Is Renters Insurance Worth It? Key Coverage, Costs, and Landlord Requirements Explained

While no state law mandates it, renters insurance is a critical safeguard for your finances and personal property. Coverage is surprisingly affordable, averaging just $23 per month, and protects against three primary risks: loss of personal belongings, liability claims, and additional living expenses if your rental becomes uninhabitable. For the nearly one-third of renters whose landlords require a policy, understanding its value is essential.

What Does Renters Insurance Actually Cover?

A standard renters insurance policy provides three core types of protection. First, personal property coverage helps pay to replace or repair your belongings—like furniture, electronics, and clothing—if they are stolen or damaged by covered events such as fire, theft, or vandalism. It's important to note that your landlord’s insurance only covers the building structure, not your personal possessions inside.

Second, liability protection is crucial. If a guest is injured in your apartment or you accidentally cause damage to someone else's property, this coverage can help pay for associated legal fees, medical bills, or damages, typically up to $100,000 or more. This protection can even extend to incidents that occur off-premises.

Third, loss of use coverage, also known as additional living expenses (ALE), can be a lifesaver. If a covered event like a fire makes your rental temporarily uninhabitable, this part of your policy helps pay for hotel stays, meals, and other necessary costs while your home is being repaired.

How Much Does Renters Insurance Cost?

One of the most compelling reasons to get renters insurance is its affordability. According to 2025 data from ValuePenguin, the average annual premium in the U.S. is $276, or about $23 per month. The actual cost will vary based on your location, the amount of coverage you select, and your deductible. When you consider the potential cost of replacing all your belongings out-of-pocket, the monthly premium is a manageable expense for significant financial protection.

Is Renters Insurance Required by Landlords?

Although not legally required, many landlords and property management companies include a clause in the lease agreement mandating renters insurance. A 2024 survey found that while 48% of renters have a policy, only 32% are required to have one by their landlord. Landlords often require it to reduce their own liability risks and prevent disputes over property damage. If it is required, you will typically need to provide proof of coverage, often a declarations page, before moving in or renewing your lease.

How to Decide if You Need a Policy

To determine if renters insurance is worthwhile for you, start by conducting a home inventory. List all your possessions and estimate their total replacement value. You may be surprised at how quickly the value of everyday items adds up. For most renters, the combination of affordable premiums and robust protection against unforeseen events makes it a prudent investment.

Ultimately, renters insurance offers peace of mind by protecting your finances from the high costs of replacing belongings, facing a lawsuit, or finding temporary housing. While the decision is personal, the low cost and broad coverage make it a smart choice for nearly every renter.