replacement cost coverage, and even add protections for valuable items, pet liability, or identity theft.  
 
Let’s discuss more about what renters insurance is and what it covers for you.

How Does Renters Insurance Work? 

Renters' insurance works simply like any other insurance policy. It provides financial protection when a covered event causes damage or loss to your belongings or when you’re held legally responsible for someone else’s injury or property damage. Here’s how it works out from start to end:

Covered Events Trigger Protection

When an event like a fire, theft, or vandalism happens, it’s called a covered peril. Your insurance policy lists the specific perils it protects against. And if the loss is caused by one of those covered perils, you can file a claim.

You File Claim and Pay Your Deductible

Once you file a claim, you have to pay your deductible first. A deductible is the amount you pay out of pocket before your insurance kicks in. For example, if your stolen watch is $1,500, and your deductible is $500, your insurance company pays $1,000. 

You’re Reimbursed Based on Your Coverage Type

Again, the claim amount you’ll receive also depends on coverage type. There are two main types of personal property coverage.

• Actual Cash Value (ACV): Pays for your item’s current value (with depreciation).
• Replacement Cost Value (RCV): Pays what it costs to buy the same item present day. 

In case you choose RCV, which will reimburse the full amount of your damaged/stolen items, you’ll be charged higher renters' insurance rates.

It Covers More Than Just Stuff

the renters' policy isn’t limited to covering stuff only. Apart from personal coverage, it offers additional living expenses (ALE) as well. If your place becomes unlivable due to a covered peril, your policy will offer you expenses for hotel stays, temporary rent, laundry, or food costs. This is also known as loss of use coverage.

In addition, there’s liability coverage. If someone is injured at your rental, the liability coverage helps pay their medical bills or legal costs. Even dog bites or damage caused by your pet may be covered, depending on your policy.

It Travels with You 

Most renters' insurance policies protect your belongings even when you’re away from home, like if your laptop is stolen from your car or your suitcase is lost at a hotel. Some also extend limited coverage to storage units.

What Does Renters Insurance Cover?

Renters' insurance protects your belongings, your finances, and your temporary living situation after a covered event. Check the following types of renters insurance coverage to learn what renters insurance does cover for you.

1. Personal Property Coverage

This is one of the major policies. It helps pay to repair or replace your belongings if they’re damaged, destroyed, or stolen due to a covered peril like: 

• Fire or smoke 
• Theft or burglary 
• Vandalism 
• Lightning or windstorm 
• Water damage from plumbing (not floods) 
• Falling objects or appliance malfunctions 
• Explosions or hail 

Covered items usually include: 

• Clothing, electronics, furniture, and kitchen items 
• Bicycles, books, luggage, tools, and décor 
• Sometimes items are stolen from your car or while traveling 

Pro Tip: Most basic policies limit certain categories like jewelry, cash, and collectibles. For better protection, ask about scheduled personal property coverage

Learn More:  

• Does renters insurance cover moving damage?  
• Does renters insurance cover broken windows?

2. Liability Coverage

This covers accidents where you’re legally responsible for injuries or property damage to others in your rental space.  

Examples: 

• Your dog bites a neighbor 
• A guest trips over a rug and breaks a wrist 
• You accidentally damage someone else's apartment 

This coverage may pay for: 

• Medical bills  Repair costs 
• Legal defense if you're sued

3. Medical Payments to Others 

If you’re not at fault for accidents that cause physical injuries to your guests in your rental, you cannot file a claim under liability insurance. For this, you’ll need medical payment coverage. In such a situation, your insurer compensates on behalf of you for things like X-rays, ER visits, or bandaging a cut. 

• Typically limited to $1,000 to $5,000 
• It’s a no-fault benefit. So, your friend/guest doesn’t have to face court and send bills directly to your insurance provider.

4. Additional Living Expenses (Loss of Use Coverage) 

If your place becomes uninhabitable due to a covered peril like fire, storm damage, or a burst pipe your policy may help cover: 

• Hotel stays 
• Temporary rental costs 
• Restaurant meals or takeout 
• Laundry and transportation 

This is known as loss of use or ALE (Additional Living Expenses). 
 
Please note that if your living space is damaged by a flood, you’ll require flood insurance from the National Flood Insurance Program (NFIP) to cover the loss.

5. Optional Add-Ons and Endorsements 

Not everything fits inside a standard renters' policy. You can always customize this with extras:  Add-On Coverage What It Covers

Learn More: Does renters insurance cover storage units?

What Does Renters Insurance Not Cover 

Renters' insurance covers many things. It doesn’t cover everything. Some situations fall outside your policy unless you add a specific endorsement. Here’s what’s typically not covered: 

• Flood damage (you need separate flood insurance for it) 
• Earthquake coverage (you need endorsement for it too) 
• Damage from pests or infestations, including pest removal or mold (Rodents, bed bugs, termites, and other pests are considered maintenance issues) 
• Your roommate’s stuff (Unless your roommate is named on your policy) 
• Damage you cause to the building (that’s the landlord’s responsibility) 
• Business equipment or commercial use (e.g., business laptop, tools, inventory stored at home) 
• Vehicle damage or car theft

How Much Does Renters Insurance Cost? 

Most people think that renters' insurance is too expensive. But that’s not true. In fact, it’s surprisingly very low. Most policies range from $15 to $30 per month, depending on what you need. That’s less than the price of two lattes. 
 
However, the renters' insurance price is shaped by many factors. Let’s discuss them here as well so that you don’t get any surprises when exploring your renters' insurance rates.

What Affects Your Renters' Insurance Premium? 

Here are the main things that shape your cost: 

• Location: High-crime or disaster-prone areas cost more. 
• Coverage Limits: If you go for more protection, the rate will be higher. 
• Deductible Amount: A higher deductible lowers your monthly rate. 
• Pet Ownership: If you’re a pet parent, you will face a little higher rate.  
• Property Value: Expect to pay more if you want to insure more stuff. 
• Type of Building: Larger, safer complexes may lower rates. 
• Security Features: Alarms, deadbolts, and smoke detectors can earn you discounts.  Claim History: Fewer past claims mean you’ll face a lower price.

Example: If you select a studio apartment in a safe neighborhood with $20,000 in personal property and a $1,000 deductible, you can expect to pay about $16 per month for insurance. In contrast, if you choose a downtown loft known for theft, with $35,000 in personal belongings and a $500 deductible, the monthly rate could be around $28.

Should You Purchase Renters Insurance or Not? 

If you rent your home, yes, you should seriously consider it. Many renters assume their landlord’s insurance will cover their belongings. Unfortunately, it won’t.  

In fact, some landlords require renters insurance as part of the lease agreement. In such a case, not having it could mean losing your place. Even if it’s not required, you should buy it anyway.

If you think my roommate is insured, I’m good. Unfortunately, not. Not unless you’re both named on the same renters policy. 

Also, if you’re renting in an area that is prone to property-related crime, theft, or natural disasters, then you must purchase renters' insurance. For instance, if you’re in cities like Detroit, Memphis, Tennessee, and St. Louis, Missouri, you must consider insuring your rental property as these areas frequently experience property crime. 
 
If you don’t have the renters' insurance, you’d have to pay for: 

• Replacing everything you own 
• Staying in a hostel if your place becomes unlivable 
• Medical bills if a guest is injured 
• Legal fees if you’re sued for accidental damage

L.A. Insurance is a Detroit-based, affordable, independent insurance agency serving customers across the U.S.A., including Michigan, Colorado, Texas, Florida, Georgia, Arizona, and Nevada.  

If you need affordable renters insurance, you can easily get a quote from us and compare it. Receive a free renters insurance quote online instantly.

How to Choose the Right Renters Insurance for You? 

Choosing the right renters' insurance policy is not just about finding the cheapest option. It’s important to choose coverage that meets your needs and fits your budget.  

Here's a step-by-step process of choosing the right renters' insurance for you:  

Step 1: Know What You Own

• Make a quick inventory of your belongings. 
• Add up the value of your furniture, electronics, clothing, and essentials 
• Keep receipts or take photos for records 
• Don’t forget high-value items like jewelry or musical instruments

Step 2: Choose Your Coverage Type 

You’ll usually have two options: 

• Actual Cash Value (ACV): Pays the current value of your items (minus depreciation) 
• Replacement Cost: Pays what it costs to buy the item brand new 

Please note that replacement cost coverage gives maximum protection but costs slightly more.

Step 3: Review What’s Included (and What’s Not) 

Standard renters' policies cover: 

• Fire, theft, vandalism, water damage 
• Liability insurance if someone’s injured 
• Additional living expenses if your rental becomes unlivable 

Tip: Ask your insurer about endorsements to add extra protection.

Step 4: Compare Deductibles and Premiums

• A lower deductible means you’ll pay less out of pocket during a claim 
• But your monthly premium will be higher 
• Choose a balance that fits your budget and risk tolerance

Step 5: Get Multiple Quotes 

Use online tools to get a renters' insurance quote or talk to an agent directly. 

Compare: 

• Coverage limits 
• Policy exclusions 
• Discounts for bundling with auto insurance

Step 6: Check for Flexibility 

Some policies let you: 

• Add a roommate or domestic partner 
• Adjust coverage mid-term 
• Transfer the policy if you move to a new apartment 

Learn More: How long does it take to get renters insurance?

Common Scenarios Covered by Renters Insurance

You might not expect disaster, but renters' insurance is ready when it shows up uninvited. 
 
Here are real-life situations it covers: 

• A fire damages your couch, clothes, and electronics. Your policy helps replace them. 
• A thief breaks in or grabs your laptop from your car. You're covered. 
• A friend slips and breaks their wrist in your kitchen. Your policy pays their medical bills. 
• A burst pipe floods your apartment. You stay in a hotel, covered under loss of use. 
• Your dog bites someone at the park. Liability coverage may cover legal or medical expenses. 
• Your suitcase is stolen while traveling. Yes, you're still protected. 
• Your storage unit is broken into. Some policies offer partial coverage.

Related Reading: Does renters insurance cover personal injury?

Filing a Renters' Insurance Claim

Now that you know what renters' insurance is and what it covers, the next step is to learn how to file a claim if something unfortunate happens, like theft, robbery, or any damage.  

Here’s how to file a claim right away: 

1. Act Fast: Call your insurance provider as soon as you discover the damage or loss. Don’t wait. Most policies have time limits. 
2. Call the Police (If needed): If there’s a theft, burglary, or vandalism, contact the police right away. Get a police report and keep a copy if it’s necessary for your claim. 
3. Document the Damage: Take photos or videos of everything affected. Write down what was damaged, lost, or stolen. Include serial numbers, model names, and estimated values. 
4. Prevent Further Damage: If safe to do so, take steps to protect your property from further damage. For example, cover broken windows or shut off leaking water. 
5. Fill Out the Claim Form: Your insurer will send you a claim form. Do it online or by mail. Complete it fully and honestly. Attach your evidence. 
6. Cooperate with the Adjuster: An insurance adjuster may inspect the damage. Answer their questions and provide anything they request. 
7. Follow Up and Get Paid: Once approved, your reimbursement will be issued by check or direct deposit, usually within 7 to 30 days. The amount depends on your coverage and policy limits.

FAQs About Renters Insurance Coverage

1. Can I cancel renters insurance at any time?  

Yes, you can cancel your renters insurance policy at any time. Just contact your provider, submit a cancellation request, and ask for confirmation. If you've prepaid, you may receive a refund. 

2. Can I transfer my renters insurance to a new apartment? 

Yes. Most insurance companies let you transfer your policy to a new rental. Notify your insurer with the new address and move-in date. Your premium may change based on the new zip code. Learn more: Can I transfer renters insurance  3. Does renters insurance cover roommates?  Only if they’re listed on your policy. If not, your roommate’s belongings won’t be covered. Each person should have their own renters policy, unless you're legally married or domestic partners. 

4. Does renters insurance cover pets or dog bites? 

Yes, liability insurance may cover dog bites or pet-related injuries. However, some breeds may be excluded. Always check the policy for pet liability terms. 

5. Will renters' insurance cover theft from my car? 

Yes, but only personal items, not the car itself. Your auto insurance covers the vehicle. Renters insurance may reimburse you for stolen belongings like a laptop or bag. 

6. Does renters insurance cover storage units? 

Yes, in most cases. Policies often cover personal property stored off-site, like in a self-storage unit. Coverage may be limited, so check the policy for exact details. 

7. Will renters insurance cover hotel stays? 

Yes, if your home becomes uninhabitable due to a covered peril, like fire or water damage. This is called loss of use or additional living expenses coverage. 

8. Does renters insurance cover floods or earthquake damage? 

No. Basic renters insurance does not cover flood or earthquake damage. You’ll need to buy separate flood insurance or earthquake coverage for that.

9. Who is eligible for flood insurance? 

Anyone in one of the 23,000+ communities that participate in the National Flood Insurance Program (NFIP) is eligible. The NFIP is managed by FEMA (Federal Emergency Management Agency). It provides flood insurance to renters, homeowners, and business owners in designated areas.

10. Will renters insurance cover food spoilage after an outage? 

Sometimes, yes. If the power outage was caused by a covered peril (like a storm or lightning strike), your policy may help cover food loss. Check with your insurer to confirm.  

11. What is HO-4 insurance? 

HO-4 is just another name for renters insurance. It’s a home insurance policy designed for tenants. It protects your personal property, offers liability coverage, and helps with living expenses during covered events.