Renters insurance: Tips for tenants

Many are aware of homeowners insurance which protects a house in case of disaster or damage, but renters may not be aware that they can also purchase coverage. Renters insurance generally does not protect the building itself, since that is the landlord's responsibility, but insures the tenant's possessions.

According to the Insurance Information Institute, policies commonly cover living expenses if a fire or similar danger forces tenants out of their apartments. While coverage may have limits, the difference between normal living expenses and emergency living expenses is typically included.

Policies provide either the cash value of lost possessions, which subtracts depreciation costs from the purchase price, or the replacement cost, which provides policyholders with the amount needed to buy new, equivalent possessions.

Renters insurance policies typically provide coverage in case of environmental effects such as fire, smoke, lightning, water or wind damage. Theft, vandalism and explosions are also typically covered, according to the III.

Renters may be wise to consult their landlord or rental property manager first to be certain they are not purchasing overlapping coverage. Some policies held by building owners or operators may cover tenants as well.