What is renters insurance?

Quick question: Do you have renters insurance? About 55% of all renters do, according to SafeHome.org.

Whether you live in a dorm, home, apartment or on base or post, you likely have personal property that you want to protect.

"Most renters can protect their belongings for about the cost of a pizza per month," says CERTIFIED FINANCIAL PLANNER™ professional and USAA advice director Sean Scaturro.

Renters insurance can help protect your personal property and finances.

What if someone gets hurt at your home or their property is damaged? You could be liable, meaning legally responsible. But renters insurance can help you cover the costs.

It can also help pay for things like a hotel or even food if you have to leave your home because of a covered loss like fire or flooding.

Why do you need renters insurance?

Renters insurance is an affordable way to help you protect your stuff and your financial well-being. USAA Renters policies can cost as little as $10 per month.‍ ‍ ^{See note 1}

As a whole, most Americans don't have an emergency fund and struggle to pay for unexpected expenses. According to the Insurance Information Institute, 45% of renters spend a third of their income on just rent and utilities.

What if your belongings were stolen? How about if a guest tripped and injured themself at your home? Or, say a pipe burst, flooding your apartment and causing you to stay in a hotel while repairs were made?

Without appropriate insurance, you may have to pay more out of pocket to repair or replace your stuff. You might also be liable for someone's medical bills or have to pay a large hotel bill.

What does most renters insurance cover?

• Personal property. Renters insurance covers things like furniture, clothes, appliances and electronics.

• Your stuff, even when it's not at your house. If your laptop's stolen from your car while you're out or on vacation, it's covered. Renters insurance covers your property wherever it is. USAA Renters Insurance offers worldwide coverage‍ ‍ ^{See note 2} for personal property during a deployment or PCS, even if your items are in storage.‍ ‍ ^{See note 3}

• Liability and medical bills. Depending on your policy, you may have coverage for bodily injuries to non-residents. For example, if someone is hurt at your home from a fall or a dog bite, renters insurance may help cover doctor's bills.
  
  If you need additional liability coverage, consider supplementing your renters insurance with an umbrella policy. An umbrella policy can help protect your financial standing in the event you're sued.

• Temporary housing. If you can't stay at your rental due to a covered loss, you may need a temporary place to stay. Costs like hotel bills and food can qualify in this situation.

• Military equipment. Depending on your insurance policy, your equipment may be covered.
  
  USAA Renters Insurance will cover military uniforms and equipment that's damaged or stolen while you're on active or active reserve duty.‍ ‍ ^{See note 4}

Replacement cost coverage vs. actual cash value

Let's say you file a claim for a stolen computer you bought several years ago. A new, comparable computer costs $2,000.

After depreciation, your computer's worth $1,000.

Replacement cost coverage would cover the cost of the new computer, while actual cash value would cover the depreciated amount.

USAA renters insurance policies provide replacement cost coverage.‍ ‍ ^{See note 5}

What are some typical exceptions?

• Top-dollar treasures. Collectibles, rare artwork or anything else that appraises at a high price will need special coverage added to an existing policy. These additional coverages are called endorsements or riders, and for something that would be impossible to replace, it's worth the extra expense.

• Stuff you damaged. If it wasn't an accident, it's your responsibility. If you threw a wild party that resulted in some of your things breaking or going missing, that's on you.
  
  We can probably all relate to a broken phone or laptop screen. While your standard renters policies typically do not cover accidental damage that you caused, you can protect your elect‍ ‍ronics from things like drops or spills.
  
  The USAA Technology Coverage Endorsement‍ ‍ ^{See note 6} can be added to your renters coverage to add extra protection for those everyday use electronic items.    

• Undocumented items. What do you own and what is it worth? Make sure you keep all relevant paperwork and receipts to show how much an item is worth. If you ever have to file a claim, you can back it up with trustworthy info.

Does renters insurance cover floods?

It depends. Insurance companies each have a different baseline insurance policy, so you have to check to see what comes standard. Sometimes flood coverage has to be added as an endorsement for an extra cost.

USAA's one of the few companies that include flood damage coverage in our standard renters insurance.

Read the fine print.

When you're shopping for your renters insurance policy, be sure to read the terms and conditions or talk to a representative. You'll want to know if there are any coverage gaps or limitations before you buy your policy.