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Ultimate guide to renters insurance

Do you rent where you live?

Did your Landlord require that you buy something called “Tenants Insurance”?

Does it seem reasonable to you to spend a very small amount of money to ensure that you won’t lose a very large amount of money from events beyond your control?

If so, you should get Renters Insurance.

Insurance can be overwhelming. It is full of jargon, exclusions, and variables that require you make a ton of little decisions that will only turn out to matter many months or years from now in an emergency.

Yikes.

This guide will show you how to cut through that noise and get the most out of renters insurance without overpaying or getting lost.

We’ll cover:

  1. First things first - what you should expect from renters insurance, and what you shouldn’t.

  2. The hour (max) process you should follow to get a policy that covers what you need without overpaying.

  3. The fifteen minutes of work to do once you have a policy that can save you weeks of pain and thousands of dollars in the event you need to make a claim.

  4. How to make a claim, and just as importantly, how to contest an unfair insurer response.

  5. Policy End Of Life - the process to deal with moving, switching insurers, cancelling your policy, or evolving it with new life circumstances.

Without further ado, let’s get this done so you can go back to funner things.

What to expect from renters insurance, and what not to

Expect your insurance to cover fires, thefts, water damage, and lawsuits against you. And not much else.

An average policy can be over 40 pages long. But really, it all boils down to fires, thefts, water and lawsuits.

[Insert chart of loss types and impact on pricing] #nc

Really those 4 types of losses are what people experience, and are what drives prices.

Nearly every word in the policy is designed to clarify, explain, or specify how your insurer will pay you as a result of financial losses stemming from a fire, theft, water damage, or a lawsuit (threatened, or real).

If you have a fire in your place, expect your policy will pay to replace your stuff, pay for you to live somewhere else while your place is repaired (or until you can find a new place) and defend you from any lawsuits that might try to pin the fire on you. All together, this could cost hundreds of thousands of dollars. And you get it all for $5 a month.

You may be surprised and delighted by the long list of bells and whistles your policy has. And truly many of them - like coverage for mold remediation - are very important in certain circumstances.

But we’ll cover the checklist of details that matter later. For now, just expect that a Renters Insurance policy is designed to cover fire, thefts, water, and lawsuits.

Things not to expect from your policy

You may be horrified by the long list of exclusions, jargon-filled conditions, and caveats stacked upon caveats. Many of them are important, and you should take notice of them. Most are very reasonable in actual fact, and are just there to make sure claims payments are fair both to you and to all the people paying premiums to pay for your losses.

We’ll cover the list of gotchas to look out for later.

Right now, just to set expectations, here’s a short list of things your policy will not do:

  • Cover damage to or from your car - that is what car insurance is for

  • Pay your medical bills - that’s what health insurance is for

  • Cover your business, even if you run it from home - that’s what business insurance is for

  • Cover damage from earthquakes, wars, nuclear bombs, floods, and some other types of catastrophes.

  • Cover damage to your stuff arising from simple “accidents” like dropping or losing things. Remember, fire, theft, water and lawsuits are the major things that are covered.

There are situations where renters insurance can be endorsed to cover earthquakes, accidental damage, unregistered vehicles, home businesses, etc - but again, don’t expect a standard policy to do these things.

Your Landlord requires it for the lawsuits part

Yes, they can do that.

Most leases, especially those of professionally managed apartment complexes, have a clause that requires each tenant to purchase somewhere between $100,000 and $500,000 of liability coverage.

This policy covers you though - your stuff and your liability (i.e. against lawsuits), not your landlord.

Why then do landlords require it?

Well, one of the people most likely to sue you is your landlord.

If they think you are liable to damages to your apartment or to the complex, or there is an injury in your place, etc, they would much rather an insurance company with deep pockets pick up the tab than have to go after individual renters. Security deposits may seem like a lot, but they are a drop in the bucket when repairing a kitchen fire.

One hour process to optimize your renters insurance

Signing up for renters insurance is a balance - you want to get the least expensive policy you can get that still works.

There are tons of guides on the internet telling you which company is “best” - many of which carry affiliate links. Go figure.

There is only one true way to know what renters insurer is going to give you the lowest price for the coverage you need.

Get three quotes.

That may sound like a lot of work, but like with most things, a little bit of preparation goes a long way towards a stress free and successful experience.

This will take you 1 hour max. If you want to take notes, use our Renters Insurance Worksheet to keep it all organized in one place.

Determine your input parameters (15 minutes)

Before you go out and get quotes, gather the below five things.

1. Details on where you live

For some (like Goodcover) giving your ZIP is enough to get a fairly accurate quote, but most require the full address upfront.

Most will require that you don’t have certain heating types - like electric space heaters, or stoves that provide your primary heat.

All will require that you have a smoke detector - it’s also the law. You probably also have deadbolts on your doors. Insurers may or may not ask about other theft, water, or fire protection systems - but not always.

Also gather your Landlords’ name (or company name) and email and/or physical address. It is very handy to have these when you are buying a policy, as most landlords require you add them as “Additional Interests”. If you don’t have it, you can give it within a certain window after signing up for insurance, but why wait?

2. A list of things you own over $1,000

If something you own would cost over $1,000 to replace, it is probably something you can list on your policy with special coverage that better protects it.

All renters insurance policies cap the claims insurers need to pay for some things - especially jewelry and fine art, and usually computers. These limitations make it even more important to make sure you list items worth over $1,000.

A policy that doesn’t specifically list these things may be cheaper.

But it is useless.

Not all things are limited though, and not all things can be listed. TVs and couches for instance are covered without a per-item cap - but they also can’t be listed for extra coverage. In general, when you sign up, insurers will let you know the things you can list and give you an opportunity to do so.

We still recommend having a list of things that cost over $1,000 - if not just to double check you’re buying enough coverage overall. Also, if you have receipts or other documentation for items on this list, now is a good time to get them, but it’s not required (and depending on what it is, might really blow up the hour we have to spend here!).

3. How much Contents Coverage you need

People ask all the time how they should calculate this number. You can use our calculator below to get an estimate.

Have a look at the estimate.

If you were to lose everything, would a check for that amount feel like enough? Would it get you back on your feet and replace all your stuff?

If so - go with it. If not, raise it. An extra few thousand of contents coverage is not particularly expensive.

4. How much Liability Coverage you need

There are two important parameters here:

What does your landlord require? This can be found in your lease agreement, or the documents your landlord would have sent around the time you were starting your lease.

Most landlords require between $100k and $500k in coverage.

Honestly, Liability coverage is the cheapest insurance you can buy - so err on the high side. But whatever you do, don’t get less than you are contractually obligated to get.

[INSERT PICTURE OF LEASE w/ this term] #nc

If you have investment or otherwise liquid assets in excess of the limits offered by renters insurance (usually ~500k or $1mil), your renters policy will not sufficiently protect you in the event of a lawsuit. You need to buy Umbrella Liability Coverage. This is outside the scope of this guide - you should talk to an insurance broker, which is currently the only real way to get this coverage.

5. Your claims history

Funny enough, not every insurer asks this. Some simply aren’t interested - they spread the additional risk presented by serial claimants over the rest of the policyholders, raising costs for everyone. Some query a database, hoping for a negative result.

In the end, if you have claims history - it may or may not penalize you. If you do, be prepared to tell insurers:

  • When the claim happened

  • What was it for (i.e. what happened? A fire? A computer theft?)

  • How much you ended up claiming for.

It’s best to be prepared. Whatever you do, don’t hide it - if you do have a claim down the road and the insurer finds out… Not only is it not legal or ethical - it’s not worth it.

You could need miscellaneous other info

It can be hard to predict 100% of what each insurer will ask for - but the above should cover the 80%. The remaining 20% may turn out to be some of the below, depending on your circumstances:

  • Breed of dog you own

  • Social Security Number (DO NOT GIVE IT in California - it is illegal there)

  • Partners Name and personal details, if you live with an unmarried partner. Not all insurers allow them on your policy, some charge for it – it’s a mix. Spouses though are always covered without needing to name them.

Get three quotes with the same parameters (15 - 30 minutes)

If you have done all of the above, the next process will take you either fifteen minutes - tops - if you take the easy way. It can take closer to 30 min if you want to use companies that require you to talk to agents.

Which insurers should I choose?

The baseline Renters Insurance Policy is nearly the same at every insurer - they are all based on the “Insurance Services Office” Homeowners 4 aka “HO4” policy.

However, the prices charged by insurers for apples to apples policies can vary dramatically:

[INSERT CHART OF SOME MAJOR COMPANIES, AND THEIR RATES] #nc

If you are in a hurry (i.e. it’s taken you 20 minutes to get down here and you’d like to wrap it up!), get quotes from online sources. We don’t get commissions from any of these (except Goodcover of course, because that’s us!)

This is not an exhaustive list, but to name a few:

  • Goodcover
  • PolicyGenius
  • Lemonade
  • The Zebra
  • GEICO
  • Progressive

If you have more time, you can enquire with these classics:

  • State Farm
  • Farmers
  • Allstate

Then there are a few companies that are not available to everyone, or available everywhere, but are consistently great for the people they do serve.

  • USAA
  • Amica
  • Erie

Before you compare, cut any that don’t meet these minimum standards

Now that you have 3 quotes, you can quickly triage any that fail to meet these minimum standards of a quality renters insurance policy.

If one of your quotes fails any one of these tests, throw it out. Get a new one if you want, or ask them to correct it - but please, please do not accept it.

Replacement cost coverage

If you got a quote online, there’s a 99% chance that your policy covers your stuff on a “Replacement Cost” basis. This means they will actually pay the costs to replace your stuff, new for old.

Think of this as the retail cost of your stuff, not the craigslist price. If you don’t expect to replace your jeans on craigslist - reject any quote that doesn’t pay for Replacement Cost.

If you didn’t buy online, here’s how to find it in a quote or policy’s Declarations Page:

[SHOW PICTURES FOR STATE FARM AND SOME OTHERS] #nc

If you live with an unmarried partner, and they are not listed as an Insured

[show image] #nc

Any modern insurer should allow you to list your partner, married or not, as a named insured on your policy. They are the co-owners of your stuff, and share the responsibility equally. This is the 21st century.

Don’t settle for your partner being added as an additional interest or additional insured. These are not the same as named insured, despite the similarity of wording, as they do not have any rights over administration of the policy or to “first party” claim payments.

If you are set on going with an insurer that doesn’t allow this, get two policies (one for each of you) before you settle for “additional insured”.

If you have a dog, but the policy excludes liability for Dog Bites

Dog bites are a major source of lawsuits that renters insurers need to deal with, so in order to keep costs manageable and protect the vast majority of their policyholders, almost every insurer limits to some degree the types of dog bite claims they will pay.

For instance, Goodcover will pay dog bite claims, but only if your dog isn’t on the excluded breeds list and doesn’t already have a biting history. Some insurers though exclude dog bite liability all together, or will only give it to you if you declare your dog’s breed and biting history in advance.

But Rottweiler owners need insurance too. If you have a dog, be extra careful when you are getting quotes to make sure your dog bite liability is covered. If you do own a Rottweiler, a court will not look as favorably upon you as it would a chihuahua owner, no matter how sweet your big guy/gal is.

Compare your three quotes using these metrics

Congratulations, you have three quotes!

You may immediately notice some price differences, but before you jump at one, find out are the quotes truly apples to apples?

Hopefully you took notes during the process in [our spreadsheet TK] #nc, or on your own.

Check at least these parameters:

  1. Limits, should be the same, but some differ
  2. Deductibles
  3. Basic Coverage
  4. Advanced Coverages
  5. Annual / Monthly Premiums
  6. Dividend
  7. Customer Experience - Agent, Online, etc

Then decide what works best for you.

At this point, after looking at 3 options that all are more or less apples to apples, it will be up to you to judge what’s right for you.

Pick one and buy it

Once you’ve made a choice – don’t hesitate. Just buy it.

Many people hesitate when buying insurance. Perhaps you’re afraid of being locked into an annual contract. Perhaps you’re worried you are making the wrong choice.

Firstly, although renters insurance is structured as an annual contract, you as a policyholder can cancel anytime and get a prorated refund of anything you pre paid. Paid in full but want to cancel 6 months in? You’ll get half your money back.

Second, if you’ve done all the steps in this guide up to here, you can be confident you’ve done your due diligence and are choosing a policy that’s right for you.

So go for it, get insured.

Practice a little document hygiene that can save you weeks of pain and thousands of dollars

Now that you have insurance, your job is almost over - but not quite.

I understand the relief and desire to just close the tab and go for a walk at this point, but there are a few things left to do that together would take 5 minutes, but could save you weeks of pain and thousands of dollars in the event of a claim

  1. Download your policy and save it somewhere. This is especially true if you are using an agent or a company where you can’t just log in and get your docs at any time.

  2. Send along any receipts or documentation required for adding high value items. The insurer will follow up so it’s ok if you don’t do this right away, but since you are in “insurance work” mode, why not just get it over with.

  3. Take a video of your place, or a bunch of pictures, for a future reference. You don’t have to send it to your insurer. But it will really help in case your place one day looks like this:

[Picture of burnt down building] #nc

How to make a successful claim

The above part of this guide is designed to get you the best renters insurance for you, at the lowest possible price.

The simple math is that 95% of people will never need to touch their policy again before they move, get engaged, etc.

But the 5% or so that will need to make a claim - this section is for you.

What to Expect when making a renters insurance claim, and what not to.

Expect to be fully reimbursed for your loss shortly after you get all the paperwork in order and the investigation is done.

In general, insurance companies pay claims. If you have followed this guide to get your Renters Insurance, so you have high enough limits, coverage for your expensive items, and “Replacement Cost Coverage”, you shouldn’t expect trouble.

Insurance companies have due diligence to do - it not only protects them (if they are a for-profit insurance company) but also protects the other policyholders from fraud - especially in Mutual or Cooperative structures.

You will be asked for documents, proofs, receipts, photos. This is why we suggested you practice good document hygiene right after buying your policy - it makes this part much easier.

But once the company is satisfied that:

  1. The loss occurred the way you said it did.
  2. That loss is covered under your policy.
  3. The amounts they need to pay you are pretty much set.

They will pay you.

Do not expect your insurer to be an emergency responder, concierge, or therapist.

Once when I was working for a huge multinational insurance company I got a call in the middle of the night.

“Help - our boat is sinking!”

One of our policyholders had gotten my number and called me as their boat started to sink in the middle of the ocean. I was just the desk-underwriter of the policy, not a claims or even customer facing person at all.

“Did you call the coast guard?”

“Oh, not yet!”

“Please do, and I’ll make a call at my end to make sure they get the message.”

Claims handlers will do their part if they are called in an emergency, and the best ones are even part therapist, but that’s besides the point.

Insurance companies exist to pay for your losses after they occur, the dust settles, and you know how much you lost. Really they are accountants, not crisis response companies.

You should call your insurer as soon as is practicable after a loss, but not before. Call the emergency services first.

Checklist for making a successful claim

If you do need to make a claim, here is the generic checklist to be mindful of:

  1. Take lots of pictures.

    They are worth 1000 words and insurance companies love them.

    Be sure to do this before you fix anything, clean anything up, or move stuff. If the situation is dangerous obviously don’t get hurt, but for pictures, the earlier the better, as they are usually the best proof of the cause of a loss, and thus getting you paid.

  2. Keep every document, receipt, and communication you get, from anyone.

    Invoices, receipts, text messages, emails, notes, police report numbers, the list goes on. Keep everything.

  3. Write out a statement of what happened before you notify your insurer.

    It’s helpful to write out your own statement of what happened before you even get in contact with your insurer, answering:

    • Who was involved, including potential witnesses
    • What happened exactly
    • What was damaged or stolen - even a rough inventory speeds things up dramatically.
    • Where did it happen
    • When did it happen

    Talking with claims handlers can be a bit intimidating as they often want to know really specific stuff, and I certainly know I’ve gotten flustered and had to restart my story a few times. Writing it out in advance helps.

  4. For specific types of claims:

    • If something was stolen, damaged by thieves, or vandalized:

      Call the police first and get a police report number. Every insurer will want to see the report when #nc

    • If you have been sued:

      Do not respond to a demand letter - tell your insurance about it first. Keep all correspondence as per 3 above and notify your insurer immediately. They will take over the defense, and handle corresponding with the lawyer representing whomever is suing you.

  5. Once you have notified your insurer of your claim, get the follow up details

Before you hang up or close the tab, make sure you know your claim number, the name of your contact, how to contact them (email, phone, etc), and when to expect their next communication.

This puts the power in your hands - you can constantly bug them if you don’t hear anything, rather than having to wait for them to contact you.

  1. Don’t be afraid to follow up

If you haven’t heard from your insurer in a while, it is totally ok to follow up. Claims adjusters can get busy, or they could be waiting for some bit of info that you actually have access to, or to get in contact with a witness who you know is currently camping, or whatever.

Most of the time delays are less neglect and more just misunderstanding, so feel free to find out what’s going on.

How to contest a claim

If you followed the above checklist and eventually got paid, congratulations! You can close the file on it now. I wouldn’t throw away any documents or correspondence for a little while though just to be safe.

However, if after you’ve done all of the above and your insurer has declined your claim, it’s time to think about how to contest that.

But before you do, consider one thing:

Could your insurance company be right?

Often declined, underpaid, or disappointing claims come down to a mismatch of expectations about what is and isn’t covered.

That said - they should be able to explain their decision to you, and you have a right to that explanation. In fact, you have a right have them keep explaining it to you until you get it.

If you’ve done the work to see whether they are right, and it doesn’t seem like they are - time to contest it.

Fighting an insurance company may feel like a David - and - Goliath situation, but with the below checklist, you can do it!

Process for contesting a claim

  1. Escallate internally

    First, ask your claims handler to escallate to their manager. Unleash your inner Karen. This is totally your right - your insurance company should be able to explain the claim outcome to you, and if they can’t, a manager needs to get involved.

  2. Read your policy

    Claims handlers will let you know what part of the policy applies or does not apply, or what exclusions apply. Have a read of those sections yourself. Do you see where they are coming from? Can you see other parts of the policy you think should apply? Quote that back to your contact - nothing a claims handler loves more than knowing a policyholder has actually read it!

  3. Still doesn’t make sense? Threaten, in writing to make a “Department of Insurance Complaint”

    A valid “DOI Complaint” is every insurer's nightmare. It involves government regulators scrutinizing their decisions, making document requests, and publishing all their findings on the internet.

    There is an entire separate disputes resolution process that gets kicked into high gear as soon as they see those words. You will definitely have their attention.

    Now, many DOI complaints are started but come to nothing, because the above Claims Success checklist, and points 1 and 2 above, were not followed.

    But if you’ve got this far, it’s probable you have a valid complaint here, and the State Government will be on your side.

  4. If your claim still hasn’t been resolved, make that Complaint.

    Every State has its own process, but after a quick look at your State’s Insurance Department website it should be evident.

    Here’s where to find California’s process: TK WEBSITE #nc

  5. Follow through

    At this point, the State’s complaint procedure will take over, and dealing with each State’s process is out of scope for this guide. Hopefully you didn’t need to get this far, but if you have, stick with it - big companies win when individuals don’t use or get frustrated by the legal remedies they have. You can do it!

How to cancel your policy

The above parts of this guide showed you how to get a great policy, and how to make a successful claim should you need to.

But all good things must come to an end. If you move, get fed up with your insurer, your needs change, or you hear of a better deal, you’ll need to cancel your policy.

This part of the guide will be super quick.

General facts about cancellation

  • You can cancel any time - your policy may be an annual contract, but the law protects your right to cancel it.

  • You will get a prorated return of premium. This means that if you paid a year or month in advance, the balance corresponding to the balance of time on your policy will be refunded to you. Pay annually and cancel 6 months in? You’ll get half of it back. Warning: some states allow insurers to charge you a fee to cancel your policy. This is a bummer, but it is usually very little.

  • You can cancel a policy effective any date in the future, or immediately.

  • You can, on very rare occasions, have a policy cancelled in the past, aka a “backdated” cancellation. Insurers have various rules for allowing this (usually no claims, evidence that you no longer had the exposure at the date you want - like if you moved, and approval from a manager).

How to Cancel if you have an online insurance product

Cancelling a policy from a company like Goodcover or Lemonade is easy. Just log on and hit the cancel button. Presto, it’s done.

How to Cancel if you use a legacy insurer, either via an agent or online

Usually looking for a way to cancel your policy online in these cases is a futile exercise. In these cases, the best thing to do is give them a call and tell them you want to cancel. There will probably be the usual “are you sure” speech, but they will do it.

Be sure to get confirmation from whomever you are speaking to of the date of cancellation, how much you can expect as a refund, and when you should expect it.

If you don’t get your refund by that time, call them back and follow up - until they do, which sadly can take a while.

If all else fails and you need to mail, email, or fax (yes, fax!) your insurer to cancel your policy

If you need to send a letter to your insurer to get your policy cancelled - which some still require - you can use the below format.

This is the template Goodcover uses to request cancellations on behalf of our Members to help ensure a seamless transition from their old carrier. You can find the parts with an asterisk***** listed on your policy's Declarations page.

DATE

{INSURANCE COMPANY NAME}*

{COMPANY ADDRESS}*

Re: Cancellation of Renters Policy

Insured: {YOUR NAME}*

Policy Number: {OLD POLICY NUMBER}*

Dear Sir or Madam,

Please allow this letter to constitute my formal request for cancellation of the above-captioned policy. This cancellation will be effective as of {DATE}.

[Optional] As of this date I am covered through {OTHER COMPANY}, policy number {OTHER POLICY NUMBER}.

Please immediately return any unused premium to me at my address listed below. Please be advised that I no longer authorize your company to directly withdraw any future premiums from any of my accounts.

I would appreciate receiving written confirmation of this cancellation within 30 days. Please do not hesitate to contact me with any questions. I look forward to your prompt attention to this matter.

Sincerely,

{YOUR NAME}*

{YOUR ADDRESS} (can be your new one, if you’re moving)

{YOUR PHONE}

{YOUR EMAIL}

That will get the job done.

Goodcover is a modern, fair, cooperative renters insurance starting at $5/mo.

Our mission is to build a community of Members enjoying financial peace of mind at the lowest possible cost. Get your instant quote and become a Member today; if you’re switching we’ll do the work for you and you’ll get a refund of anything you’ve prepaid.

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© 2022 Goodcover Insurance Solutions, LLC. Licensed in AZ #3001513665, CA #0M20813, NV #3720512, TX #2733601

Goodcover Insurance Solutions, LLC (Goodcover) is an insurance agency licensed to sell property-casualty insurance products. Goodcover will receive compensation from insurance carrier partners for such sales. Refer to the Legal Notices section for additional information.

Issuance of coverage is subject to underwriting review and approval. Coverage may not be available in all states. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of the insurance carrier listed in your Policy Declarations. Coverage scenarios are hypothetical and shown for illustrative purposes only. Coverage is dependent on the actual facts and circumstances giving rise to a claim.