Financial Literacy Lifestyle + Wellness

Insurance Basics: Renters Insurance

BY Spectrum Wealth Management | Oct 10, 2022

If you’re renting an apartment, home, or condo, you might assume you don’t need insurance. Should anything structural happen to the building, the property owner is responsible for repairing the damage under their policy.

But they aren’t responsible for your belongings. Should you lose your rental to a fire or robbery, the owner of the property will not be responsible for replacing them. If you’re a renter, it’s paramount that you have renters insurance to replace your personal property. Relying on government services to cover them may leave you out in the cold. Some landlords may require you to have rental insurance as part of your agreement, while others may leave it up to the tenant’s discretion.1,2

Overview of Renters Insurance

Renters insurance works much like a homeowners insurance policy. Renters insurance won’t cover dwelling or structural damage but instead covers the cost to replace your belongings, loss-of-use coverage to your living space, and personal liability damages should someone get injured in your apartment. When one of these unexpected events occurs, you would file a claim with your renter’s insurance company and, depending on whether you have a deductible, be eligible to receive benefits after that is taken care of.1,2

What Renters Insurance Covers

There are specific types of damage that renters insurance covers. You’ll want to read your policy carefully to ensure that your belongings are properly insured. Typical renters policies cover events like:

  • Fire
  • Smoke damage
  • Falling objects
  • Explosions
  • Theft
  • Riots
  • Lightning and electrical damage
  • Snow, sleet, and ice1,2

What Renters Insurance Does Not Cover

There are specific events that your renters policy probably does not cover. However, if you live in an area affected by floods or earthquakes, for example, you should be able to add an endorsement at an extra cost that covers these events.

Renters insurance typically does not cover:

  • Flood
  • Earthquake
  • Damage from pets
  • Personal injuries
  • Damage from pests
  • Car damage
  • Sinkholes
  • Terrorism1,2

Why Do You Need Renters Insurance?

There are many unexpected scenarios in which renters insurance will make your life easier. For example, if you accidentally leave your bathtub running and flood your downstairs neighbor’s apartment, your landlord probably will not cover the damages. Paying for the repairs out of pocket can become quite costly and could be an additional financial burden to you.2

You also probably own more possessions than you think you do. If you take an inventory of everything you own and the price you paid for it, you’ll quickly discover that you own quite a lot. Replacing electronics can become especially costly, and you don’t want to have to pay out of pocket to replace everything. Your renters insurance will also cover more than a stolen TV. Should you have your laptop stolen while you’re traveling, your renters insurance policy will also pay to replace it.2

Cost of Renters Insurance

One of the misconceptions about renter’s insurance is that it’s too expensive to set up a policy. That couldn’t be further from the truth. The average cost of renter’s insurance is $168/year. If you can bundle your renters insurance with your auto insurance policy, you may receive a discount. Additional discounts may be provided if your apartment has smoke detectors, built-in sprinklers, and other safety measures.3

Regardless of whether your landlord requires renters insurance, it’s important to protect your valuables. For an average of just $14/month, you can get peace of mind should a disaster strike.


Spectrum Wealth Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Additional information about Spectrum’s investment advisory services is found in Form ADV Part 2, which is available upon request. The information presented is for educational and illustrative purposes only and does not constitute tax, legal, or investment advice. Tax and legal counsel should be engaged before taking any action. The opinions expressed and material provided are for general information and should not be considered a solicitation for purchasing or selling any security.