What is Renters Insurance?
If you like your stuff and don’t want to pay to replace it in case disaster strikes, then you need renters insurance. Renters insurance (HO-4) protects your personal belongings and also includes personal liability, medical payments to others, and additional living expenses (loss of use) if a covered loss makes your home uninhabitable. See coverage basics from the Insurance Information Institute.
Best of all, renters insurance remains inexpensive in 2025—about $17–$18 per month nationally (≈$200–$215 per year), with many shoppers seeing quotes between $15 and $22 depending on state, limits, and deductible. This updates older ~$15/month averages based on earlier NAIC data and reflects recent price increases captured by the BLS CPI index for tenants’ and household insurance (Insurance Information Institute; BLS CPI; NerdWallet; Bankrate; ValuePenguin). While older surveys once cited low adoption, the best current characterization is that about half of U.S. renters carry a policy—industry polling reports roughly a majority have coverage, while a large federal survey finds coverage remains below half (Insurance Information Institute; Federal Reserve SHED). Older mid‑2010s polling suggested only
37% of renters had a policy, which helps explain why adoption appears higher today.
Yes, as with any insurance policy, you can overpay for coverage that under-delivers. And even comprehensive renters policies have exclusions—standard HO‑4 forms exclude flood and earth movement unless you buy separate coverage (details below). Always review limits, sublimits, deductibles, and endorsements (Insurance Information Institute).
However, when you look at all the benefits for the price, renters insurance is often a high‑value buy. In today’s inflationary environment, it’s smart to choose replacement cost coverage for contents, revisit your limits annually, and consider an inflation‑guard feature where available (BLS CPI; Insurance Information Institute).
What is Covered by Renters Insurance
Personal Property Damage
Your property, whether it’s inside your house or not, is covered for listed causes of loss. Standard renters policies use a named‑perils approach with a specific list of covered events (often 16). If one of them caused the damage, your belongings are protected. Replacement cost coverage for contents is often available as an endorsement and is worth considering to counter inflation’s impact on prices (Insurance Information Institute).
- Aircraft
- Explosions
- Falling objects
- Fire or lightning
- Freezing
- Ice, snow, or sleet (roof collapses)
- Riots
- Smoke
- Sudden and accidental damage as the result of short circuiting
- Sudden and accidental tearing, cracking, burning, or bulging
- Sudden and accidental water or steam damage
- Theft
- Vandalism
- Vehicles
- Volcanic eruption
- Windstorms or hail
Personal Liability
Personal liability applies when you’re legally responsible for injuries or property damage to others. It can pay for medical costs, property damage, and legal defense. A common starting limit is around $100,000, with higher options available; many consumer cost studies use this benchmark when quoting renters policies (NerdWallet).
Additional Living Expenses
Being displaced due to fire, theft, or other covered disaster is a traumatic experience. A renter’s policy that includes additional living expenses (loss of use) helps pay for temporary housing and increased living costs (e.g., hotel, meals) while your home is being repaired (Insurance Information Institute). With rising hotel and rental prices, review your limits to ensure they’re adequate (BLS CPI).
Medical Payments
If someone is injured at your residence and requires medical attention, Medical Payments to Others can help pay reasonable medical costs up to the policy limit, typically regardless of fault and separate from liability coverage (Insurance Information Institute).
Other Coverage Types
Basic renters policies include property, liability, and loss‑of‑use coverage. Insurers often offer optional endorsements: replacement cost for contents, scheduled coverage for high‑value items (jewelry, bikes/e‑bikes), identity theft/cyber, and even pest‑related add‑ons in some modular products—availability varies by carrier (Toggle (Farmers) modular renters).
What is Not Covered by Renters Insurance
Before you get a policy, you should be aware that renters insurance does have some coverage gaps.
The biggest gaps are flood and earth movement (e.g., earthquakes, landslides), which are generally excluded on standard renters policies. To protect your belongings from flood, renters can buy contents‑only flood insurance through FEMA’s National Flood Insurance Program or from private flood insurers; the private flood market has expanded and represents roughly one‑third of U.S. flood premium, broadening consumer options (NAIC private flood brief). For earthquake, renters can purchase standalone coverage (for example, through the California Earthquake Authority in California) or via specialty insurers in many states (NAIC consumer guidance). Wildfire, wind, and hail are typically covered perils, subject to policy terms and deductibles (Insurance Information Institute).
Additionally, damage or destruction caused by bed bugs, termites, rodents, and other creatures is usually not covered, since pest control is considered the occupant’s responsibility (Insurance Information Institute).
Shopping for Renters Insurance
While renters insurance is affordable, you can still overpay or end up under‑insured. Shop with coverage adequacy in mind: confirm limits, sublimits (e.g., jewelry, electronics), deductibles, and whether your policy provides replacement cost vs. actual cash value for contents.
To do so, the first step is to take an inventory of what you own. Estimate replacement costs and save receipts/photos to simplify claims. In an inflationary environment, revisit your inventory and limits annually and ask whether your policy includes an inflation guard for contents limits (BLS CPI).
Next, do a brief risk assessment. If you live in a flood‑ or earthquake‑prone area, plan for separate coverage (NFIP contents‑only or private flood; earthquake endorsements/standalone policies). Completing both an inventory and risk assessment helps you right‑size limits and avoid gaps (NFIP for renters; NAIC earthquake guidance).
Now you can shop. Compare quotes from multiple companies and stack savings opportunities. Bundling renters with auto can deliver meaningful multi‑policy discounts—independent 2025 roundups commonly show potential savings ranging from roughly the low‑teens up to about 20–25% at some brands, depending on state and profile (Bankrate; NerdWallet). Protective‑device credits for monitored burglar/fire alarms, sprinklers, and smart‑home sensors are widely available (often mid‑single to low‑double‑digit credits depending on carrier/state); some insurers run smart‑home programs like Travelers’ electrical fire prevention with Ting (Travelers; Policygenius).
Choose between Replacement Cost vs. Actual Cash Value
- Replacement cost coverage pays what it costs today to replace an item with a new one of like kind and quality, without a deduction for depreciation. In an inflationary market, this helps avoid shortfalls when replacing electronics, furniture, and clothing (Insurance Information Institute).
- Actual cash value pays the depreciated value at the time of loss (replacement cost minus depreciation), which is often less than the cost to buy new. If your policy uses ACV for contents, consider upgrading to replacement cost and review limits regularly (Insurance Information Institute; BLS CPI).
What’s the Difference Between Named Perils and All Risk Policies
- A Named Perils policy lists specific causes of loss (e.g., fire, theft, wind). Losses outside the list are not covered, and the burden is on you to show a listed peril caused the damage. Most base renters policies cover personal property on a named‑perils basis (NAIC).
- All risk (open perils) policies cover any cause of loss unless excluded, shifting the burden to the insurer to show an exclusion applies. Open‑perils coverage is broader and typically costs more; not all carriers offer open‑perils on renters contents. Confirm exclusions like flood and earth movement, which are standard across forms (IRMI; NAIC).
