Renters insurance protects you and your personal property from theft, fires, vandalism, windstorms, and injuries sustained at your residence.
But, as they say, the devil is in the details, so how do you know what your renters’ insurance policy covers and what it doesn’t?
It doesn’t help that the name can be confusing; it’s not always clear that renters insurance covers your valuables—computer, iPhone, bicycle, diamond ring, and so on—even when you’re not at home. Renters’ insurance as a whole could use a rethink and reboot, which is kind of our whole deal here at Lemonade.
Are you short on time? Here’s a quick rundown of what renters insurance covers and what it doesn’t:
This article will unpack the fundamentals of renters insurance without resorting to technical jargon. We prefer to keep things simple. While you may not end up discussing renters insurance at the next party, you will have a better understanding of how these policies can help make your life a little easier.
What exactly is renters insurance?
In layman’s terms, renters insurance provides financial assistance if something bad happens to you or your belongings.
Think of rental insurance as a safety net. It will kick in and assist if there is loss or damage from specified “perils,” which include theft, fire, vandalism, certain types of water damage, and a variety of other inconvenient things.
We say that an insurance policy “protects” you from unfortunate events such as fires or dog bites. But that’s just an expression because the insurance company isn’t stopping those things from happening… Instead, it provides financial compensation for any resulting damages.
If your entire apartment is damaged to the point where you can’t stay there, renters insurance can reimburse you for the nights you’ll have to spend at the Holiday Inn.
And if you are injured at the fault of someone else, or if someone else is injured at your fault, it can even help with medical or legal expenses.
What is the purpose of renters insurance?
You will make monthly or yearly payments (known as your ‘premium’) to your insurance company in exchange for the protection renters insurance provides. Your premium is determined by a variety of factors, including where you live, the amount of coverage you purchase, your claims history, and other factors.
If you file a claim, your renters’ insurance company may compensate you for any covered losses that exceed your deductible, which is the amount you pay before your insurer compensates you. (For more information on deductibles, see the section below.)
So, when does your renters’ insurance coverage kick in? Let’s take a closer look at what a typical policy includes.
Coverages for basic renters
A typical renters insurance policy (also known as an HO4 policy) provides three types of coverage:
What exactly does all of this mean?
1. Personal belongings
Personal property coverage reimburses you for the cost of lost or damaged valuables if they are lost, damaged, or destroyed as a result of a covered loss.
To name a few, standard policies cover named perils such as kitchen fires, lightning, windstorms, hail, smoke, vandalism, theft (at home or elsewhere), freezing, damage from aircraft or vehicles, and riots.
That is, if your clothes, furniture, electronics, or jewelry are damaged or destroyed as a result of a specified peril, your renters’ insurance policy may cover the costs.
Just keep in mind that if your landlord owns the items in your apartment, they are not covered by your policy. That includes any furnishings and appliances that came with the property.
It’s also important to remember that renters insurance will not cover items stolen in a construction zone, and you’re only covered for a portion of the expensive items you own. Extra Coverage is recommended for jewelry, musical instruments, and other valuables worth more than $1,000. (more on that below).
Furthermore, your renters’ insurance policy does not cover any of your roommates’ personal belongings; they must obtain their own policies.
2. Short-term living expenses
If one of the covered perils renders your home unlivable, you may need to spend some time in a hotel. The good news is that most renters insurance policies will cover these and other expenses as part of your loss of use coverage, which may include money for food and laundry.
3. Personal liability insurance and medical expenses
Renters’ insurance covers situations in which someone is injured at your home as a result of an accident, including hospital bills and legal fees from a lawsuit. It also covers certain damages that you may cause while away from home.What you should understand about coverage limits, deductibles, and Extra Coverage
Deductibles and limits
When filing a claim under your Lemonade Renters insurance policy, keep your coverage limits and deductible in mind.
Your deductible is the predetermined amount you have agreed to contribute to each claim before receiving compensation for your loss. When you sign up for Lemonade, you can choose a deductible between $250 and $2,500. (A higher monthly premium will result from a lower deductible because you will owe less out-of-pocket in the event of a covered claim.)
Each type of coverage has its own set of limits and, on occasion, sub-limits. You can, for example, select $10,000 in personal property coverage. If your apartment is robbed and all of your belongings are taken, your insurer will compensate you up to the $10,000 limit (after taking your deductible into account).
Did you say limitations?
Without going into too much detail: Certain types of property have additional sub-limits, which may vary depending on the state in which you live.
Except for California and New York, portable electronics theft is prohibited in all states. In general, cash (or even cryptocurrency!) theft is only covered up to a maximum of $200. And unless you “schedule” specific items of jewelry, which we’ll explain below, jewelry theft is only covered up to a maximum of $1,500.
Let’s get some Extra.
So you now have a good idea of what renters insurance covers. But what if you want to increase your coverage for specific items that are particularly valuable? Such additional coverage is known as scheduled personal property coverage in the insurance industry.
Because “scheduled personal property coverage” is such a mouthful, we at Lemonade just call it “Extra Coverage.”
Extra Coverage can be added to jewelry as well as valuables such as bikes, cameras, fine art, and musical instruments for an additional fee.
While these items are already covered by your base policy, Extra Coverage provides additional benefits:
- -No-deductible claims
- -Accidental damage coverage
- -Protection against “mysterious loss” (as in “I haven’t seen my engagement ring in three weeks and I’m beginning to think it’s…gone”).
While these items may require appraisals or other proof of purchase (more on that here), the Lemonade app makes the process extremely simple.
Does the renters’ insurance cover appliance breakdowns?
Your standard renter’s insurance covers your electronics and appliances against certain “perils,” but not all types of damage.
For example, if your washing machine experiences an electrical failure, your standard policy will not assist you. However, if you want to add those extra safeguards, you can purchase Equipment Breakdown Coverage (EBC).
This endorsement, also known as Appliance Coverage, is designed to supplement and enhance your renters insurance by providing coverage for a variety of additional types of damage. However, keep in mind that this coverage only applies to appliances that you own (not your landlord).
Is renters insurance valid in the event of a hurricane?
For the most part, yes. Hurricanes are strange creatures. In some states, such as Rhode Island, your standard Lemonade renters insurance policy will include a Hurricane Deductible. In others, such as New Jersey, some policies may include a separate, mandatory, or optional hurricane deductible. Other states, such as California, do not even include the word “hurricane” in their renters insurance policies.
A hurricane is essentially a massive windstorm (which is covered because it is one of those named perils), rain (which is not covered unless the wind blows off your roof and it begins raining in your apartment), and possibly flooding (not covered).
Bonus: If your home becomes uninhabitable for any reason, renters insurance provides benefits such as reimbursement for hotel stays or any expenses above what you’d normally have to pay on a daily basis.
What is the story’s moral? If you live in an area where they get past the “C’s” when naming the next hurricane (for more information, click here), you should probably review your policy or contact your insurer to see what your options are.
Is water damage covered by renters insurance?
Depending on the cause, your renter’s insurance policy may cover water damage.
While flooding from the outside is not covered, you should be covered for property damage caused by flooding inside your apartment if it is caused by a named peril. So, if your pipes burst and your belongings are damaged, you should be able to file a claim.
Renters’ insurance can also assist in covering the costs of water damage caused by you to others. So, if you leave the water in your bathtub running for an extended period of time and it causes a leak in your downstairs neighbor’s apartment, your personal liability coverage may kick in to help pay for any damages.
What does renters insurance not cover?
Renters insurance is fantastic, but it is not a magical cloak. It won’t protect you from every bad thing that can happen on a daily basis, so it’s important to understand what’s not covered by your policy.
Natural disasters such as floods and earthquakes
Is your apartment in an area where flooding, sinkholes, or earthquakes occur on a regular basis? Natural disasters are generally not covered by standard renters insurance.
But there’s no need to leave San Francisco, South Beach, or whatever beautiful but disaster-prone neighborhood you call home. Other insurers offer separate flood insurance policies; in the meantime, Lemonade offers standalone earthquake coverage in certain states.
While flooding refers to weather-related events, issues involving water damage to your property that aren’t the result of Mother Nature are most likely covered by Lemonade renters insurance. In other words, you’re not covered for flooding from the outside in, but you’re covered for flooding from the inside out, such as burst pipes, leaky AC units, a flood in your apartment after your upstairs neighbor forgets to turn off their bathtub, causing it to overflow, and so on.
Certain natural disasters (such as volcanic eruptions, wildfires, or tornadoes) are covered by a renters insurance policy. However, certain occurrences, such as widespread power outages, will not be covered.
Theft from a vehicle
You pull over to the side of the road and leave your phone on the passenger seat. If someone commits a smash-and-grab to obtain your iPhone X, renters insurance will cover the device.
However, renters insurance does not cover damage to the vehicle itself, such as a broken window (for that, your car insurance coverages could come in handy). The same holds true if a drunken prankster decides to rip off your rearview mirror for amusement. Furthermore, actual theft of your entire car, or specific parts of it, would not be covered as “personal property” under your renters policy.
Renters insurance, in fact, does not cover “motor vehicles” in general—but it does cover certain types of e-bikes. Motorized medical devices, such as motorized wheelchairs or scooters, may also be covered.
Items that are undocumented
While we trust you and know you’d never lie or falsify anything, an insurance company does require some proof that the item for which you’re filing a claim existed and was in your possession.
Keep receipts if you can, or try to take photos of your valuables on your phone (also save them in the cloud in case your phone is stolen).
Your roommate’s possessions
You’re extremely responsible, and you have Lemonade renters insurance. But you share your home with three other guys who don’t.
Your policy will not help them if their belongings are damaged or stolen (unless any of them are a blood relative, your spouse, or an adopted child). If your roommates aren’t aware of why renters insurance is a good idea, you can educate them after reading this article, right?
If you are permitted to sublet your apartment through homesharing services such as Airbnb, you should be aware that your renters insurance will not typically cover these short-term rentals.
However, platforms like Airbnb do offer standalone homeshare insurance policies, so if you plan to sublet, it’s worth looking into those options.
Lemonade renters insurance does not cover damage caused by mice, rats, or insects.
Extermination costs will also not be covered—this is typically the responsibility of your landlord. And what about the scourge to end all scourges, the one whose name we almost dare not say… bed bugs?
Treatment can be costly and time-consuming, and renters insurance will not cover the costs. However, here is a wealth of information on how to keep bed bugs out of your home and out of your life.
Mold is only covered if it is the result of one of the aforementioned perils. For example, suppose there was a fire at your home and the water used to put it out caused a serious mold problem – any resulting damages/losses are covered. Another scenario in which you are protected is if your air conditioner suddenly fails, flooding your home and destroying your belongings. Lemonade renters insurance will also protect you.
However, cases, where mold grows slowly over time, are not covered. So, what’s that nasty stuff growing in your shower or beneath your sink? You should address it as soon as possible because it is not covered by your policy. That would be considered negligence, which your insurance company will never cover.
Home damage caused by pets
Some animal-related damages and losses to your apartment are not covered by your standard renters insurance policy. What’s the deal? It’s kind of like mold. It is your responsibility to ensure that any problems are resolved as soon as you become aware of them. Renting with a pet (no matter how perfect they are) is therefore a bit risky. Accidents occur. Literally. As do a slew of other unexpected consequences when you share your home with your furry (or scaled) pal.
The only aspect of owning a pet that is covered by insurance is when they bite others or destroy other people’s belongings. Your medical payments and/or personal liability will kick in at that point. Remember that most insurance companies do not cover high-risk breeds or dogs with a history of biting.
The majority of physical property damage to your home
Renters insurance does not cover the physical structure that houses your belongings. That is the purpose of your landlord’s insurance.
So, if your building has roof leaks, it is your right as a renter to demand that your landlord provide you with a dry roof. Before you sign a lease, inquire about your landlord’s insurance as well as their protocol in the event that something happens to the apartment’s actual structure.
However, in certain situations, your renters insurance would kick in. For example, if your actions cause damage to your rented apartment as a result of fire, smoke, explosion, or certain water damage.
Some common myths about renters insurance
Let’s go over some of the common misconceptions about renters insurance.
- -You may believe that because your landlord has insurance, it covers damage to your belongings. Not so. The policy of your landlord covers the physical structure of their building as well as any furnishings/appliances owned by the landlord inside, such as the fridge or stove… However, it does not cover you or any damage to your MacBook, digital camera, or single-speed bike.
- -Perhaps this is your first time living alone, and your parents have homeowners insurance. Your parents’ insurance will not cover you and your belongings in your new apartment.
- -Perhaps you’re one of those people who only goes home to sleep after a long day at work (or a long night of fun). Why get renters insurance if you are rarely at home? The reason for this is that your policy protects you whether you’re at home or in a bar, coffee shop, airport, party boat, skate park, mall, subway car, silent rave, therapist’s office, etc.
Can you change your coverage after you’ve purchased a policy?
Without a doubt! Because we like to keep things simple, Lemonade’s Live Policy allows you to update your own coverage on the Lemonade app at any time. There are no agents, no hold times, and no stress.
Obtaining a renters insurance quote
The price you are quoted for renters insurance is determined by a variety of factors. Your premiums may be affected by where you live, the condition of the building, your personal history, and the amount of coverage you choose.
- -For example, renters insurance rates for a spotless new loft in Brooklyn will differ from those for a spacious studio apartment in Dayton, Ohio, in a 1932 building.
- -If you want more coverage, it will…cost you more. (Shocking!) Assume you want to safeguard $10,000 in valuables. Increasing your personal property limit to $40,000 would result in a higher premium.
- -Adding Extra Coverage for specific valuables will incur additional costs, but you’ll be glad you did if your engagement ring or vintage guitar goes missing or is damaged.
Applying for a quote is the simplest way to find out what your own rate would be.
We truly believe that the Lemonade sign-up process is delightful. Maya, our charming AI bot, will walk you through all of the details and provide you with a quote in minutes.
You may even enjoy the process… And who knows, maybe you’ll end up bragging about how great renters insurance is at your next party.