Renters insurance typically includes three core components of coverage:
- Personal Property Coverage
- Protects your belongings: This is the heart of a renters insurance policy. It covers the loss of or damage to your possessions inside your rental home due to covered events (often called “perils”) like:
- Fire and smoke
- Theft and vandalism
- Lightning strikes
- Damage from bursting pipes
- Windstorms, hail
- Falling objects
- Weight of ice and snow
- Worldwide Coverage: Might extend to cover your belongings when they’re temporarily away from home while traveling.
- Liability Coverage
- Protects you if you’re found legally responsible: If someone is injured in your rental unit or you/your family members accidentally damage someone else’s property, this part of your policy helps cover:
- Medical bills for the injured person
- Repair or replacement costs for the damaged property
- Lawyer fees and court costs if you’re sued
- Additional Living Expenses (ALE)
- Temporary relocation costs: If a covered disaster makes your rental unit uninhabitable, ALE covers necessary expenses like:
- Hotel stays
- Restaurant meals
- Laundry costs
- Other increased living expenses while you’re displaced
Additional Notes:
- Limits and sub-limits: Like most insurance policies, renters insurance has coverage limits for each type of coverage and might have sub-limits for certain possessions like jewelry or electronics.
- Replacement Cost vs. Actual Cash Value:
- Replacement cost reimburses you to buy new items
- Actual cash value takes depreciation into account, so you might receive less.
- Exclusions: Standard policies typically don’t cover floods or earthquakes. You may need add-on coverage for those risks.