What Does Renter’s Insurance Not Cover?

Renter’s insurance is the best way to protect tenants against property loss and more. For instance, renter’s insurance can provide reimbursement to cover stolen items after a break-in. These policies can pay for a hotel if there was a fire and the unit needs repairing. They can also cover the tenant if a visitor trips, falls, and sustains an injury inside the unit. Each year, these policies help tenants protect themselves and recover from the unthinkable. But what doesn’t renter’s insurance cover?

What is Renter’s Insurance?

Renter’s insurance is insurance for tenants. Renter’s insurance is designed to protect a tenant’s belongings from an unexpected event. This could include a break-in or an injury during a visit to a tenant’s apartment. These policies, like all insurance, are designed to lessen risk and help tenants recoup losses in the event of disasters like an apartment fire.

It is for this reason renter’s insurance is at the very least highly recommended by many property owners. Some landlords even stipulate in their lease that each tenant obtain this insurance. California law allows property owners to do this. Landlords can add a requirement for renter’s insurance into the lease to protect themselves from a lawsuit should an injury happen in a tenant’s unit. Tenant insurance can even protect the landlord from rent disruption should a tenant lose their belongings in a disaster.

It's important that the tenant understands the landlord’s property policy does not protect their personal belongings inside their home. Instead, renter’s insurance reimburses for the replacement costs of damaged or stolen property. It could even extend to transportation, such as having your car broken into while it’s parked in the apartment lot. However, policies that cover cars are not always the default or most common renter’s insurance policies.

What Does Renter’s Insurance Cover?

Renter’s insurance will generally cover damage caused by these types of adverse events:

Explosion
Fire
Hail
Lightening
Smoke
Snow or ice
Theft
Vandalism
Wind

For renters, it’s important to understand what their property – that is, the sum total of their possessions – is worth. That helps them choose the correct amount of insurance coverage. If the renter has special equipment, such as expensive guitars, lots of computers or 3-D printers, or other high-value items, it might be worth it to take out a separate policy on these items.

Renter’s insurance is generally broken into four categories:

Personal property coverage to reimburse the tenant for loss of the things they own. This coverage can kick in after vandalism, weather damage, explosions, and fire, or even rioting. The insurance payout can replace home décor, clothing, or even game consoles and TVs. The most common claims in this area are for wind or fire damage or theft.
Personal liability coverage can cover the tenant if they are sued for damages after an injury at their home (rental unit). This could include damage that a pet inflicts on a visitor, potentially, or if someone slips and breaks an arm at a party. Liability can cover court judgments and legal expenses up to the policy cap.
Medical payments to others goes arm-in-arm with personal liability if someone is injured. This clause stipulates payment up to the policy cap of medical bills for the injured party.
Loss of use clauses cover those additional living expenses if the apartment becomes unlivable. This could include payment for temporary housing, meals, and more. Note that this policy clause only kicks in if the rental unit is uninhabitable as a result of an adverse event (see above) covered in the policy.

Each renter’s insurance policy has a cap on the payouts for these categories. Like health, car, or property insurance, there is a set deductible that must be paid before the insurance policy will pay out.

Some policies offer specialized coverage for credit card theft or check forgery. Some policies reimburse for the cost of food replacement if the power is out for an extended time. However, like all insurance policies, there is a list of situations where renter’s insurance simply will not apply.

What Does Renter’s Insurance Not Cover?

Some of the natural disasters that happen frequently in California are not typically covered under renter’s insurance policies. This includes:

Bedbug, flea, or rodent infestations.
Damage from flooding. Renters worried about flooding can take out a separate flood insurance policy to cover their personal property.
Water damage from anything other than a burst pipe, a sprinkler system failure, or a damaged roof. Sump pump failures or sewer backups are not covered under basic policies, but add-on coverage can cover this.
Mold damage.
Theft or damage to your car.
Business injuries. For example, if you do business out of your home and a customer comes by, slips, falls, and sues, the renter’s insurance policy will not pay. However, there are add-on coverage clauses for business owners that will cover these instances.
Earthquake damage. This is a problem in California, of course. In our state, the California Earthquake Authority is a non-profit organization that offers earthquake insurance to tenants. In some cases, even volcano eruptions are covered in these policies.
“Acts of God” such as a hurricane, sinkhole, or landslide.
Coverage of particularly expensive items, such as high-end art collections, for example.
Liability caused by certain dog breeds.
A roommate’s property, unless that person is listed on the policy.

Tenants can add specific policies based on the peril they’re worried about.

How to Add a Lease Clause Requiring Insurance for Tenants

Renter’s insurance for tenants is an important risk mitigation tool. But encouraging your tenants to add renter’s insurance isn’t enough. A verbal agreement in this cause can only lead to miscommunication. Instead, you should add a clause requiring tenant insurance into your lease agreement. This should include:

The names of the insured parties.
The type of policy (liability and personal property).
The amount of the policy limits.
The landlord should be listed as an additional insured so you are notified of policy cancellations.
Clearly defined penalties if the policy is canceled.
The requirement to be notified once the policy is obtained and as it is maintained.

Risk mitigation is one key area where Tenant Planet can help landlords with the business of property ownership. Our ongoing property management service starts at just $79 a month. Talk with our team today about how we can help you cut costs—and risk—by handling your tenant properties.