How Much Renters Insurance Do You Need? (2024)

If a fire in your rented home destroyed your belongings, how much would it cost to replace them? How much money could you lose if you’re held responsible for an accident in your home and sued? Your renters insurance could reimburse you in these (and other) situations. Deciding how much you need means considering the value of your personal belongings and potential financial liabilities.

Understanding renters insurance coverage limits

The question “How much renters insurance do I need?” is more accurately stated as “What renters insurance coverage limits should I choose?” A limit is the maximum possible amount the insurance company might pay if you have a claim for a particular coverage on your policy. You choose limits when you buy your policy. So, you need to think about how much you could stand to lose if a catastrophe occurs, then choose limits accordingly.

Most renters insurance policies have four standard coverages. You choose a limit for each.

CoverageDescriptionCommon policy limits*

Personal property

Pays if your belongings, such as furniture, clothing, appliances, electronics, etc., are stolen, damaged, or destroyed by a fire, storm, or other event. Claim amounts are typically based on the depreciated value of the item (known as its “actual cash value,” or ACV)

$10,000 - $250,000

Personal liability

Pays if you’re held responsible for a third party’s injuries or property damage. (Does not apply to car accidents)

$100,000 - $1,000,000

Additional living expense

Pays for things like hotel and restaurant meals if your rented home is uninhabitable while being repaired

$3,000 - $200,000

Medical payments

Pays a guest’s medical bills if they’re injured while in your rented home.

$1,000 - $5,000

*This is a sample of ranges. The coverage limits provided by your insurer may vary.

In the example above, choosing a $10,000 personal property coverage limit means the insurance company would never settle a personal property claim for more than $10,000, regardless of the dollar value of the property you’ve lost. So if you lose $20,000 worth of belongings in a house fire, your insurance payout will fall well short of what’s needed to replace those things.

Of course, you could choose a higher personal property coverage limit—up to $250,000 in this example—to mean you have “more insurance.” But it would also cost more than one with lower limits. In an ideal scenario, you buy a policy with coverage limits that reflect—but do not exceed—your needs.

4 tips to determine how much renters insurance you need

Figuring out your exact coverage needs can be tricky. However, you can likely do a good job of estimating how much renters insurance you need by following a few tips.

1. Create an inventory of your possessions

List everything you own and keep in your house or apartment, including their estimated value. Include the purchase date and price, and keep the receipts if you have them. Take photos as well. You’ll want to include your furniture, clothing, electronics, appliances, hobby and sports gear, etc.

Your inventory can be on a spreadsheet or document or even a pad of paper if you prefer to go analog. Whatever works for you. The National Association of Insurance Commissioners has a handy home inventory app that allows you to go from room to room and document your belongings, log the purchase price and purchase date, and take photos of the items and any receipts.

Once you’ve completed the inventory, you should be able to develop a more informed estimate of the total value of your belongings. This can guide your choice of a personal property coverage limit. Your inventory, including receipts and photos, could also be useful if you ever file a claim.

2. Consider your lifestyle and assets

Whether you’re an entertainer or more of an introvert could affect your insurance needs. Do you have people coming in and out of your home a lot (for example, for parties and get-togethers)? Or do you lead a more low-key lifestyle?

The real question is: Does your lifestyle make you more likely to be held financially responsible for others' injuries and/or property damage? If so, you may want to consider higher limits for both personal liability and medical payments coverage.

When it comes to personal liability, you should also consider your assets. If you have a lot of money in savings and investments, for instance, you’ll want to have liability coverage that reflects that amount.

3. Consider how much it would cost to have to move out temporarily

Renters insurance additional living expense coverage helps you pay for extra costs you incur if you’re forced to move out temporarily if a fire, storm, or other catastrophe makes your rented home uninhabitable.

So if something were to happen forcing you to move out for a few weeks while your landlord handles repairs, what would you do? Could you possibly stay with a friend or relative? Or would you have no choice but to pay for a hotel, restaurant meals, and laundry services? If your “Plan B” is more like the latter, you might want to consider bumping up your additional living expense coverage limit.

4. Decide whether you need additional coverage

Personal property, personal liability, additional living expenses, and medical payments come standard on most renters insurance policies. But you do have some other options you might want to consider.

Adding these will increase your amount of renters insurance, but will also increase the cost of the policy.

Replacement cost

An option for your personal property coverage, replacement cost ensures any claim will be based on the cost to replace an item with a brand new one, rather than the item’s depreciated value.

For example, say your two-year-old laptop, which you purchased for $2,000, is stolen. Standard personal property coverage would base the claim payout on the item’s actual cash value (ACV), which may only be $1,200 at that point.

But a policy with the replacement cost option would base the claim payout on the current cost of a new laptop of the same make and model, which now might be $2,050.

Scheduled property

It’s not uncommon for standard renters insurance policies to provide only limited coverage for high-value items such as jewelry, artwork, expensive electronics, firearms, and clothing such as furs. A scheduled property rider can boost the coverage for those types of items.

For example, Lemonade Renter's Insurance allows you to purchase scheduled personal property coverage, referred to as “Extra Coverage”, if you want to insure valuables such as jewelry, bikes, cameras, fine art, and musical instruments.

How Much Renters Insurance Do You Need? (1)

How Much Renters Insurance Do You Need? (2)

Lemonade Renter's Insurance Money

Lemonade Renter's Insurance Money

Average annual cost

$168

Earthquake coverage

Standard renters insurance policies typically do not cover damage caused by earthquakes. So if a quake destroys your rented home and damages your belongings, you’ll get nothing from your insurer. However, many insurers offer supplemental earthquake coverage. If you live in an area prone to earthquakes, consider checking to see what your insurer offers.

Flood insurance

Similar to earthquakes, standard flood insurance policies will not cover damage caused by watershed flooding (such as a flooded river or ocean storm surge).

If your rented property is in a flood zone, you may want to consider coverage through the National Flood Insurance Program.

Other common renters insurance coverage options include identity theft protection, pet liability, and pet medical. You can add these, if needed, to your policy.

What is a renters insurance deductible?

One more important thing to consider is your personal property coverage deductible.

The deductible is a dollar amount the insurance company subtracts from a claim settlement. When you purchase your policy, you choose a deductible level from options that typically range between $250 and $2,500.

For example, say you choose a $500 personal property deductible. After a fire in your rented home, you file a claim with your insurance company to help pay to replace damaged belongings. The insurer settles for $5,000 and sends you a check for $4,500.

The remaining $500—the deductible amount—is your “share” of the costs.

Choosing a lower deductible means you’ll have less of a share if you file a claim, but it will also increase the cost of your policy.

On a standard renters insurance policy, you’ll choose a deductible for your personal property coverage but not for personal liability, additional living expenses, or medical payments.

How to be confident you have the right amount of renters insurance

Create an inventory to understand your needs

As explained earlier in this article, an inventory can be a valuable tool to pinpoint your specific renters insurance needs. You owe it to yourself not to rely on guesswork.

Check the policy to understand what is and isn’t covered

Make sure you understand your policy’s details. Remember that most standard renters insurance policies have limited coverage for certain items and likely do not cover belongings damaged or destroyed by flooding or earthquakes.

Shop around to find a policy that fits your budget

Renters insurance can be quite affordable, but you owe it to yourself to shop for the best deal. A recent study of 12 insurance companies by USA Today showed that there was a $246-per-year difference between the least and most expensive rental insurance policies.

Regularly review your policy

Consider reviewing and updating your home inventory every year prior to your policy renewal to see if your coverage needs have changed. Update your policy accordingly.

Consult with an independent agent

Many insurers make it relatively easy to buy renters insurance online. But if you’re unsure of your insurance needs, know there’s no reason to go it alone.

Independent agents are trained and licensed professionals who typically represent multiple insurance companies. They can understand your needs and shop from among the companies they represent to make sure you get the right policy at a price that works for your budget.

More good news: Because agents earn money through commissions, they typically don’t charge customers for their services.

Factors that may influence the cost of a renters insurance policy

Renters insurance is relatively affordable, with the national average policy costs about $15 per month. Here are several factors that might affect what you pay.

Your state

As previously mentioned from the USA Today study, the average cost of renters insurance in the cheapest state (Alaska, at $48) and the most expensive state (Louisiana, at $294) differs by $246 per year.

Your insurer

As we’ve seen earlier in this article, the the choice of insurer can significantly impact the cost of renters insurance.

Where you live

Living in an area with a higher crime rate or that’s more susceptible to natural disasters may result in a costlier renters insurance policy.

Type of building and features

The type of building—freestanding home, condominium, apartment building—may affect the insurance cost. The presence of safety and security features such as smoke detectors and burglar alarms can also affect what you pay.

Your claim history

People who frequently file insurance claims are likely to be charged more for a policy.

Your credit history

Insurers recognize a correlation between a person’s responsible use of credit and their likelihood of filing claims. They therefore tend to extend better policy pricing to those with better credit histories.

Your other insurance coverage

Insurers typically offer discounts to those who “bundle” coverage: For example, having both a car and renters insurance policy with the company.

TIME Stamped: You don’t have to guess how much renters insurance you need

Take the necessary steps to get a better sense of how much renters insurance you need. Complete (and regularly update) a home inventory of your possessions to make a more informed choice for your personal property coverage limit.

Also, consider your lifestyle and what you might be able to do if your rented home became temporarily uninhabitable to help decide what limits to choose for your personal liability, additional living expenses, and medical payments coverages.

Frequently asked questions (FAQs)

Is renter’s insurance worth it?

Renters insurance is worth it for many people renting their homes. A policy provides important financial protection if you were to lose your belongings in a house fire, theft, or other catastrophe. It can also help if you’re held responsible for another’s injury or property damage and sued.

Is it better to have a higher or lower deductible for renter's insurance?

Your choice of deductible depends on your financial needs, comfort with risk, and how you prefer to handle out-of-pocket expenses. Remember that choosing a lower deductible means you’ll pay a higher premium for the policy but have lower out-of-pocket expenses if you have a claim and need to replace your belongings. The converse is true: choosing a higher deductible means you pay less for the policy but have to pay more out-of-pocket if you have a claim.

How can you save money on renters insurance?

One of the most effective ways to save money on renters insurance is to shop around for coverage. Another tip is to consider bundling your renters and car insurance with the same company. Many insurance companies offer generous discounts for doing so.

The information presented here is created independently from the TIME editorial staff. To learn more, see our About page.

How Much Renters Insurance Do You Need? (2024)

FAQs

How Much Renters Insurance Do You Need? ›

Liability protection is the bigger part of any rental policy. Before you ask, “How much renters liability insurance do I need?” The correct answer is simple: You will need a minimum of $100,000 in personal liability coverage. That is typically enough to cover medical and legal bills in most situations.

How much renters insurance do most apartments require? ›

According to the Investopedia article mentioned above, most renters insurance policies cover personal items, living expenses, and liability insurance (typically from $100,000 to $300,000 in damages).

How much is renters insurance ok? ›

The average cost of renters insurance is about $15 to $20 per month1. However, what you end up paying depends on a number of factors.

What are the four steps in figuring out how much renters insurance you should have? ›

In order to estimate how much renters insurance you need and calculate how much it will cost, you'll need to consider four things: The value of your personal property, how much liability coverage you need, where you live, and any other extra coverages you might want to add based on your circumstances.

How important is renters insurance? ›

Renters insurance protects your belongings from loss, damage, or destruction following things like burglaries, fires, tornadoes and other covered events. Plus, renters insurance also protects your liability (and your money) if someone is injured at your rental home or apartment.

What is the minimum renters insurance coverage in California? ›

Personal Liability – Covers you for any damages for which you're held liable, and most landlords will require you to get at least $100,000 of this type of coverage. Medical Payments to Others – Covers medical payments for any injuries that have occurred on the property, and it will usually have a minimum of $1,000.

Is it legal for landlords to require renters insurance in California? ›

While renters insurance is not required by law in California, some landlords may require it for you to live in their building. It's generally a good idea to have at least some form of coverage as your landlord's insurance is not liable for any damage to your personal property.

Why is my renters insurance so high? ›

Insurance is all about risk, so customers that live in areas with higher risks of claims usually have to pay more for coverage. Some location-based factors that impact renters insurance rates can include: The rate of crimes, especially theft, in your ZIP code.

What does renters insurance actually cover? ›

Renters insurance covers personal property, personal liability, medical payments and additional living expenses or loss of use, up to the limits of your policy.

Why did my renters insurance go up? ›

Renters insurance premiums can rise if you have a bad credit score, while good credit can lower them. Paying off debts can help you establish credit. Location: The cost of renters' insurance varies depending on the crime rate in your locality and proximity to a fire station from where you live.

How do I calculate how much insurance I need? ›

10 times your income

Perhaps the most well-known calculation model is multiplying your annual income by 10. For example, if you make $100,000 per year, you'll need $1 million in life insurance. In another version of this rule, you'll add an extra $100,000 per child to cover the costs of their education.

How do you decide how much coverage you need? ›

To determine how much coverage you need, take an inventory of your belongings, especially items with higher value like jewelry, electronics and collectibles. Once you understand what you have and its value, you can decide if the predetermined limits on your policy offer adequate coverage.

How do you calculate insurance? ›

Insurance premiums vary based on the coverage and the person taking out the policy. Many variables factor into the amount that you'll pay, but the main considerations are the level of coverage that you'll receive and personal information such as age and personal information.

Why is it bad to not have renters insurance? ›

Your Landlord Won't Cover Damages

For example, if there is a fire in your apartment, and you lose everything, your landlord will not pay to replace your belongings, even if the fire is not your fault. The same goes for many other kinds of emergencies that could befall a renter.

Do I need renters insurance if I live with my boyfriend? ›

Does each roommate need renters insurance? Many insurance companies will require roommates to have their own separate renters insurance policy rather than allowing roommates to be on a policy together. If your landlord doesn't mandate renters insurance, you and your roommates aren't required to carry a policy.

Should a landlord be named on renters insurance? ›

Your landlord shouldn't be listed on your renters insurance policy as an additional insured. Having an additional insured on your renters insurance means that you would be paying to cover them and their personal property too.

Can Texas landlords require renters insurance? ›

Texas state laws don't mandate renters insurance, but your landlord or the property management company may require it as part of your rental agreement.

Can landlord require renters insurance in Florida? ›

While there's no law requiring that you purchase renters insurance in Florida, your individual landlord might specifically require it. And if your lease specifies that you need renters insurance, well… that's that.

How much renters insurance should a landlord require in Georgia? ›

On average, most landlords require tenants to carry $100,000 in liability and at least $10,000 in personal belongings coverage. This is to help those injured or who have their property damaged by another tenant as well as to keep the landlord clear from blame concerning an accident between tenants.

How much renters insurance should a landlord require in Virginia? ›

How much renters insurance should a landlord require? While there is no absolute number that you need to aim for in terms of renters insurance, you should require renters to obtain a policy that covers their personal property, liability, and alternative living expenses.

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