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How Much Renters Insurance Do I Need?

Updated January 23, 2024 . AmFam Team

How much renters insurance do I need? American Family Insurance shares everything you need to know about your renter's insurance coverage.

Congratulations! You finally found your dream rental and can't wait to move in! Now you might be wondering if you need renters insurance. Design your own renters insurance policy to cover losses caused by theft, fire, vandalism, and liability issues, including bodily injury and medical expenses.

Renters insurance can't prevent losses, but it can help you replace your valuables if something goes wrong. According to the Independent Insurance Adjusters & Brokers of America (IIABA), almost two-thirds of residential lessees in the United States don’t carry renters insurance.

Although some renters take this risk, renters insurance protects you against accidents, thefts, fires, and lawsuits*. Your policy only covers your coverage limits. Consult your policy for details.

It is a good idea to purchase renters insurance, even if it isn't a requirement. The amount of insurance you’ll need depends on the value of your possessions. It’s not required by law, but your landlord or management company may require renters insurance as a condition of your lease agreement. To be certain, you should refer to your lease agreement. 

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What Rental Insurance Covers

Whether you're out and about or at home, our on-the-go renters insurance is here to protect you. Our renters insurance extends coverage beyond your apartment, so you have some liability coverage even when you're out. Without renters insurance, repairs and expenses may have to be paid out of pocket. But your policy may not kick in until you've paid your deductible. Are you planning on renting, but you're unsure about renters insurance? Here are some tips to help you protect yourself.

Personal property damage: Most belongings are worth more than you think. A personal property policy covers your possessions if any unforeseen events damage them, such as fire, sudden water damage from plumbing, heating or cooling systems, theft, or power surges. Insurance companies may also cover theft, fictitious documents, fungi, and bacteria. Make sure you check your policy*. The value of your personal belongings is only covered up to the policy limits once you pay a deductible.

Personal liability: You may protect yourself from claims made by others for injuries or property damage caused by your personal activities, kids, or pets. Most policies cover legal fees, liability to third parties, and negligent acts committed by your kids*.

Loss of use coverage: Also known as additional living expenses or temporary living expense coverage, loss of use coverage reimburses you for living expenses if your rental home is uninhabitable after a covered event, like fire. A part of this coverage can be used to cover additional living expenses, such as food and lodging. For example, if there’s a fire in your home and you can't live there during repairs you’ll have help paying for housing. Loss of use coverage has limits as to what and how much it will help you pay for, but usually it’s enough to help you maintain your current standard of living, refer to your policy for details.

Optional coverages: Most renters insurance policies are flexible enough to fit your specific lifestyle needs. You can even add coverage to protect pets, home businesses, expensive watches and jewelry, and more. Feel free to contact your agent if you have questions. 

Standard Renters Insurance Coverage Factors

It's easy to get renters insurance, and it doesn't cost much. To figure out what kind of coverage you need, check out the tips below.

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Inventory of Possessions

It's important to take inventory of your items before estimating your insurance needs. Personal property is anything that is not permanently installed inside your home. Clothing, furniture, electronics, and miscellaneous household items are all personal property. Include details like the age, cost, and the current value of the item. Appliances and fixtures attached to utilities are not included. Next, make an inventory of each room in your house and think of how much it would cost to replace your items. Your belongings are generally more expensive to replace than their actual value. Having this type of coverage is important if you wear jewelry outside the house too. You'd be covered against a named peril, like theft. Other scenarios, however, wouldn't be covered, so you might want to broaden the type of coverage.

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Discounts

Most insurance companies offer discounts when you buy more than one policy. Renters usually need to purchase auto insurance as well as renters insurance. You can save up to 5% by bundling your renters and auto policies.** Even if you don't want more than one policy, you can still get a discount. Check out our Renters Insurance Discounts page to learn more.

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Deductible

Your renters insurance will cover theft of valuable possessions, but you will have to pay a deductible first, which can either lower or increase your costs. This depends on the deductible you select. Your deductible is the amount you are responsible for paying out of your own pocket for a covered loss or liability. Our optional Diminishing Deductible feature when added to your policy rewards you for being a responsible renter by crediting your deductible $100*** each year, up to your $500 policy maximum.*** Imagine coming home from a night out with friends to find someone has broken into your apartment, stealing your electronics. You find out that it will cost $2000 to replace all your stolen valuables. But before your renters insurance policy will pay for replacements, you will have to pay a $500 deductible. Because this is your first claim, you have earned a $300 Diminishing Deductible, which has reduced your deductible to $200. Your renters insurance will cover the remaining $1,800 after you pay $200.

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Liability Coverage

Generally, liability coverage covers property damage, first aid, medical expenses, and court costs if an accident occurs in your rental. Liability coverage is available up to $500,000 under a renters' liability policy.

Having enough liability coverage can protect you from lawsuits and liability claims if a guest is hurt in your home. The more guests you have have or the more assets you have, the more insurance you may need. Without enough Liability coverage it, you risk being sued for more than your liability insurance covers.

Renters insurance helps you protect all the things you've worked so hard for. Use our renters insurance comparison chart to see what renters package is right for you.

Request a quote online or speak with your American Family Insurance agent about your renters insurance needs.

This information represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Exclusions may apply to policies, endorsements, or riders. Coverage may vary by state and may be subject to change. Some products are not available in every state. Please read your policy and contact your agent for assistance.

*Coverage provided for covered losses up to your policy limits. Refer to your policy for details or speak with your agent if you have questions.

**Customers who bundle auto and renters policies may save up to 5% on both policies together (as of January 2022). Discounts may vary by state, property, policy form and company underwriting the auto and/or property policy. Discounts may not apply to all coverages on an auto or property policy.

***Diminishing Deductible does not apply to all property deductibles. Named storm deductible applies only to GA. Policy maximum limits are $500 for renters. This coverage is not available in MN at this time.

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