Renters insurance

Also called tenant insurance, HO-4

An inexpensive policy that covers a tenant’s belongings, liability and temporary living costs; the landlord’s policy covers only the building.

What it means

Renters insurance protects people who rent an apartment or house. It typically includes personal property coverage for belongings, even when they are away from home; liability coverage if someone is injured or the renter accidentally damages someone else’s property; and additional living expenses if the rental becomes unlivable after a covered event.

The landlord’s insurance covers the structure, not the tenant’s possessions or liability. Some landlords require renters insurance. As with homeowners policies, floods and earthquakes are usually excluded, and the choice between replacement cost and actual cash value affects payouts.

Example

Suppose a burglary takes $5,000 of electronics and furniture, and the renter has a replacement-cost policy with a $500 deductible. The insurer pays $4,500 to replace the items.

How it’s used

Tenants protecting their belongings
Meeting a lease requirement
Liability protection for renters

Strengths and weaknesses

Strengths

Usually low premiums for meaningful protection
Covers belongings at home and often away from it
Includes liability and temporary housing coverage

Weaknesses

Floods and earthquakes are usually excluded
Actual cash value policies pay less for older items
Limits on jewelry and other valuables can be low

Good to know

A quick video or photo inventory of belongings makes filing a claim much easier.

Educational information only, not financial, tax or legal advice. Rules, limits and rates change; check the IRS, your lender or plan, or a qualified professional before acting.