Insurance is designed to offer peace of mind, but there’s a reason your policy has all that fine print: You might not have the coverage you expect. Like any other insurance policy, renters insurance has exclusions, and knowing about them ahead of time can help you avoid unexpected bills in a disaster.
Just as important, though, is knowing what IS covered. All that fine print in your policy likely includes coverage you might not expect, which could save you money down the line.
Covered: belongings outside your home
Most renters know insurance covers personal belongings within their home but may not realize their things are probably covered off-premises too, including when traveling. Barbara Madvin, an insurance agent at Gaspar Insurance Services, says vehicle break-ins are some of the most common insurance claims she sees for renters. While damage to the car itself is generally covered by your auto policy, your renters insurance pays for items stolen from the vehicle, as long as their value exceeds your deductible.
Your renters policy will also cover your belongings if you move them from your home to a storage unit, a friend’s house or anywhere else to protect them from a covered disaster. In the event of a wildfire or hurricane evacuation, this can be particularly valuable, according to Christine G. Barlow, a chartered property casualty underwriter. This coverage typically lasts 30 days.
Covered: living expenses if your rental is uninhabitable
While your home is undergoing repairs due to a fire or other covered disaster, your insurance company will usually pay for you to maintain your normal standard of living somewhere else.
A “normal standard of living” is broader than you might think. For instance, if you live in a rental home with a pool that you use every day, “the carrier needs to put you someplace where you have access to a swimming pool,” says Barlow, who is also managing editor at FC&S Expert Coverage Interpretation, a trade publication. If you have pets, your insurer should find you pet-friendly accommodations or board the animals where you normally would.
Not covered: common disasters
Most renters insurance covers your possessions only in the case of specific scenarios, or “named perils” listed in the policy — things like fire, theft and wind. “If something’s not mentioned in that list, then there’s no coverage,” Barlow says.
For example, flood damage is almost always excluded from renters policies and typically must be purchased separately. (One exception: USAA, which serves military families, includes flood coverage with standard renters policies.)
Not covered: brand-new stuff
Madvin recommends asking whether replacement cost coverage is included in your policy. If not, your belongings are covered only for their depreciated value, which often isn’t enough to buy brand-new replacements.
Say your 10-year-old TV is stolen and replacement cost isn’t included. “The carrier’s going to say, ‘OK, you paid $1,000 for it 10 years ago; we’ll give you $250 for it now,’” Madvin says. With replacement cost coverage, you’ll receive enough to purchase a new TV.
Not covered: expensive valuables
Most renters policies cover jewelry and other costly items only up to a specific limit named in the policy, typically $1,000 to $2,000. So if you have an expensive engagement ring, for example, both Madvin and Barlow recommend adding separate coverage for it. An appraisal is usually required.
How to avoid surprises
Before buying renters insurance, take inventory of your belongings. “Most renters underestimate how much stuff they have,” Barlow says, which can leave a coverage gap. Barlow recommends using the Encircle app to upload photos of your belongings and estimate their worth. Other similar apps include Sortly and Allstate’s Digital Locker.
Read your policy thoroughly. Barlow suggests marking it with what’s covered in green and what isn’t in red. Madvin advises paying particular attention to the policy’s endorsements, which are typically add-ons or exclusions to standard coverage.
Confused by all the legalese? Turn to an expert. Talking through your options with an insurance agent or broker can ensure you understand the policy you’re buying. “Unless you really know insurance,” Barlow says, “it’s very easy to miss coverages that you need or to not realize something isn’t covered.”