Renters insurance is one of the few policies that is genuinely cheap. Ours runs $14 a month for $30,000 of contents coverage and $100,000 of liability. That is less than the two streaming services we cancelled last spring, and most of the renters we know still skip it, usually because they assume the landlord's insurance covers them. It does not. The landlord's policy covers the building. Everything inside the apartment that belongs to you is your problem.
What it covers
- Your belongings, against theft, fire, smoke, vandalism, and water damage from a burst pipe or the neighbor's overflowing bathtub. Furniture, clothes, electronics, kitchen equipment, the bike in the hallway.
- Your liability, if a guest is injured in your apartment or you accidentally damage someone else's property. The classic case is a kitchen fire that spreads to the unit next door. Without liability coverage, the neighbor's insurer can come after you personally.
- Additional living expenses: the cost of a hotel and meals while the apartment is unlivable after a covered event. This is the part people forget, and it is often the most valuable. A week in a hotel after a fire costs more than a decade of premiums.
- Belongings outside the apartment, usually up to a percentage of the contents limit. A laptop stolen from a car or a bag taken on a trip is typically covered.
What it does not cover
Floods from outside the building, earthquakes and sinkholes are excluded on standard policies and need separate coverage. Your roommate's belongings are not covered unless they are named on the policy. Damage from your own neglect, like a window left open in a storm, is excluded. And the personal property limits for certain categories are low by default: jewelry, cameras, musical instruments and collectibles often carry a sub-limit of $1,000 to $2,500 unless you add a rider, which is cheap.
Replacement cost versus actual cash value
This is the one choice on the form that matters. Actual cash value pays what your five-year-old sofa is worth today, which is not much. Replacement cost pays what it costs to buy a new one. The difference in premium is usually a couple of dollars a month. Always choose replacement cost.
How much coverage
Walk through the apartment with your phone and photograph every room, including inside closets and drawers. Add up roughly what it would cost to replace everything. Most people land between $20,000 and $40,000 and are surprised. The photos double as your inventory if you ever have to file a claim, so back them up somewhere other than the phone.
For liability, $100,000 is the usual minimum and $300,000 costs only slightly more. If you have a dog, check that the breed is not excluded.
Where the savings are
Bundling with an auto policy at the same company usually takes 5 to 15 percent off both. Paying annually rather than monthly often saves a few dollars in fees. A higher deductible, $500 rather than $250, lowers the premium slightly, and it makes sense if you would not file a claim for less than $500 anyway. We would not, so we did.
At $14 a month, this is not a decision that needs a spreadsheet. It is the cheapest insurance most people will ever buy, and the one they will be most grateful for on the day the upstairs neighbor's washing machine hose gives out.
