Renters insurance: what it covers and how much you need

Renters insurance pays to replace your belongings after a covered loss like fire, theft or a burst pipe, pays if you accidentally injure someone or damage their property, and covers extra living costs if your apartment becomes unlivable. Most renters need enough personal-property coverage to replace everything they own, which you work out with a quick home inventory, plus liability coverage well above the minimum.

Your landlord's insurance does not do this. New York's Department of Financial Services (DFS) is blunt about it: the landlord's policy covers the building, not a tenant's personal property. The narrow exception DFS notes is when the landlord knew about a hazard, failed to fix it in a reasonable time, and your things were damaged as a result, which you would have to prove.

What a renters policy covers

DFS lists four parts in a standard renters (also called tenants) policy:

According to DFS, covered events typically include fire, smoke, theft, vandalism, windstorm or hail, lightning, explosion, falling objects, the weight of snow, ice or sleet, accidental water discharge (plumbing or appliance failure, sprinklers), and electrical surges. Check your own policy's list, because the wording decides what is covered.

The NAIC describes two common policy styles. A broad form policy, the most commonly purchased, covers your belongings against specific named events such as fire or theft. A comprehensive form covers a range of events unless the policy specifically excludes them, and usually costs more.

Actual cash value vs replacement cost

This one choice changes what a claim actually pays. Actual cash value (ACV) pays what your item was worth at the time of the loss, after depreciation, minus your deductible. Replacement cost pays what it costs to buy a new equivalent item. The NAIC notes that replacement-cost policies typically pay once you actually replace the item and submit receipts. DFS suggests replacement cost if you own a lot of electronics, because they lose value fast.

What renters insurance usually doesn't cover

• Floods and earthquakes. DFS says a standard policy does not cover them; you need separate coverage if you live where they are a risk. Flood insurance for renters is sold through FEMA's National Flood Insurance Program (NFIP) and private insurers. NFIP contents coverage goes up to $100,000, generally starts 30 days after purchase, and does not cover belongings kept in a basement. That last point matters in NYC if you live in a basement or garden-level unit; see our flood insurance guide.
• Sewer and drain backup, unless you add it. DFS lists it as an optional add-on.
• Expensive jewelry, art, collectibles and similar items above the policy's sub-limits. Both DFS and the NAIC point to an add-on (often called a rider or scheduled personal property) for high-value items.
• Business equipment or inventory, unless you add a home business rider.
• The building itself and your landlord's fixtures, which are the landlord's to insure.

How much coverage do you need?

Two numbers: a personal-property limit and a liability limit. Also check how much loss-of-use (additional living expense) coverage the policy includes; insurers set it differently, so compare it across quotes.

Personal property: do a home inventory

DFS recommends listing everything you own, photographing or videoing it, and working out what it would cost to replace. Most people are surprised by the total. Walk through room by room:

In this example, a $20,000 or $25,000 property limit leaves a little room for things you forgot. If your list includes an engagement ring or a camera body worth several thousand dollars, ask how much the base policy pays for that category and whether you need a rider. Store the inventory and photos somewhere off-site, like cloud storage or email, so you can reach them after a fire.

Liability

Ask for quotes at two or three liability limits and compare the price difference. In an apartment building, a leak that starts in your unit can damage several apartments below, so many renters choose a higher limit than the minimum offered. DFS specifically advises making sure your policy includes liability coverage for medical and legal costs if someone is hurt in your home.

Deductible

A higher deductible lowers your premium but means you absorb more of every claim. Pick a deductible you could pay tomorrow without borrowing. A claim smaller than your deductible pays nothing.

Can a landlord require renters insurance?

Some leases include a clause requiring tenants to carry renters insurance, sometimes with a minimum liability amount or a request that the landlord be listed on the policy so it's told if you cancel. Read the lease before you sign. For a rent-stabilized apartment, state housing regulators say a renewal lease must keep the same terms and conditions as the expiring lease unless a change is needed to comply with a specific law or regulation, so a new insurance requirement added at renewal is worth questioning with HCR.

How to buy a policy in an afternoon

1. 1

   Do the inventory first

   Total your replacement costs by room and flag high-value items such as jewelry, cameras or instruments.
2. 2

   Choose replacement cost

   Ask for replacement-cost coverage on contents, especially if you own electronics.
3. 3

   Set liability and the deductible

   Pick a liability limit that fits a building with neighbors below you, and a deductible you can pay in cash.
4. 4

   Ask about add-ons you need

   Riders for valuables, sewer and drain backup, a home-business rider. Get flood coverage separately if your area floods.
5. 5

   Compare at least three quotes

   Compare the same limits and deductible side by side, and ask about discounts for smoke detectors, deadbolts or bundling (DFS lists these).
6. 6

   Send proof to your landlord if required

   Ask the insurer to send proof of coverage or list the landlord on the policy if the lease requires it.

After a loss: filing a claim

1. Make sure everyone is safe; for theft, file a police report and keep the report number.
2. Photograph the damage before cleaning up, but prevent further damage (for example, move things away from a leak).
3. Tell your landlord in writing about any building damage, and your insurer as soon as you can.
4. Keep receipts for hotel stays, meals and replacement purchases.
5. Send your inventory and photos with the claim.

If your claim is denied or delayed and you can't resolve it with the insurer, you can contact DFS, which regulates insurers in New York. For leaks and repairs, also see who is responsible for a water leak, and if a fire forces you out, where to get help after displacement.