But under what circumstances, exactly, does renters insurance cover theft?

Renters insurance typically includes three types of coverage: Personal property, liability, and loss-of-use. Personal property covers your belongings; liability covers guests in your home or accidental damage to the neighbors’ property. Loss-of-use covers things like hotel bills and storage costs if your home becomes uninhabitable.

Theft, however, is a unique situation. You’ll have to file a police report before doing anything with your insurance. The details they collect go a long way in determining whether or not a claim will pay out – so be as accurate as possible.

The Liability Clause:

Theft claims mostly depend on the personal liability clause of your policy. Thankfully, in the case of theft, most belongings are covered. Furniture, clothing, jewelry, and electronics are generally covered under the liability clause – up to a coverage limit. The claim does top out at a certain point, though. So it’s essential to have a sense of your belongings’ total market value. And to obtain secondary insurance for high-value items that exceed all, or a significant portion of, the coverage limit.

There are only a few instances when theft isn’t covered by renters insurance. For example: if your bag were stolen on the subway: you’re covered. But if you check your luggage on an airline and the bags are stolen? Renters insurance won’t cover it – because your item was in possession of a third party. In that case, you’d file a claim with travel insurance.

But the worst-case scenario is if your insurer decides that the theft happened due to negligence. Like, if you left your keys in the door… If your insurer thinks you passively allowed it to happen – they’ll probably deny your claim outright. Ignorance is no defense when dealing with a claims adjuster.

Replacement Cost vs. Actual Cash Value:

It’s one of the most common discrepancies between plans. If you have good insurance, they’ll cover the replacement cost of items, minus the deductible. If you have crummy insurance, they’ll only cover the “actual cash value.”

Replacement cost is the market price: the dollar amount this product would cost, new, in-store. Today – not when you bought it. But actual cash value is the replacement cost, minus depreciation.

The difference between them is, roughly, the cost of that item on Amazon vs. eBay.

Special Cases – Asset Theft, Cash, and Family:

Unfortunately, renters insurance doesn’t cover damage or theft involving your vehicle – even when it’s parked on your property. A car can only be insured separately by an auto insurance policy. However, it does cover personal belongings while they’re stored in a vehicle. So if your car gets broken into and you lose your laptop – you’d file a claim for the broken window and stolen stereo through auto insurance, but claim your stolen laptop through renters or homeowners insurance.

Renters insurance also covers stolen cash, but only up to a measly $200. But, think about it: if it were that easy to claim more money, why wouldn’t you? It’s stolen – there’s no proof. It makes insurance fraud too easy.

And finally: a renters policy automatically covers anybody related to you by blood, marriage, or adoption. If you live with a partner, you can still get the same protection by adding them to your existing policy as an “additional co-insured” for a small additional fee.

In any case – renters insurance isn’t just a practical choice – it’s a necessary choice. In 2020, property damage and theft made up 97.2% of all claims to insurance companies. One hopes, with insurance, that you never have to use it. But if you do, chances are it’ll be for this.

Renters insurance can be more inclusive than homeowner’s insurance because it covers things like damage caused by children or pets, as well as legal expenses related to a lawsuit involving your home. Because renters insurance policies are generally shorter-term (usually just one month) than homeowners’ policies, they may cover less. For example, if a renter moves out after 10 years but leaves behind expensive furniture, homeowners insurance will likely pay up to $5,000 for damages caused during those 10 years. However, renters insurance might only cover $1,500. If you’re considering covering your belongings with renters insurance, make sure you understand how much coverage you get.

If you buy renters insurance online before you move into your new place, it’s important that you find a policy that provides the right amount of coverage at the right price. The process isn’t difficult, though: You simply need to compare multiple options side-by-side with our free tool, which does the searching and comparing for you. Once you pick a plan, it usually takes about 30 seconds to finish signing up — even if you have several plans to choose from! Your coverage amount should depend on what kind of risk you want to take, so let us help you calculate the appropriate premium based upon where you’ll be living.

The National Hurricane Center notes that many coastal areas face frequent hurricanes. Residents must prepare themselves for this possibility by investing in hurricane supplies, such as roof tarps and generators. A generator allows them to remain connected to electricity, keeping medical equipment functioning and refrigerators stocked. Roof tarps protect from strong winds, and many local governments require homes built near water or within an evacuation zone to be equipped with working storm shutters.

In addition to protecting you and your family from the financial consequences of a claim, personal liability insurance prevents claims against you personally. This includes acts committed while operating a vehicle under your name (such as drunk driving), negligent conduct, and acts of vandalism or malicious destruction of property. Personal injury liability additionally protects you if someone else is injured or killed in your car, boat, motorcycle, or other motorized vehicles as long as you were in control at the time.

The first thing would be your home contents – whether you’ve got a home worth more than £50,000, you’d want to insure it. Then there’s everything else in your life. Let’s say you’ve got kids; then you’d probably want to include the kids at school, college, or university and perhaps some sports equipment too. And let’s say your partner has a hobby and keeps a few tools in the garage – he’s going to use them without thinking twice; you don’t need him to get hurt, do you? So you might also want to add these items to your policy.

Insurance companies do not want to sell policies to people who intend to live permanently outside their home country. According to Financial Times, “most insurers tend to view nonresidents as higher risks – because they often fail to tell insurers when they plan to return home.” Insurance companies tend to avoid insuring people who reside abroad due to high rates associated with nonresident policies, especially if the person lives close to another jurisdiction that offers cheaper premiums.

You’re covered no matter what. That means your auto insurance won’t drop once your license plate changes colors, even if your state doesn’t allow it. It means you’ll still be protected if you happen across a bear on the road, as long as your policy covers bears. It means you won’t lose your coverage if your dog bites someone, but it means you may need to pay a small deductible each year.

Fewer than half of us do. A decision that’s easy to understand, but difficult to justify in light of the facts.

What’s stopping us?

For one, renter’s insurance doesn’t feel necessary. Renting is almost never a permanent living situation. At any given time, many renters are entirely new to the concept of property. And insurers have a cultural reputation of over-selling their products. Sure, it’s true that your landlord is legally-required to have property insurance. But many renters erroneously assume that that policy also extends to the residents.

Let me be clear: your landlord’s policy covers the building and its constituent units, but coverage ends at your doorstep. None of your personal property is protected by your landlord’s building policy. Your basic assumption should be that the landlord, in all cases, has minimized their responsibility for the dweller and dwelling.

Consider this: how much is the device you’re holding worth, alone? What’s the value of your computer? Television? Clothing? Furniture? Collectables? You worked hard to purchase these things. For most of us, that dollar amount quickly climbs into the thousands. Much more expensive than the deductible on a basic rental insurance policy.

Which – by the way – is a shockingly cheap thing. According to Nerdwallet, the average price of a renter’s insurance policy is $168 per year. Mine was just $100, through Allstate. It’s a small, small price to pay for lasting peace of mind. So small, you can’t justify refraining. If you have enough to afford the security deposit, as well as first and last month’s rent, you should also be able to afford a policy that represents just 2-3% of the up-front cost of your unit.

In fact, many landlords are addressing this lapse in coverage by requiring tenants to purchase insurance as an initial condition of signing the lease. Like a second security deposit that shifts responsibility away from the landlord, in the event of an incident.

Just buy it. If you feel like you can’t afford it, then you definitely can’t afford the consequences of not having it. So do it for you, do it for your roommates, and do it for the pizza delivery person who just slipped on your doorstep.

Who knew his dad was a personal injury lawyer? Good thing your renter’s insurance covers liability, too.