Is Renters Insurance Worth It? (2024 Guide)
Even if your property manager doesn’t require renters insurance, you may want to purchase a policy to protect yourself from unforeseen events that could cause hundreds of dollars worth of damage. Read our guide to learn about the benefits of renters insurance.
While many landlords require their tenants to hold a renters insurance policy, some do not. And while you may never need to file a claim, you’ll be glad you have renters insurance if you need it to replace expensive belongings, help pay medical bills for someone who got injured on your property, or for any number of other unforeseen perils. But is renters insurance worth it for you? Our guide will help you find out.
Common Losses Covered by Renters Insurance
Renters insurance typically covers four key areas—personal property, liability protection, additional living expenses, and medical payments to others. For personal property, this means paying to replace damaged, lost, or stolen items. Liability protection and medical payments to others can help cover expenses for individuals who live outside the home you may be liable for—like a medical bill after your dog bites a visitor. If for some reason your rental becomes uninhabitable due to a covered loss, you can turn to medical payments coverage for help.
- Fire damage
- Theft or burglary
- Vandalism
- Water damage (from burst pipes, leaks, or other covered incidents)
- Smoke damage
- Windstorm or hail damage
- Lightning strikes
- Explosions
- Falling objects
- Riots or civil commotions
- Damage from aircraft or vehicles
- Weight of ice, snow, or sleet
- Accidental discharge or overflow of water or steam
- Freezing of plumbing systems
- Power surges causing damage to electronics
- Liability protection for accidents and injuries on the rented property
“Theft, Fire, Smoke, Water, Windstorm, and Freeze damages are all covered under a Renter’s policy, and some carriers have additional endorsements that can be purchased such as a water back-up endorsement or a loss from the mysterious disappearance of a piece of jewelry, a broken laptop, supplemental coverage for electronics, computer equipment, and musical instruments, to name a few,” Bonnie J. Walker, AIC, CLX Technical Lead, Property at Lemonade said. When shopping around for the best and cheapest renters insurance policy, confirm what coverage you’re getting for the price (including endorsements). Ask for at least three quotes from different providers for the same amount of coverage to ensure you’re getting the right amount of coverage at a competitive price.
How Much Does Renters Insurance Save You?
Renters insurance is generally budget-friendly and the most basic policies can be purchased for as little as $5 per month. Based on data obtained from Quadrant Information Services, the average cost of renters insurance is $180 per year, or $15 per month.
In general, renters can expect to save $7,064 in a year when 1 claim is filed. The table below explains how much you can expect to pay out of pocket to cover damages for each of the most common claim types with and without renters insurance.
| Claim Type | Average Cost to Fix | Cost with Insurance |
|---|---|---|
| Bodily Injury and Property Damage | $18,351 | $1,000 |
| Water and Freezing | $6,965 | $1,000 |
| Vandalism | $4,601 | $1,000 |
| Theft | $3,057 | $1,000 |
The less you pay per year for insurance, the more you can expect to save. We have found Lemonade to be the cheapest option for most renters. Get a quote using the form below to see if it is the right fit for you.
The Risk of Renting Without Insurance
If you aren’t required to have an active renters insurance policy, you may be tempted to skip this added expense. Keep in mind, though, that if you don’t have a policy—or substantial emergency funds saved up—you’ll end up paying out of pocket to replace essential possessions, for temporary lodging expenses, and many other losses. The last thing you want is to end up displaced or unable to replace expensive possessions because you don’t have the protection of a renters insurance policy. You may also find that having liability and medical payments protection gives you some peace of mind.
Alternatives to Renters Insurance
If you want to find an alternative to renters insurance, you have options, but they won’t protect you as fully as a renters insurance policy. One option is relying solely on a landlord’s insurance. Note, however, that their policy only covers the structure of the building, leaving your personal belongings unprotected.
Another alternative is to create a rainy day fund to help cover any potential future losses. It can be difficult to save enough to cover a substantial loss, though, and you’d likely pay more out of pocket than you would have if you obtained a renters insurance policy. Relying on an alternative to renters insurance may seem cost-effective initially, but the potential monetary repercussions in case of a loss can outweigh any perceived savings.
Walker notes one exception to needing renters insurance. If you reside in a home or rental with a relative, you would be covered under their policy, “However, you are subject to the limit of liability for the policy amount your relatives took out, causing great concern that you and your relatives would be underinsured.”
Is Renters Insurance Required?
Renters insurance is not a legal requirement in order to rent a property at a federal or state level. However, some landlords and property management companies require tenants to have it before issuing a lease agreement.
Individual landlords can choose how much renters insurance coverage they want tenants to have, but most request $100,000, as that’s the amount a standard policy typically covers.
Frequently Asked Questions About the Value of Renters Insurance
How do I know if I need renters insurance?
All renters can benefit from having a renters insurance policy. In some cases, your landlord or property management company will require you to hold this policy type and inform you of their unique coverage requirements. However, even if it’s not a requirement, consider buying a policy that can help financially protect you while renting.
Why is it bad to not have renters insurance?
If you don’t have renters insurance, you put yourself at great financial risk. To start, a renters insurance policy helps pay to replace lost, stolen, or damaged personal belongings. This policy type can also step in to provide financial support if you’re held liable for damages or injuries to another individual.
How does renters insurance save you money?
A renters insurance policy can save you money by covering the replacement of expensive personal belongings (like electronics or furniture), providing funds if someone is injured on your property, or if you cause damages to another individual’s property.
Is it possible to get free renters insurance?
No, you cannot find renters insurance for free. The good news is that it’s typically a very budget-friendly policy type.