A pretty apartment with lighting, plants hanging and a gray couch

What's the deal with renters insurance?

You’ve decided to rent an apartment or house with a few friends next year. Awesome. While you’re confident you’ve found the right roommates and the perfect location, you’re not so certain you’ve got your head wrapped around renter’s insurance. Some landlords require a certain amount of coverage, so be sure to check your lease for details. We’ve created this overview to help you with some of the basics.

What is renters insurance?

Renters insurance is basically insurance for you and your stuff. By “you," we mean liability coverage — more on that in a second. By “stuff," we mean electronics, furniture, jewelry, clothes, bike, small appliances, etc.

Your landlord should have insurance to cover any damage to the property you’ll be living in, but anything inside is all on you.

What does it cover?

Standard rental insurance (an HO-4 policy) will reimburse you for loss or damage associated with these 16 specifics:

  • fire or lightning

  • windstorm or hail

  • explosion

  • riot or civil commotion

  • damage caused by aircraft

  • damage caused by vehicles

  • smoke

  • vandalism or malicious mischief

  • theft

  • volcanic eruption

  • a falling object

  • the weight of ice, snow or sleet

  • accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire-protective sprinkler system, or from a household appliance

  • sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, an air conditioning system or an automatic fire-protective system

  • freezing of a plumbing, heating, air conditioning or automatic fire-protective system of a household appliance

  • sudden and accidental damage from artificially generated electric current (does not include loss to a tube, transistor or similar electronic component)

If your home is destroyed in a disaster covered by your policy*, renters insurance pays for your additional living expenses — hotel bills, restaurant meals and other costs as your home is repaired.

*One thing to note is renters insurance won’t pay for damage from earthquakes or floods, meaning you’ll have to cover any repairs or losses.

Now, about that liability coverage we mentioned…

If someone gets hurt in or on the property you're renting, or if their property gets damaged at your place, your liability coverage kicks in and saves the day. Let’s say they decide to sue you — your policy will typically cover your legal costs and any damages awarded to the other person.

Decide to get a sweet little pupper and it bites someone? Yikes! The good news is you and your four-legged best friend are typically covered — although some insurers exclude dog bites so be sure to ask.

What does it cost?

It’s pretty affordable. According to the Insurance Information Institute, the average annual renters insurance premium in the U.S. is only $188, or a little more than $15 a month for coverage that ranges from $30,000 to $50,000 (depending on where you live) with a $500 to $1,000 deductible. And if you already have car insurance, it's typically cheaper to bundle in renters insurance. Nerdwallet recently rated the best renters insurance companies of 2017, or you can check out insurance for ASU students though Uloop.

What types are there?

  • Actual cash value: It’s the cheaper version but it only covers the depreciated value of your stuff based on the condition it’s in and how long ago you bought it. So for example, if your bike is two years old and it gets stolen, you’ll only get the value of a two-year old bike. If you want a new bike, you’ll have to cover the difference.

  • Replacement cost coverage: It’s more expensive, but it will cover the current cost to get you a new version of whatever you lost. So, same bike scenario as above, but this time you get the full coverage of buying a new bike.

Can my roommate and I split renters insurance?

Yes, but ... if you’re related, then your roommate is automatically covered on your policy because they are a “resident relative.” If you are not related, there is renters insurance for roommates, but make sure you ask your insurance representative to walk you through it so you know if it’s the right decision for you.

Biggest takeaways as to why you’d want it:

  1. It will cover the cost of stolen items in case of a break-in. This includes theft from your apartment, your car, the gym or a hotel room.

  2. The liability insurance will cover medical bills and court fees (if you get sued) if someone gets injured in your apartment.

  3. It covers fire and smoke damage (after your deductible) to your things. Your landlord should cover any damage to the building.

  4. It covers damage to your things from weather and natural disasters, like lightning, windstorms or hailstorms (which have all been known to hit AZ).

  5. It covers the cost of a hotel and restaurant meals if your home is damaged beyond repair.

We definitely recommend you consider protecting yourself and your things. You may initially think you don’t have many expensive things to replace at this point in your life, but think of how fast it’d add up if you lost multiple things at once.

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