How to Get Renters Insurance: A Step-by-Step Guide

If there's a fire in your apartment and your personal property gets damaged, who replaces it? Or, say you have a friend over and they accidentally trip and get injured — who covers their medical expenses? These are scenarios where your landlord's insurance won't help. Their policy protects the building itself, but not your personal belongings or liability.

That's where renters insurance comes in. A renters policy can protect your finances from unexpected events like theft, fires, injuries to guests, and more. Here, we'll explore what renters insurance covers, how much it costs, and tips for choosing the right policy. Interested in learning how renters insurance can protect what matters most to you? You've come to the right place.

Renters insurance, explained

Renters insurance provides coverage for a renter's belongings, liability, and additional living expenses if the rented property becomes uninhabitable. If an incident like a pipe burst or appliance leak occurs, your landlord's insurance typically covers the building itself, not your personal belongings. This means you could lose items like your favorite couch or cherished record collection without compensation.

Renters insurance costs are minimal compared to the cost of replacing your personal property, making it a very worthwhile investment.

What renters insurance covers

A renters insurance policy provides coverage in these areas:

• Personal property: Imagine coming home to find your apartment has been burglarized.  Your laptop, TV, and designer handbag collection are all gone. This personal property coverage reimburses you to repair or replace those valuables if they’re damaged, destroyed or stolen.
• Liability protection: Let's say your dog gets over-excited and knocks over your elderly neighbor, causing them to break their hip. This part of your policy covers their medical bills and legal costs if you're found responsible for their injury.
• Loss of use: If an electrical fire renders your apartment unlivable during repairs, loss of use coverage helps alleviate the costs you'll incur in this situation. This valuable protection pays for temporary housing expenses like an extended stay hotel, allowing your life to continue as normally as possible until you can return home.
• Credit card or bank fraud: A lesser-known benefit of renters insurance is that it offers coverage for unauthorized transactions on your credit card and forgery of your checks. This means that if a thief racks up fraudulent charges on your credit card, this protection reimburses you for the financial loss.

What renters insurance does not cover

Renters insurance protects you in many areas, but it doesn't cover everything. Here's a list of exclusions you should be aware of:

• Flood or earthquake damage: Renters insurance policies do not cover damage caused by flooding and earthquakes. You'll need separate coverage for these types of scenarios.
• Maintenance issues: Costs for regular maintenance, repairs, and wear and tear are not covered.
• High-value items: Expensive items like jewelry, antiques, or fine art may have limited coverage and might require additional riders for full protection.
• Roommate’s belongings: If you have a roommate, they will need their own renters insurance, unless you specifically list them on your policy.
• Intentional damage: Any damage or loss you cause intentionally isn't covered.
• Business losses: If you operate a business out of your rental property, a renters policy won't cover any equipment used for business purposes or loss of income. For these scenarios, you will need commercial insurance.
• Vehicle damage or theft: Coverage for vehicles is not part of a renters policy.

Evaluating whether you need renters insurance

If you still aren't sure if you need a renters insurance policy, here are some questions to consider:

• Do you have valuable personal belongings? Consider items like electronics, furniture, clothing, and jewelry. 
• Can you afford to replace all your belongings if they were stolen or damaged? Think about the cost to replace everything you own out-of-pocket in the event of a fire, theft, or other catastrophe.
• Do you have savings to cover additional living expenses if your rental becomes uninhabitable? Consider the cost of temporary housing, meals, and other expenses if you cannot live in your rental due to a disaster.
• Are you prepared to handle potential liability costs if someone gets hurt in your rental? Think about medical and legal expenses if someone gets hurt in your home and holds you responsible.
• Do you live in an area prone to natural disasters? Consider whether additional coverage for floods, earthquakes, or other specific risks might be necessary.
• Do you operate a home-based business? If so, consider whether you need additional coverage for business equipment and liability.
• Do you have roommates? Think about whether you need to coordinate coverage or if each roommate should have their own policy.

How to purchase a renters insurance policy

If you decide to buy a separate renters insurance policy, here are the steps you should take to get the right coverage:

1. Decide coverage amounts

Determine the value of your personal belongings and decide how much coverage you need. Start with creating an inventory of your personal belongings by room and category and document with photos or videos.

Research replacement costs for each item and sum the values of all items to determine the total estimated value of your belongings.

2. Research providers

Look for reputable insurance companies that offer renters insurance. Start by reading reviews from other customers to understand their experiences as well as the quality of insurance company websites and their services. It's also a good idea to check the financial stability of the insurance companies through rating agencies like A.M. Best, Moody's, or Standard & Poor's to verify they can pay out claims if necessary.

3. Get renters insurance quotes and compare options

Request quotes from multiple insurance providers. Provide details about your rental situation and personal belongings to get the most accurate estimates. To compare quotes, be sure to make an apples-to-apples comparison between the options. Key terms to be aware of are:

• Premium: The amount you pay for your insurance policy, typically charged on a monthly or annual basis.
• Deductible: The amount you must pay out of pocket before your insurance coverage kicks in. For example, if you have a $600 deductible and incur $1,800 in damages, you will pay $600, and the insurance company will cover the remaining $1,200.
• Coverage limit: The maximum amount an insurance company will pay for a covered loss. There are different limits for different types of coverage within a policy, such as personal property, liability, and additional living expenses.
• Replacement cost: This type of coverage pays to replace your damaged or stolen items with new ones of similar kind and quality without deducting for depreciation.
• Actual cash value: This type of coverage pays to replace your items minus depreciation. It means you get the value of the item at the time of the loss, considering its age and wear.
• Liability coverage: Protects you against legal responsibility if you cause bodily injury or property damage to others. It covers legal fees, medical bills, and other costs if you are found liable.
• Additional living expenses (ALE): Covers the extra costs of living elsewhere if your rental becomes uninhabitable due to a covered event. This can include hotel bills, restaurant meals, and other expenses.
• Exclusions: Your insurance policy does not cover specific conditions or circumstances. Compare these to make sure you know the exclusions between quotes.
• Endorsements or riders: Additional coverage options that can be added to a standard policy to cover specific items or situations. This is where you might add a rider for high-value items like jewelry or electronics.

4. Check discounts

Ask about available renters insurance discounts, such as those for bundling with other insurance policies, having security systems, or being a non-smoker.

5. Choose a policy

Select the policy that best meets your needs and budget. Complete the purchase by paying the premium. Make sure you receive confirmation of coverage and keep a copy of the policy documents for your records.

6. Keep your policy updated

You might upgrade your couch or need to add someone to your policy. Regularly review and update your coverage, especially when you buy new personal property or your living situation changes.

Common pitfalls when buying renters insurance

Common pitfalls when buying renters insurance include:

• Not buying enough coverage: Failing to accurately value all your personal belongings can lead to insufficient coverage limits. This means you'll likely have hefty out-of-pocket costs to replace items if disaster strikes.
• Choosing a high deductible: To lower your premiums, you might choose a high deductible. But this gamble can backfire if you need to file a claim, leaving you to cover a larger portion of the expenses out-of-pocket.
• Overlooking liability coverage: While protecting your personal property is important, don't neglect liability coverage. Accidents can easily happen where you're held responsible for injuries to guests or damage to others' property.
• Ignoring exclusions: Always review exclusions so you understand what isn't covered by your policy, such as flood, earthquake or other disaster damage. Overlooking these gaps can leave you financially exposed.
• Failing to update the policy: Life changes quickly. Remember to update your policy anytime you acquire new valuables or your living situation changes. Outdated coverage limits may not fully protect your current belongings.

How much does renters insurance cost?

The typical cost range is $15 to $30 per month, but your specific cost will depend on factors such as how much coverage you choose to get as well as your location.

• Coverage amount: If you choose a higher coverage limit, this increases the premium you'll pay.
• Deductible: Choosing a lower deductible will raise your premium, while a higher deductible will lower it.
• Location: Rates can vary based on where you live. If your rental property is in an area prone to natural disasters or higher crime rates, your costs will be higher.
• Personal factors: Your credit score and claims history can also affect the cost.
• Discounts: Many insurers offer discounts for bundling policies or having safety features like smoke detectors.

Finding the best renters insurance company

As you research the best renters insurance companies and providers, make sure to consider Azibo. We provide comprehensive policies covering personal property, liability protection, and additional living expenses if you need to leave your rental temporarily.

With flexible coverage options suited for various budgets and living situations, you can easily meet your lease requirements and show proof of coverage if your landlord mandates renters insurance.

Getting renters insurance

Renters insurance is surprisingly affordable coverage that can prevent life's unexpected events from becoming financial disasters. For a relatively small monthly cost, you get valuable protection for your personal belongings against perils like fire, theft, and certain natural disasters.

Equally important is the liability coverage that can cover legal fees and medical bills if you inadvertently injure someone or cause property damage. While renters insurance doesn't cover every single scenario, it does act as a safety net for most of the common risks renters face.

The process of getting affordable renters insurance is straightforward: make an inventory of your possessions, compare quotes from top insurers, and choose a deductible you're comfortable with. Be sure to read the fine print so you understand exclusions.

With a solid policy in place, you can rent with the comfort of knowing you've protected your finances. Your personal belongings and hard-earned savings are worth insuring from life's unpredictable twists and turns, after all.

How to get renters insurance FAQs

Is renters insurance required in Colorado?

No, renters insurance is not required by law in Colorado, but landlords may require it as part of the lease agreement.

How important is renters insurance?

Renters insurance is very important, as it protects your personal belongings and provides liability coverage in case of accidents.

Is renters insurance really worth it?

Yes, renters insurance coverage is worth it. It provides valuable protection for your personal belongings and liability coverage for accidents for a relatively low cost.