Tenant's insurance, also known as renter's insurance, is insurance coverage that people renting a house or apartment buy to protect their belongings in case of loss or damage from negligent destruction, theft or natural disasters, reports Nolo. Renter's insurance also covers medical and legal costs when guests injure themselves. The cost of renter's insurance depends on how insurance companies assess the reimbursement value of personal property, the deductible amount, the state where tenants live and extra options in the policy.
When purchasing renter's insurance, tenants can make an inventory of their possessions and insure all of them or choose to insure only valuable items such as computers, entertainment systems and costly jewelry, points out Nolo. Although landlords may cover damage to the building itself due to natural disasters, tenants may need renter's insurance to cover damage that their negligence causes, such as fire, bathroom flooding or weather entering the interior through a broken window. Renter's insurance is important not only for guest injuries from slipping and falling but also from pet bites.
Renter's insurance policies cover personal possessions at cash value, which assesses an item's worth on the open market, or replacement value, which calculates the amount tenants would spend to replace an item, explains Nolo. Because replacement value policies pay out more, they are typically more expensive. If tenants are not concerned about replacing their personal property but only want to cover property damage and guest liability, they can choose less expensive, high-deductible policies.