Solved! What Is Renters Liability Insurance, and Do I Need It?

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Q: I’m looking at buying a renters insurance policy, but I’m a little confused about the different types and what exactly they cover. What is renters liability insurance? Do I need to carry it, and is it required? Also, is it very expensive? 

A: Renters liability insurance is a type of coverage found in a standard renters insurance policy. It can cover legal fees, damages, or other costs incurred if the renter is found liable for an event that caused injury to another person or damage to someone else’s property. For instance, if the renter’s dog bit another person, renters liability insurance would likely cover any legal fees for the renter and medical bills for the bite victim. Renters liability coverage also tends to be very affordable. This guide will cover in more detail what renters liability insurance is and how it works.

Renters liability insurance is a form of personal liability coverage typically included in renters insurance policies.

Renters liability insurance is a type of coverage found in most standard renters insurance policies. But what is renters insurance, and what does renters insurance cover? Renters insurance typically has the following components: coverage for personal property, coverage for liability, and coverage for additional living expenses following a covered peril.

Renters liability insurance is a type of coverage that can cover repair costs for property damage, the cost of injuries to others, and legal defenses up to the limits of the policy. For example, if the renter caused damage to a neighbor’s property, liability coverage would typically help pay for repair or replacement of the damaged items.

The liability part of a renters policy can also contain something called no-fault medical coverage, meaning that if someone is injured in the renter’s home, the renter can submit that person’s medical bills right to the insurance company, according to the Insurance Information Institute (III).

Renters liability insurance covers tenants in the event they damage property or are held legally responsible for another person’s injury on the premises.

The main point of renters liability coverage is that it protects the renter if they are found to be legally responsible for an event that ended up causing injury or damage to another person or their property. In addition to the dog bite example above, some situations where renters liability coverage would kick in include the renter’s dog causing damage to someone else’s property, or the renter’s child ruining an expensive rug or heirloom vase in someone else’s home.

Basically, renters liability insurance helps cover many events that might cause harm to someone in a way that was accidental. However, there are events that are not typically covered by renters liability insurance, which we cover in more detail below.

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This type of coverage can help pay legal fees, medical bills, and repair costs stemming from covered events.

When someone is responsible for damage to another person, there can be many costs associated with the damage. The most direct cost that people think of is the medical bills. If a person slipped and fell on the renter’s property or a dog bite caused extensive injury, then renters liability insurance would likely help with those bills.

Another point to remember is that someone could seek damages in the form of a lawsuit. Renters liability insurance would help pay legal costs and court-ordered payouts the person held responsible has to pay, up to the policy limits, which are typically $100,000 for a standard renters insurance policy.

The liability part of a rental insurance policy can even cover any repair costs. For instance, if a renter accidentally causes a fire in the kitchen or the renter’s child accidentally throws a football through the neighbor’s window, liability insurance would likely pay to cover the cost of repairing the kitchen or replacing the neighbor’s broken window.

Coverage often extends to damage or harm caused by tenants’ pets, too.

As mentioned above, a useful part of renters liability insurance is that it’s known for covering damage from pets in some instances. For example, if a dog bit someone outside the family, the resulting injuries would likely be covered.

Although the liability insurance portion of a renters policy can cover damages or harm caused by a pet, many policies will not cover a dog with a history of biting or even certain breeds that are perceived to be aggressive. But even with the best control and training, animals can be unpredictable, so the liability portion of a renter’s insurance policy is particularly valuable for renters who own pets (provided they aren’t excluded by the insurance company.

However, renters liability insurance does not cover certain situations such as car accidents, acts of vandalism, or property damage resulting from negligence.

It’s important to read a renters insurance policy in full, as these policies do not universally cover all events. One common event that is not covered is damage resulting from a car accident. This would be covered under the purview of an auto insurance policy, even if the accident happened on the renter’s premises.

Sometimes a renters insurance policy will specify certain events that are not covered; vandalism is one of them. Renters insurance policies may not cover a claim in cases of extreme negligence. For example, if a renter launched a firework at a neighboring house and caused damage, it’s likely the act wouldn’t be covered under renters liability insurance.

Home-based businesses are also not covered by renters liability insurance—they require a separate liability endorsement.

Another area that renters liability insurance does not typically cover is losses to a home-based business. A standard renters insurance policy would only provide coverage for personal property, not anything used for business purposes.

To get coverage for a home-based business, many insurance companies offer a separate liability endorsement. This is a separate coverage that can be added on (in some cases) to a renters insurance policy to provide liability coverage for some types of businesses.

Renters can also check with the insurance company as to whether any separate policies should be added that can provide coverage for liability and items used in the home business. According to the III, these types of policies may extend coverage to events like loss of papers and records, loss of income from the business after a covered peril, or additional costs like operating out of another location after a disaster. Liability coverage may also be extended through these policies, such as protection against damages caused by the products or services the renter offers as part of their home business.

Even with liability coverage as part of your renters insurance policy, you may need to pay damages out of pocket if an injury occurs in your building’s common areas.

Whether renters are covered can also depend on where the event took place. Many renters insurance policies only offer coverage in the event that something happened in the actual living space of the renter. If the accident occurs in the building’s common area, that can mean the renters insurance company could refuse to pay it.

As an example, if a child got away from their parents in the apartment building’s lobby and drew all over the walls, the renters insurance policy may not cover this event because it happened while the child was out in a common area and away from the direct living space of the renter.

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Tenants are not legally required to obtain renters insurance—but your landlord might insist on it.

While it’s not always required that a renter carry renters insurance, a landlord may be legally allowed to require it of renters. Some states even have laws on the books that allow landlords to require tenants to carry renters insurance.

From the landlord’s perspective, this requirement can make sense. Often a landlord’s apartment insurance policy will only cover the building itself. When it comes to liability issues where the tenant is found responsible, requiring renters insurance can protect the landlord from people attempting to seek damages against the owner of the property. With renters having policies in place to handle liability issues, that helps the landlord stay legally safe.

Liability coverage amount—and insurance costs—will be determined by your coverage limits. Umbrella liability policies can be purchased to increase limits if you need more coverage.

Those new to renting may wonder, “How much is renters insurance?” Renters insurance is typically an affordable type of policy. For instance, it’s common to see many policies cost between $8 and $22 per month, though it can be lower. These premiums are for standard policies that offer typical coverage of $100,000 for most renters insurance policies.

However, premiums can vary based on the policy’s coverage limits. Experts typically recommend people buy at least $300,000 in liability coverage, which can directly affect monthly premiums. It’s important to shop around to see which renters policy comes with the highest coverage limits and the best premiums for those limits. Renters can also purchase umbrella or excess liability policies that increase the coverage limits. How much does renters insurance cost with an umbrella policy? Umbrella policies in addition to renters insurance cost about $200 to $350 per year on average for an extra $1 million in liability coverage, making it relatively affordable for renters who determine that the extra coverage is worth the increased monthly premium cost.

It can make sense to get this umbrella coverage for a wide variety of reasons. Some people just like the peace of mind, as legal and medical fees can compound fairly quickly. If someone entertains often or has many people over frequently, it can help knowing that the protection is in place in case someone injures themselves at a party the renter is hosting. For a renter who owns a pet and lives in a very populated area, there’s a higher risk for the pet causing injury or damage to other people or their property. Renters who live in a high-income area may want higher liability limits where damage to property can mean greater expense.

Consider switching renters insurance providers to raise your liability limits and expand coverage.

Depending on the insurance company, a renter may need to switch insurance providers to get the most expanded coverage and higher liability limits. Different insurance companies can offer different coverage limits and types of policies for varying costs, and renters might find that the best renters insurance policy from one company better suits their needs and budget than a competing company.

It can pay to shop around to find the most comprehensive coverage and the highest limits. Shopping around can also help the renter find the lowest premiums and the highest coverage possible for cheap renters insurance. Renters should shop around with several insurance providers, such as State Farm renters insurance or Liberty Mutual renters insurance. They might also look into smaller insurance companies for coverage, which can sometimes offer the cheapest renters insurance. To avoid doing business with an unreliable carrier, it’s important to check with the Better Business Bureau and consumer advocacy groups for smaller insurance companies that may not have the reputation of larger carriers.