What Does Renters Insurance Cover

Here you are, ready to purchase a renters insurance policy.

You are wondering how the policy will protect you when the unexpected happens.

We are here to help.

Also known as tenants insurance, this policy acts as a safety net for you and your property when disaster strikes.

safety net

Contrary to common belief, renters insurance does not offer coverage for every mishap under the sun.

A typical tenant?s insurance policy provides coverage in three main areas:

  • Personal liability
  • Loss of use coverage
  • Personal property

Renters Insurance Coverage Basics

Personal Liability, Legal, And Medical Bills

Renter?s?insurance shields you from a variety of occurrences which may lead to a?personal liability?claim.

renters insurance shield

Personal liability coverage (also known as coverage E or effective coverage) may cover the cost of bodily injuries to others when you are at fault.

In the same scenario where you accidentally injure someone, personal liability coverage also requires the insurance company to defend you in the lawsuit, if it should arise.

And, since the insurance company wants to minimize its losses (remember, think like an insurance company), they will pay for an experienced attorney, thus providing you an additional benefit.

Imagine another scenario. You are having a pool party and one of your visitors slips and gets seriously injured.

You rush your friend to the emergency room, feel terrible that this person was hurt at your party, and may be held liable for some of the medical expenses.

emergency room

Thankfully, you have renters insurance, and your policy?s coverage F clause will help cover some of the costs. Most plans cover you within the range of $1,000 to $5,000.

It is crucial to note that as with other coverages, limits apply to the amount your policy will pay after a loss.

Read through your policy thoroughly to understand the set limit for your coverage. Your agent will assist you to adjust the threshold if you need additional coverage.

Now that you have a basic understanding of personal liability coverage let?s take a look at the loss of use coverage provided by most renters insurance policies.

Loss?Of Use Coverage

If you are renting an apartment or a house, you have a roof over your head until your lease agreement expires.

What if a fire damaged the place you call home and you could no longer live in it?

This is where loss of use coverage (LOU) comes to your rescue. It is also referred to as coverage D or additional living expenses (ALE).

The coverage D policy will pay for?additional living costs?you receive for reasonable accommodation and living expense.

The policy will be useful when your home is under repair or until you relocate permanently and will only pay for necessary expenses that exceed your regular budget.

For instance, you spend $500 monthly for meals at home.

Now while your apartment is being repaired, your budget shoots up to $1,000 because you have to eat at restaurants instead of preparing your meals at home.

Your policy will cover the extra $500.

To help you maintain your living standards, your loss of use policy may cover other incurred costs such as:

  • Parking fees
  • Pet boarding
  • Temporary accommodation such as an apartment, hotel or motel
  • Laundry expenses
  • Transportation cost
  • Restaurant bills
  • And more…

Unfortunately, renters mistakenly believe that the policy will cover 100 percent of ALE until the house is habitable.

It is important to note that only a few policies will do it. Frequently, insurers will place a cap or limit payments for a covered loss.

To make sure you do not fall into this trap, make sure you understand how your loss of use coverage may protect you should disaster strike.


Personal Property ?

Also known as coverage C, a personal property policy will help you to replace your possessions if they are damaged or stolen.

Renters insurance protects your property wherever it may be. Whether stolen from your backpack in a hotel in Rome or your car?s trunk, you will experience the benefits of the personal property clause of your renters insurance policy.


Personal belongings that are usually covered include:

  • Furniture
  • Electronics
  • Clothing
  • Gym equipment
  • Watches
  • Fine art
  • Jewelry

There are sub-limits for items such as expensive jewelry. While jewelry is also regarded as personal property, it is wise to check with your agent if the set limit is high enough to?protect it.

The personal property coverage will generally protect you from certain risks (known as perils).

Some common perils are:

  • Explosions
  • Fire or lightning
  • Theft
  • Vandalism
  • Volcanic eruptions
  • Falling objects
  • Water damage
  • Riot or civil commotion
  • Smoke

It is advisable to create a home inventory and remember to update it as you purchase new articles. This way, it will be so much easier to determine the amount of coverage you need for your personal property and the amount you will be reimbursed (read about actual cash value or replacement cost here).

Storage Units

As a policyholder, renters insurance also protects your property while it is in a storage unit off premises up to an absolute limit.

storage units

Generally, this absolute limit is up to 10% of your full coverage.

For example, if your policies amount to $40,000 in total coverage for your possessions, items in the storage unit are covered for $4,000.

This policy will protect your items from fire and theft inside the unit during transitional times and prolonged storage periods.

Be sure to speak with your agent about your desired level of coverage and adjust your plan accordingly.

Final Thoughts

Renters insurance coverage protects you and your possessions from liabilities and perils of everyday life.

As a renter, it is highly recommended to purchase renters insurance. After becoming a policyholder, you will have peace of mind knowing that you are protecting the many things you work hard to purchase.?

If you are reading this prior to obtaining your renters insurance policy, we hope you now understand some of the basics of what renters insurance covers. With this new knowledge, ask your renters insurance agent how your new policy may work and protect you in a variety of situations.

If you already have a policy, read it and try to understand how you are covered.

read renters insurance policy

If you need any help, reach out to a local insurance agent.