Renters insurance is a crucial form of protection that provides financial coverage for tenants in the event of personal property loss or liability for accidents. With an average monthly cost of approximately $18 to $23 in the U.S. in 2025, it is an affordable way for renters to safeguard their belongings and protect themselves from financial risk.
It is essential for renters to understand that their landlord’s insurance policy covers the physical structure of the building but does not extend to the tenant’s personal property.
What Does Renters Insurance Cover?
A standard renters insurance policy includes several key types of coverage with customizable limits:
- Personal Property Coverage: This is the core component of the policy and covers the loss of personal belongings such as furniture, electronics, and clothing due to a covered event. Coverage limits typically range from $10,000 to $100,000, with many renters choosing a limit between $20,000 and $40,000.
- Liability Coverage: This protects you financially if you are found legally responsible for injuring someone else or damaging their property. A standard policy usually includes $100,000 in liability coverage, though higher limits are available.
- Additional Living Expenses (Loss of Use): If your rental unit becomes uninhabitable due to a covered event like a fire or major water damage, this coverage helps pay for temporary living costs, such as a hotel stay.
- Medical Payments to Others: This component covers minor medical bills for a guest who is injured on your property, regardless of fault, with typical limits between $1,000 and $5,000.
Common incidents that lead to renters insurance claims include theft, water damage from burst pipes, fire and smoke damage, and weather-related events.
Security Deposits and Damage Charges
Renters insurance can also be important in situations involving property damage. At the start of a lease, a tenant typically pays a security deposit to the landlord. This deposit can be used to cover unpaid rent or damages that go beyond normal wear and tear.
Landlords are permitted to make deductions from a security deposit for issues like large holes in walls, broken appliances, or excessive carpet stains. However, they cannot charge for normal wear and tear, such as minor scuffs on the walls or faded paint.
If the cost to repair tenant-caused damages exceeds the amount of the security deposit, the landlord can bill the tenant for the remaining balance. If the tenant refuses to pay, the landlord may take legal action. This is a scenario where the liability coverage from a renters insurance policy could provide critical financial protection. Most states have laws that protect tenants regarding security deposits. Landlords are typically required to provide an itemized list of deductions within a specific timeframe and may need to show proof of repair costs. Many states also limit the maximum amount a landlord can charge for a security deposit, often to one or two months’ rent.