Renters insurance: what it covers and how to file a claim

If you rent, the building’s insurance belongs to the landlord and does not protect your belongings. This guide is for renters who want to understand renters insurancerenters insuranceRenters insurance, also called tenants insurance, protects your belongings and protects you when you rent. The landlord's insurance covers the building, but not your furniture, clothes or electronics. It usually includes three coverages: your personal property, even if it is stolen away from home; additional living expenses if a covered loss forces you to move out for a while; and personal liability if someone is hurt in your home. A standard policy does not cover floods, which are insured separately. Some landlords require it.See the full definitionClose: what it covers, what it leaves out (like floods), actual cash value versus replacement cost, liability coverage and how to file a claim. It summarizes what the Texas and California insurance departments and the federal flood insurance program publish.

Coverages a renters policy typically includes

3¹

Usual wait before an NFIP flood policy takes effect

30 days⁶

The most an NFIP renters policy pays for your belongings

$100,000⁶

What renters insurance covers

According to the Texas Department of Insurance (TDI), your landlord’s insurance won’t cover your personal items. To protect them from theft or damage, say from a burst pipe, you need your own renters policy.¹ The California Department of Insurance (CDI) puts it the same way: your landlord does not insure your personal property.⁵

TDI says a renters policy typically includes three coverages:¹

Coverage	What it pays for
Personal property	Your belongings, even items stolen from your car or while you travel
Additional living expenses	The extra cost of food, rent and other things if a covered loss forces you out for a while
Personal liability	Protects you if someone is injured in your home and pays legal costs if you are liable and sued

In California, CDI describes a renters policy in four parts: personal property (Coverage C), loss of use (D), personal liability (E) and medical payments to others (F).⁵ Coverage C protects your belongings and those of family members who live with you.⁵

There is one thing your policy does not do: fix the house or the building. The building owner’s policy pays for that.² Which repairs fall on the landlord and which on you depends on your lease and your state’s rules; the guide to your lease helps you read it, and the guide to repairs and housing conditions explains what to do when something breaks.

What it doesn’t cover: floods and special limits

Most renters policies cover losses from fire, smoke, theft or vandalism and certain kinds of water damage. They don’t cover losses from floods.¹ FloodSmart, the website of FEMA’s National Flood Insurance Program (NFIP), says the same about most homeowners and renters insurance.⁶

That is what flood insuranceflood insuranceFlood insurance is a separate policy that can cover a building, its contents, or both, when flood water causes damage. Most homeowners insurance policies do not cover that damage. Most of these policies are backed by FEMA's National Flood Insurance Program (NFIP) and bought through insurers and agents. If your home is in a high-risk flood area and your mortgage is backed by the federal government, the lender is required to demand it; outside those areas it is optional, but floods happen there too.See the full definitionClose is for. The NFIP sells renters policies that protect what you own inside your home: furniture, clothes, television, computers, rugs and some artwork, up to $100,000 of damage. This is called contents coverage.⁶ You can buy one if your city or town participates in the NFIP, and most communities in the country do.⁷

Before you buy, keep three things in mind:⁶

• Coverage starts 30 days after purchase, with some exceptions.
• It does not cover cash, things you keep in a basement, or temporary housing while repairs are made.
• It lasts one year, and every company that sells it charges the same rates.

Your renters policy also has a dollar limit: the most it will pay, even if replacing your things costs more. Some policies set lower limits for certain items. TDI lists common limits of $100 for cash, $2,500 for items used for business and $500 for jewelry and watches.¹ CDI explains that these special limits are not added on top of the overall limit; they sit inside it. To cover something more valuable, you add an endorsement, also called a “rider” or “floater.”⁵

Actual cash value or replacement cost

When the insurer pays you for something you lost, it calculates the payment one of two ways. TDI explains them like this:²

• Replacement cost: pays to repair or replace your belongings at today’s prices.
• Actual cash value: pays replacement cost minus depreciation, the value an item loses through wear and age.

CDI’s glossary adds detail: replacement cost is what it costs to replace an item with something new of like kind and quality in the local market, and actual cash value never exceeds your policy limit.⁵

TDI offers this example: you paid $1,300 for a laptop two years ago, and the same kind now sells for $500. A basic renters policy would pay $500 if the laptop were destroyed. You can buy a policy that covers the replacement value of your items, but it costs more.¹ That is why TDI says to make sure the policy you buy will pay to replace your belongings.¹

Two ways to pay for your belongings

ACV

Actual cash value

• Pays what it costs to replace the item minus depreciation.²
• It is what a basic policy would pay in TDI's example.¹
• It never exceeds your policy limit.⁵

RC

Replacement cost

• Pays to replace your belongings at today's prices.²
• The policy costs more.¹
• You are paid in two checks: actual cash value first, the rest once you replace the item.²

Ask which one your policy has before you buy; the difference shows up exactly when you file a claim.¹

Example with real numbers

Your sofa burns: how the payment is figured

An example in words, with no figures, to show where each check comes from.

With actual cash value

Today's price of a similar sofa, minus depreciation²

With replacement cost, first check

The sofa's actual cash value²

With replacement cost, after you replace it

The rest of your claim²

Either way

Your deductible is subtracted and the payment stops at your policy limit³

Your own figures are on the declarations page, the first page of your policy: coverages, limits and deductibles.² To see what you can afford each month for rent and insurance, use the rent calculator.

Run it with your numbersHow much rent can I afford?

Liability: if someone gets hurt in your home

Liability is the part of the policy that protects you from claims by other people. According to TDI, in a renters policy it protects you if someone is injured in your home and pays legal costs if you are liable and taken to court.¹

CDI explains two coverages that go together:⁵

• Personal liability (Coverage E): applies when you or someone in your household is legally responsible for injuring another person. It normally includes your defense. It does not protect you in every situation; for example, it does not cover an intentional act.
• Medical payments to others (Coverage F): pays reasonable medical expenses for people accidentally hurt in your home, like a neighbor’s child who falls while playing. It does not cover your own injuries or those of people who live with you, and it is not a substitute for health insurance.

In California, CDI says a renters policy generally has liability coverage with a minimum of $100,000, medical payments with a minimum of $1,000 and loss of use at 20% of personal property coverage.⁵ Those are general California figures; yours are in your policy.

For homeowners policies, TDI explains that liability coverage also pays if you’re responsible for damaging someone else’s property, plus your court costs if you’re sued because of an accident.² If you worry about causing damage to the building or a neighbor, ask your agent whether your renters policy includes it.

How much coverage to buy and how the deductible works

Your policy pays up to a dollar limit for your belongings. To know how much you need, TDI recommends filling out a home inventory.¹ CDI says the most reliable source of what your things are worth is you, and asks you to count everyday items: kitchen utensils, linens, curtains, clothes and shoes.⁵

How to make the inventory, according to TDI:²

1. List what you own. If you can, note the purchase date, value and serial number.
2. Photograph or videotape every room, with closets and drawers open.
3. Keep the list and receipts for major items in a fireproof safe or at another location.
4. Update it from time to time.

The deductibledeductibleA deductible is the part of an insurance claim you pay yourself. When you have a covered loss, the insurance company subtracts the deductible from the claim amount and pays you the rest. You may have a different deductible for each type of coverage. You will find it on the first page of your policy, called the declarations page, along with your coverages and limits. In taxes, the word "deductible" means something else: an expense that can lower the taxes you owe.See the full definitionClose is the part of a claim you pay yourself.² It can be a fixed amount or a percentage, and on home policies it applies to each claim. In general, the higher the deductible, the cheaper the policy. TDI suggests thinking about how much you could pay if your things were damaged, and warns that filing small claims may raise what you pay later.³

What you pay for insurance is the premiuminsurance premiumAn insurance premium is what you pay the insurance company in exchange for your policy's protection. It can be paid in one lump sum or, more often, in periodic installments for the life of the contract. Each company decides whether to sell you a policy and how much to charge. For home insurance it usually looks at the cost to rebuild the home, building materials, location, nearness to a fire station, your past claims and, at some companies, your credit score. Discounts can lower it. If you stop paying the premium, the company can cancel your policy.See the full definitionClose. Each company has its own rules for deciding whether to sell you a policy and what to charge, so prices differ from one insurer to the next. Some use your credit score to set the price, but none can turn you down based only on your credit.²

What depends on your landlord and your state

The law doesn’t require renters insurance, according to TDI, but some landlords do.¹ If your leaseleaseA lease, or rental agreement, is the contract in which the owner or landlord gives you the right to live in and use a property for a set period of time in exchange for payment, usually rent. While the lease lasts you have possession, but the landlord still owns the property. The lease says how much you pay and when, who handles maintenance and how the agreement can end. Your rights as a tenant are usually spelled out in the lease and in your state and local laws. Before complaining to the landlord, it helps to read the lease and make sure you are also following the rules you agreed to.See the full definitionClose requires it, read that clause before signing so you know what is being asked and from when.

In Texas, there is a Consumer Bill of Rights for home and renters insurance; your insurer gives you a copy when you buy or renew.² And under a state law (House Bill 531), before you rent the landlord must tell you if they know the home is in a 100-year flood plain or flooded at least once in the past five years, and must encourage you to buy flood insurance. The NFIP can be reached at 877-336-2627.⁴

In California, if no company will sell you a homeowners or renters policy because you don’t meet its requirements, CDI points to special programs. One is the California FAIR Plan: a basic fire policy for the structure and contents, with no liability or theft coverage.⁵

If you live in another state, look up the consumer line of your state’s insurance department: that is the place to ask about the rules there.

How to file a claim

From the damage to the check

1. 1. Tell your insurer as soon as possible

   The same day, if you can

   Most companies have deadlines for filing a claim.²

2. 2. List the damage and take photos

   Before you repair anything

   Write down what was damaged and take photos or video. Make only temporary repairs to protect your belongings.²

3. 3. The insurer acknowledges your claim

   In Texas, within 15 days

   It may ask for a proof of loss form listing everything you lost, down to the kitchen utensils.²

4. 4. The insurer accepts or denies it

   In Texas, 15 business days after it has all your information

   If it denies the claim, it must tell you why in writing. It can take longer if it tells you why, or after a major disaster.²

5. 5. You get paid

   In Texas, 5 business days after it agrees to pay

   With replacement cost, the first check is for actual cash value and the rest comes once you replace what you lost.² Keep your receipts.²

6. 6. If you disagree

   When you get the offer

   Tell the insurer why. You can ask for an appraisal if the problem is the amount, or file a written complaint.²

The deadlines in steps 3 to 5 are the ones Texas law sets, according to TDI.² Other states have their own rules; ask your state insurance department.

If you had to leave your home, additional living expenses are paid only up to your policy limit. TDI recommends watching your spending so it doesn’t run out before you can move back.²

If you can’t reach an agreement with the insurer, TDI lays out your options. Appraisal is for disputes about the amount, not about whether the policy covers the loss. You can also file a written complaint with TDI or go to court. Its question line is 800-252-3439.² If a problem with your landlord gets complicated, free legal aid is one option.

How to buy a policy without surprises

CDI asks you to compare prices, coverage, conditions and complaint information, and not to rely only on what someone else tells you, even an agent.⁵ Since each company charges differently, it pays to get several quotes.²

When the policy arrives, read it: check that the coverages, limits and premium are what you agreed to.⁵ A homeowners policy is a different product; the home insurance guide explains it.

If this is you

You share your home with roommates

In California, personal property coverage protects your belongings and those of family members who live with you.⁵ If you share with people who are not family, ask whether each person needs a policy. More in the guide to sharing a home.

You are a student and a dependent

Your parents' homeowners policy may cover your belongings even if you don't live with them, usually up to 10% of their personal property coverage.¹

You had a fire or a burglary

Tell your insurer as soon as possible, take photos before repairing and keep receipts.² If you have to leave your home, ask about additional living expenses.¹

You are worried about the price

A higher deductible usually lowers the premium, but think about how much you could pay if something is damaged.³

Costly mistakes

• Mistake: Assuming your landlord's insurance covers your things.

  Instead: Your landlord's insurance doesn't cover your personal items; that is what renters insurance is for.¹

• Mistake: Thinking your renters policy covers a flood.

  Instead: Ask about an NFIP renters policy; it takes effect 30 days after purchase.⁶

• Mistake: Buying without knowing whether it pays actual cash value or replacement cost.

  Instead: Ask which one it has: replacement cost pays at today's prices.²

• Mistake: Having no list of your belongings.

  Instead: Make an inventory with photos and keep it in a safe place away from home.⁵

• Mistake: Making permanent repairs before the insurer sees the damage.

  Instead: Make only temporary repairs and take photos first.²

• Mistake: Paying the agent in cash.

  Instead: Pay by check made out to the insurance company or the agency.⁵

What to do this week

1. Check your lease or ask your landlord whether renters insurance is required.¹
2. Make your inventory: a list, photos of every room and receipts for major items, kept away from home.²
3. Get quotes from several companies and compare coverage, conditions and complaints, not just price.⁵
4. Ask each one: actual cash value or replacement cost? What special limits apply? What is the deductible?¹
5. If you live where it floods, ask about an NFIP renters policy.⁶
6. Save your insurer’s phone number and your state insurance department’s; in Texas it is 800-252-3439.²