What is renters insurance?

Renters insurance, also known as tenants insurance, is an insurance policy designed for individuals in a rented home, apartment, or multifamily property unit. For tenants, renters insurance is a vital tool to protect their belongings and financial well-being. Whether you’re concerned about fire, theft, or liability, a renters insurance policy can provide the coverage you need.

In this guide, we explain what is renters insurance and what does it cover. By understanding renters insurance, you can make an informed decision to protect your assets and enjoy peace of mind in your rented home.

Why do you need renters insurance?

Understanding the difference between what your landlord’s insurance covers and what falls under your responsibility is crucial. Landlords typically cover the physical structure of the rental property and any appliances or fixtures they own against damage from insured events like fires, storms, or other natural disasters. Landlords’ insurance does not extend to the personal belongings of the tenant or liability for injuries within the tenant’s rented space, which is where renters insurance comes in.

Protects personal property

The main reason you need renters insurance is to protect your personal property. In the event of a fire, theft, or other weather-related disasters, you will be responsible for replacing any damaged or stolen personal belongings. Renters insurance can help replace your lost or damaged items without causing a significant financial burden.

Liability coverage

Liability coverage is another critical reason you need renters insurance. This will protect you from the legal costs if someone is injured in your rental unit or if you accidentally cause damage to someone else’s property.

For property managers and landlords, making sure tenants have renters insurance is crucial to avoid financial problems if something unexpected happens. Multifamily property management software makes this easier by letting tenants buy and keep track of their renters insurance right from the system. The software also tracks insurance status and sends reminders for policy renewals, helping keep everyone protected.

How does renters insurance work?

Renters insurance provides a safety net for all types of renters by financially compensating you for any losses covered under your policy.

Here is a step-by-step overview of how renters insurance works:

Policy purchase and coverage selection

The first step involves choosing a renters insurance policy that fits your needs. You’ll decide on the coverage amount for your personal property and liability, and select any additional coverages for specific items or situations. The premium you pay will depend on these choices, along with factors like your rental’s location and the deductible amount you choose.

There are typically two coverage options under a renters insurance policy. The first is actual cash value coverage, which will reimburse you for the value of the item at the time that it was damaged or lost. The second is replacement cost coverage, which will reimburse you for the cost of replacing the item that was damaged or lost.

Filing a claim

If an incident occurs, you will file a claim with your insurance company. This involves providing documentation of the incident and the value of the lost or damaged items, or details of the liability issue. The insurance company will assess the claim to determine if the incident is covered under your policy and calculate the compensation amount.

Deductible payment and compensation

If your claim is approved, you’ll be responsible for paying your deductible, which is a predetermined amount you agreed to pay towards the covered loss. The deductible applies to property damage and loss claims but not typically to liability claims. After the deductible is paid, the insurance company will compensate you for your loss or cover the liability costs.

What does renters insurance cover?

Knowing what is covered by renters insurance is key to making the most of your policy.

Here we look at what your renters insurance policy will most likely cover:


Renters insurance can cover the cost to replace or repair damaged personal property in the case of a fire. This includes furniture, electronics, clothing, and other belongings. The policy may also help cover the cost of temporary housing if your rental is uninhabitable due to fire damage.

Natural disasters

Renters insurance typically covers your personal property against losses from natural disasters such as fires, lightning strikes, windstorms, and hail. It often also provides coverage for damage from heavy snow, ice, and sleet. It’s important to note that floods and earthquakes often require additional coverage.


If your rental unit or personal property is vandalized, renters insurance can help cover the repair or replacement costs. This protection extends to graffiti, broken windows, and damaged items due to a break-in.


Renters insurance provides peace of mind by covering losses from theft. There are certain items that will be excluded from this policy, making it essential to choose your coverage carefully. It’s important to note that there needs to be sufficient evidence of a break-in to be covered by this policy.

Frozen plumbing system

Damage from a frozen plumbing system can be extensive. When water freezes inside the plumbing system, it can cause the pipes to crack or burst, leading to water damage when the ice thaws. Renters insurance typically covers the cost to repair or replace your belongings if they are damaged due to water from burst pipes.

Impact by a vehicle

If a vehicle impacts your rental property and causes damage to your belongings, renters insurance can cover the costs of repairs or replacements.

What does renters insurance not cover?

While renters insurance offers broad protection, it’s important to know its limitations.


Certain high-value items like jewelry, fine art, and collectibles may require additional coverage beyond a standard renters insurance policy. Limits on certain types of valuables mean you might not be fully reimbursed without a separate policy.

Motorized vehicles

Renters insurance does not cover damages to motorized vehicles. This exclusion typically includes cars, motorcycles, and scooters, even if they are parked on the rental property. You will need to get vehicle insurance to protect these assets.

Home business

If you run a business from your rental unit, standard renters insurance might not cover business-related equipment or liability. A separate business insurance policy will be needed for comprehensive coverage.

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