How Much Renters Insurance Do I Need?
By Martin Dasko
Published on June 6, 2020
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How Much Renters Insurance Do I Need
“How much renters insurance do I need?”
A reader emailed us recently to find out about how much renters insurance they needed for their situation.
You’ve heard about car insurance and other types of insurance, but you’re fairly new to renters insurance.
I recommend you start your journey with a free renters insurance quote by state.
You’re not even sure how renters insurance works.
You’re not sure about how much renters insurance is even required or if there’s a limit.
Maybe, you're not even sure of What Is Renters Insurance and Do I Even Need It?
When looking for the right renters insurance for your situation, you’re going to have to make some decisions.
You may be tempted to sign up for the cheapest insurance plan or with the first insurance company that you hear of.
However, that insurance company may not be ideal for your situation.
Its important to know how to get renters insurance and we are going to walk you through the process.
We’ve done the research to help you find the right insurance plan because you don’t want to be out of luck six months down the road when something happens and you find out that you’re not covered because you chose the wrong policy or because you didn’t have adequate coverage with your policy.
How Much Renters Insurance Should I Have in 2021?
With work from home on the rise and people home more than ever, it's important for us to update this article with a look at how much renters insurance you need.
How much renters insurance do you actually need these days? We looked around to see what experts were saying on this topic with all of the changes in the world.
According to this article published by Consumer Reports:
"To figure out how much personal property coverage you really need, do a home inventory. You may be surprised. For the average renter, the cost for replacing all your belongings—from clothes to cookware to computers—could easily exceed $35,000."
Since you're likely spending more time at home, this may mean that you've purchased more items to make you feel comfortable at home.
These items could range from that new home office to that upgraded couch. You also likely upgrade your kitchen and other rooms in your home since you're now spending more time indoors.
What this means is that you may need more protection now in the form of personal property coverage. You worked hard to save up for these purchases. You want to protect these purchases. You're likely going to need more personal property coverage in 2021 to ensure that everything's covered.
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How Much Renters Insurance Should I Have?
You’re probably wondering about how much renters insurance you should have. There are varying reports out there.
The good news is that you can customize a plan based on your needs. You can shop around until you find the ideal renters insurance that suits your lifestyle at the moment.
This leads to the obvious question...
How much renters insurance coverage do I need?
This will depend on your situation, your claims history, how much liability you feel that you need, and the value of your possessions.
You’re going to want to look at your possessions first to see what they’re worth. We have to plan for replacing every possible item (laptop, clothing, phone, and so on) in the event of a theft or some sort of disaster (anything from water damage to a simple cooking fire.
The thing to keep in mind is that a disaster doesn’t have to be so drastic.
There could be an electrical issue where all of your electronics that are plugged in get fried.
You can have your laptop stolen out of your car.
You can have a little leak in your place that damages your property.
You can even have a leak that damages the units below you and you’re on the hook for their bills.
You’re also going to want to look at your personal liability to see how much protection you want in case something were to happen to you, your place, or a guest while visiting you.
"The whole process was so simple. Other insurance companies need to step into the current century!"
What Should I Include In Renters Insurance?
What do you need in your renters insurance coverage?
It’s important to cover yourself in the event of the worst-case scenario.
Renters insurance coverage will bail you so that you don’t have your finances destroyed if something were to happen.
Here’s an interesting story that caught my attention.
The author of the article had a cooking fire in their home.
Their renters insurance covered the costs of property damaged, their lodging and eating expenses when they couldn’t live in the unit, and even dry cleaning for their clothing that smelled like smoke.
The best part of the story is that they only spent $4 per month on renters insurance due to an insurance bundle.
So that $4 monthly saved them thousands of dollars.
They were able to live in a hotel, order in their meals, and not worry about their clothing smelling like smoke.
The author of the aforementioned article concluded with this when it comes to renters insurance saving them:
“We could have lost a lot more. But having renters insurance saved us from what could have been quite the financial quagmire as we hadn't planned or budgeted to stay in a hotel for a week and a half, dine out for most of our meals, replace furniture, or dry clean our entire wardrobe.”
What this scenario proves is that renters insurance is a necessary expense that we can’t avoid.
Could you imagine spending the money out-of-pocket to stay in a hotel, dine out, and replace all of your valuables?
Let’s look over a few common questions about what to include in your renters insurance policy:
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How much personal property coverage do I need?
As you look for the perfect policy, it’s important to remember that you may need additional coverage for some items.
This article over at CNBC brings up an interesting point on valuables:
“Standard renter’s insurance will typically cover clothes, computers and furniture, but it won’t cover expensive valuables like your engagement ring or high-end collectibles like rare baseball cards or artwork. You’ll need additional coverage for those.”
This will depend on the worth of your valuables. You should complete a home inventory assessment to see how much everything is worth.
How much loss of use coverage do I need?
This depends on your current standard of living, but it’s safe to go with $10,000. Your renters insurance would cover the costs to maintain your current lifestyle when you can’t live in your unit.
How much medical payment to others do I need?
Your renters insurance policy should cover the medical bills of someone who would get injured while visiting you. It’s safe to say that you should have at least $2,000 here since the medical bills could add up easily.
How much personal injury coverage do I need?
This depends on how much you’re comfortable with. How much do you feel that you would need to cover your medical bills?
Do I need replacement cost coverage?
This would protect you since your unit and your possessions would be restored to how they were before the damage occurred.
Pro Renters Insurance Tip
Renters insurance doesn't just cover the replacement of your belongings, but also protects you if someone gets hurt on your property. Limits usually start at $100,000.
Do I need sewer or drain backup coverage?
This depends on what kind of unit you live in. You may want to consider this if you live in an area prone to flooding or a basement unit.
What about endorsements and riders for valuables?
The main benefit of endorsements (riders) for valuables is that your expensive items (jewelry, art, antiques, and things like that) will be fully covered. A typical renters insurance policy doesn’t fully cover your most expensive possessions so you may want to consider spending the extra money on a rider.
Should I get a vacancy endorsement?
You don’t need this when renting since this will mainly apply to the homeowner with an empty rental unit.
Is identity fraud coverage available?
Yes it is. You can purchase an endorsement on your current renters insurance policy for identity fraud coverage. Your expenses that come from reclaiming your identity would be covered under this endorsement. This is something to think about when reviewing your renters insurance policy.
But you'll have to check out another article if you want to know What Does Renters Insurance Cover Or Not Cover.
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Common Renters Insurance Coverage Amounts
What are common renters insurance coverage amounts?
We researched renters insurance companies to find out what the average renters insurance coverage amounts are so that you know how much you would typically be covered for.
Here’s a table that we designed for you so that you know what you’re covered for with your renters insurance policy.
We went through the signup process with a few renters insurance companies to provide you with a rough estimate with how much coverage you should expect with a standard policy (rates and coverage will vary on your personal situation).
TYPES OF COVERAGES | COVERAGE AMOUNTS |
|---|---|
Personal Property | $40,000 |
Personal Liability | $100,000 |
Loss Of Use Coverage | $12,000 |
Medical Payments To Others | $2,000 |
Debris Removal | $1,000 |
As you can tell from this table, you’re going to want to take a look at how much coverage your renters insurance policy includes.
That $40,000 level of coverage for personal property will come with limits for every valuable.
Please note that some issues like fire damage or water damage may fall under a few categories of coverage.
For example, a cooking fire could damage your personal property (up to $40,000 in coverage), get you into a lawsuit if someone were to get injured ($100,000 in coverage) and force you to stay in a hotel for a few days (up to $12,000 in coverage).
You can always upgrade your coverage amounts and customize your policy as you see fit for your situation.
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What To Consider When Calculating How Much Coverage You Need
Figuring out how much coverage you need will depend on a few factors. The main thing to keep in mind is to think about how much protection you would like to feel comfortable.
Here’s what to consider when calculating how much coverage you need…
What do I own?
According to one renters insurance company, here’s the main thing to keep in mind about calculating how much coverage you need:
“When signing up for a renter’s insurance policy, you’ll have to select your coverage amount. That means you’ll have to decide up to what dollar amount you’ll want your insurance policy to cover. If a burglar breaks into your house, would you want your insurance to reimburse you for up to $10,000 of stolen stuff? Or would you need more than that?”
You’re going to have to take inventory of all of your possessions to see how much you coverage you need.
It’s important that you list everything out.
You don’t want to be guessing because you’ll be surprised by how much all of your combined items are worth just sitting around your apartment.
Also keep in mind that cheap renters insurance usually is priced that way because it offers you less coverage.
Do I need additional coverage?
How do you know if you need additional coverage for your renters insurance policy? Here are two important things to think about here:
Did your items go over the coverage limit? Do you have any musical instruments, expensive art, or jewelry that you would like under your renters insurance policy? You’re going to have to pay for additional coverage.
Do you live in an area prone to flooding or natural disasters? You may need supplemental coverage to protect you in the event of a flooding or a sewage issue.
How much liability can I afford to pay?
Your renters insurance covers you when it comes to personal liability.
This is why it’s important to look at how much liability you can afford to pay.
I don’t know about you, but I’m not a fan of legal fees.
Lawsuits can get pretty expensive and you would be in serious financial trouble if someone were to sue you based on something that happened to them while visiting you.
Managing Your Policy
How do you manage your policy?
Your renters insurance policy should be tailored towards your unique situation.
You have to think about everything from the type of unit you live in to the community that you live in.
Here’s how you can manage your renters insurance policy:
Make changes when you purchase a new item (you want that new iPhone covered).
Update your policy when you get a new roommate or partner.
Increase your coverage limits when you see fit (do you want to protect your expensive art?).
Look at your deductible to see if it should be increased (to get a lower premium) or decreased.
Speak with an agent to see if you’re missing any coverage (do you feel that your area could be impacted by flooding?).
These are just a few tips for how you can manage your renters insurance policy. It’s your policy so don’t be afraid to customize it.
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No brokers, no paperwork, get a policy in seconds. Zero Hassle, zero paperwork, zero worry. Join now! Starting at $5/month.
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Take Action!
How much renters insurance do I need?
Hopefully, we answered this question for you.
It’s time to sign up for renters insurance.
The amount of coverage will depend on your situation so ensure that you customize your plan for your lifestyle.