A First-Time Renter's Guide to Renters Insurance

Just because you aren't a homeowner doesn't mean your items are valueless. Renters insurance can offer financial protection for personal property in your name, even if you only live in an apartment.

Of course, navigating through renters insurance policies can be challenging for newbies. This helpful first-time renter's guide to renters insurance will teach you everything you need to know about what's covered, the costs and how to apply for coverage.

What Is Renters Insurance and Why Is it Important?

Like homeowners insurance, renters insurance delivers financial risk coverage for losses pertaining to personal property in case of theft or damages from hail, vandalism or an explosion, among others. It also protects the insured party from liability claims — for example, injuries obtained from structural issues that your landlord is responsible for or those that occur to visitors.

You can obtain renters insurance in an apartment, townhome, mobile home or single-family home. While 55% of renters in the United States had renters insurance in 2022 — equal to 61 million people — SafeHome.org reports that about 65 million will take out a policy in 2023.

Renters insurance isn't nearly as expensive as many believe and is the wisest thing renters can do to protect themselves and their belongings. You may be careful always to turn off the stove to prevent a fire, but you have no control over what your neighbors do. What do you do if there's a break-in or hurricane?

How Much Does Renters Insurance Cost?

Renters insurance premiums saw a 2.8% year-over-year (YoY) drop in 2019, making it more affordable than ever for renters to protect their assets.

According to a NerdWallet, renters in the U.S. can expect to pay an average of $179 annually — or $15 monthly — based on $30,000 in personal property coverage and $100,000 in liability.

Of course, renters insurance costs vary by state. Mississippi has the highest renters insurance premiums at $261 yearly or $22 monthly, while Wyoming costs $101 yearly or $8 monthly.

What Does Renters Insurance Cover?

You can expect your renters insurance policy to cover everything from art and collectibles to furniture, clothes, electronics, sporting goods and jewelry. It also covers accidental injury costs for visitors to your place.

However, there may be some coverage limitations. Renters usually have a coverage limit on electronic devices in case of theft. Likewise, there may be a $1,000 to $2,000 policy limit on jewelry if it becomes lost or stolen. Unfortunately, that may not come close to the price you paid for it, considering engagement rings cost about $5,500 nowadays.

You can always buy additional coverage for expensive items — this is called "scheduling personal property." If you want more coverage for your laptop or tablet, you must "schedule" the computer with the insurance company.

To be on the safe side, protect your property by installing cameras near the front door and living areas. Nearly 34% of burglars enter through the front door, so you'll have a good chance of determining who stole your items.

What Isn't Covered by Renters Insurance?

There are exclusions in renters insurance policies, including the following:

• Anything structural in your apartment or house
• Permanent appliances and fixtures
• Vehicles
• Items outside of the unit or house
• Anything owned by roommates or landlords that don't belong to you

Additionally, renters insurance doesn't cover anything lost in a flood, earthquake or sinkhole. You may not be eligible for liability if you own a dangerous dog breed, either.

4 Steps to Apply for Renters Insurance

While the steps to apply for renters insurance are straightforward, you'll need to research the best insurer and policy. Here are the four main steps to apply for renters insurance.

1. Determine What Your Needs Are

Take stock of what you own — documenting your belongings with photographs and video is a good idea. You might also want to log more expensive items in the off-chance something happens to them, making filing a claim much easier.

Noting your items' worth will help ensure you don't undervalue them, giving you a ballpark amount of insurance you'll need. What if you have an expensive collection lost in a building explosion or burglary? Secondly, an inventory of goods will be crucial to support your claim, so keep it safe.

2. Search for an Insurance Company

After assessing your possessions, you'll want to search for the most suitable renters insurance companies. Ask your friends, families and apartment neighbors for recommendations and pass their names to whichever insurance company you contact.

You may be eligible for lower rates and packages, especially if you have other policies with them, such as car insurance. Additionally, you can search and compare company ratings to determine which offers the best coverage.

3. Fill Out an Application

You can apply to multiple insurance companies to see which offers you the lowest rate and most sufficient coverage.

Many insurance companies allow you to fill out the application online. Others may want to speak with you over the phone before processing your form. You may also get asked to provide additional documentation.

4. Submit Your Policy

Once you've chosen your desired company, you can pay the premium upfront for the year or in monthly installments.

Be sure to read through your policy once you receive it in the mail to understand your insurance's scope and costs. — this is also the time to look for discrepancies in your policy.

Protect Your Belongings With Renters Insurance

Taking out a renters insurance policy is a good idea if you rent in the U.S. Your landlord's insurance protects the building, not your property. For a small premium in the grand scheme of things, you can ensure your personal property is protected.