Renters insurance is one of the cheapest insurance products in the United States — typically $15 to $25 a month for $30,000 of personal-property coverage — and one of the most consistently underbought. The National Association of Insurance Commissioners (NAIC) reports that a large share of US renters carry no policy, often because they assume their landlord's insurance covers their belongings. It doesn't.
This guide explains what a standard policy actually covers, the three numbers that decide what you pay, and the situations where the coverage is most useful.
What a standard policy covers
A typical renters policy (HO-4 in the standard ISO form) bundles three protections: personal property (your belongings), liability (if you accidentally injure someone or damage their property), and additional living expenses (if a covered loss makes your unit uninhabitable). The landlord's policy covers the building structure, not anything inside your unit.
Covered perils usually include fire, theft, vandalism, certain water damage from internal plumbing, and damage from many weather events. Flood and earthquake are typically excluded and require separate policies — flood coverage through the federal NFIP, earthquake through a state-specific or stand-alone insurer.
Replacement cost vs actual cash value
This single choice changes a claim more than any other. Actual cash value (ACV) pays the depreciated value of an item — your five-year-old laptop is worth less than you paid for it. Replacement cost value (RCV) pays what it would cost to buy a comparable new item today. RCV costs roughly 10% more in premium and is almost always worth it.
The NAIC's consumer guide recommends asking specifically which type of valuation a quote uses; the same headline coverage limit means very different things under each.
Sub-limits and scheduled items
Standard policies cap certain categories far below the headline limit: jewelry might be capped at $1,500, electronics at $2,500, cash at $200. If you own a $4,000 wedding ring or a $3,500 laptop you depend on, you need a scheduled-property rider (also called a "floater") that covers that specific item for its appraised value. The premium is typically 1–2% of the item's value per year.
When the coverage actually pays out
The most common renters claims are theft (including theft from a vehicle in some policies), water damage from plumbing failures, and small-fire damage. Liability claims — a guest slipping in your unit, your dog biting someone — are less frequent but can be catastrophic, which is why the cheap liability upgrade matters.
Read the exclusions before you buy. Bedbug infestations, intentional damage, business equipment beyond a small sub-limit, and pets restricted by breed are common exclusions or limitations.