Does Renters Insurance Cover Damage to Property?

Accidents happen. Sometimes those accidents are minor and sometimes they result in a serious case of property damage. Property damage can be a confusing topic for renters. Your renters insurance policy covers you from some forms of property damage, but it won’t have your back for others. Let’s break down what you need to know.

Renters insurance only covers damage to the policyholder’s personal property and damage they accidentally cause to someone else’s property, including a house or belongings. To be covered, the property damage must have been caused by a covered peril.

Since renters don’t own the unit they live in, renters insurance doesn’t cover any damage to the structural property of the rental unit the policyholder is living in. But it can cover damage they accidentally cause to another home or someone else’s belongings. Let’s take a look at the two types of coverage included in renters insurance that covers property damage.

The first form of coverage included in renters insurance is protection for your personal property. This covers many of your belongings like furniture, clothes, electronics and jewelry. So if any of these pieces of property were damaged by a covered peril, such as a hurricane destroying your rental property’s structure and causing water damage to your belongings, your renters insurance would reimburse you for the damaged items.

Your policy comes with either replacement cost coverage or actual cash value coverage. Replacement cost coverage is more straightforward, reimbursing you the exact dollar amount you paid for the damaged item. While actual cash value takes depreciation into account, reimbursing you what the item would likely be worth on the market.

So a couch that was destroyed by fire would get different pay outs depending on which type of coverage you have. If the couch was purchased for $2,000 five years ago, you’d still get reimbursed $2,000 with replacement cost coverage. But you may only get $1,000 from actual cash value if they determine the lifespan of a couch is 10 years.

Since replacement cost coverage nearly always pays more than actual cash value coverage, it also increases your premiums.

The other portion of your policy that protects against property damage is your liability coverage. It can help cover damage you cause to someone else’s personal property or the structural property they live in. But, like covered perils, the damage had to be accidental and unexpected.

For instance, if you’re doing yard work and cutting a tree down, misreading the cut and causing the tree to topple on your neighbor’s roof, the personal liability insurance in your renters policy could help pay for the damages you caused.

And if that tree damage sunk in part of the roof, causing damage to items the homeowner stores in the attic, those could be covered as well.

Renters insurance doesn’t cover any intentional damage or damage caused by wear and tear in the unit you’re living in, but your policy’s liability coverage may be able to pay for damage that was caused by you or someone you invited over if it was sudden and unexpected. It can also help to pay for property damage you accidentally cause to another rental property.

So if you throw a party that gets out of control and either you or your guests put a hole in the wall, ruin the carpet or floors by spilling a beverage or something to that nature, you won’t be covered. You’d have to pay for those damages yourself.

But if you accidentally start a kitchen fire that winds up destroying the walls and floors, your policy’s liability coverage could pay to repair the damages. If it doesn’t, your landlord’s insurance policy may. But this is why many landlords require their tenants to purchase renters insurance, because a landlord policy may exclude coverage for tenant damage.

If your landlord keeps belongings on the premises that are used to maintain the property, or they furnish the rental unit for you, coverage for those items may be within a grey area of both your renters insurance policy and your landlord’s insurance policy.

Some renters policies may cover the damage if it was accidental, but other policies may exclude coverage altogether because they deem the landlord to be responsible to protect those items. If you’re living in one of the aforementioned situations, it’s best to check with your renters insurance policy to figure out exactly what is and isn’t covered by your policy.

Accidental damage is typically covered under the liability portion of your renters insurance policy, but only if the damage occurred suddenly and accidentally. Your policy won’t cover intentional damage or damage that occurred over a prolonged period of time.

So an accidental kitchen fire or instance or a water-related incident that damages your landlord’s property may be covered by your renters insurance policy. You may also be covered by your policy if someone you invited over was the culprit of the accidental damage. It’s always best to speak with your insurance agent to figure out what exactly is and isn’t covered by your policy.