Choosing the right renters insurance policy takes more than picking the cheapest monthly premium. Coverage limits, exclusions, deductibles and claims experience all affect what you actually get when something goes wrong. Lemonade renters insurance starts at $5/month, is 30% more affordable than the typical renters policy and is built to be transparent about all of it. Here are eight steps to evaluate any renters insurance policy before you sign.
Key Takeaways
- Review policy exclusions and consider additional coverage for high-value items
- Understand the difference between actual cash value and replacement cost coverage
- Calculate the right amount of personal liability coverage for your situation
1. Calculate Your Personal Property Coverage Needs
Start by creating a home inventory of everything you own. Walk through each room and add up the replacement cost of your belongings, including:
- Furniture and appliances
- Electronics and devices
- Clothing and accessories
- Valuable personal items and gear
Most renters underestimate how much their possessions are worth. A basic apartment might contain $20,000 to $30,000 worth of belongings, and a fully furnished home could reach $50,000 or more. Document valuable items with photos and receipts so you have a baseline for coverage and a record if you ever file a claim. With Lemonade, you can get a renters insurance quote in as little as 90 seconds in the app, and join more than 3 million active customers who trust Lemonade to protect what matters most to them.
How much personal property coverage do most renters need? Most renters do well starting at $20,000 to $30,000 in personal property coverage, but the right amount of coverage depends entirely on the value of your belongings. A home inventory is the only way to know for sure. Get a Lemonade quote to see what coverage makes sense for your situation.
2. Choose Between Actual Cash Value and Replacement Cost Coverage
This decision significantly affects your claim payouts after a covered loss. Here's how the two types of coverage compare:
- Replacement cost coverage pays to replace damaged or stolen items with new equivalents of similar quality, with no deduction for depreciation
- Actual cash value factors in depreciation, so you receive what the item was worth at the time of the loss, not what it costs to replace it today
For example, if your three-year-old laptop is stolen, replacement cost coverage might pay $800 for a new equivalent model. Actual cash value coverage might only pay $400 after depreciation is applied.
Replacement cost coverage typically costs more than actual cash value, but provides substantially better property insurance protection. Lemonade pays claims at replacement cost coverage by default, meaning no depreciation deductions and no surprises when you need to replace something. Half of Lemonade claims are handled instantly through the app.
Is replacement cost coverage worth the higher premium? For most renters, yes. The difference in renters insurance cost is usually small relative to the gap in payout, especially for electronics and furniture that depreciate quickly.
3. Review Policy Exclusions and Limitations
Every renters insurance policy covers specific perils and sets sublimits on certain categories of personal items. Knowing what your policy covers and what it excludes before you sign is how you avoid a denied claim after a covered event.
Common policy exclusions
- Flood damage, which typically requires a separate policy through the National Flood Insurance Program
- Earthquake damage, unless added as an endorsement
- Intentional damage
- Wear and tear
- Windstorms in some coastal areas, depending on your insurer and state
Common sublimits to check
- Jewelry: Often capped at $1,000 to $2,500 total
- Electronics: May have per-item limits of $2,000 to $5,000
- Cash: Usually limited to $200 to $500
- Business equipment: Often excluded entirely from standard property insurance
If you own valuable items that exceed these policy limits, additional coverage through a scheduled endorsement is worth considering. Lemonade's Extra Coverage lets you schedule individual items over $1,500 for their full replacement cost value. Get a Lemonade quote and add Extra Coverage for the items that matter most.
4. Determine Appropriate Personal Liability Coverage
Personal liability protection covers you if someone is injured in your rental property or if you accidentally cause property damage to someone else. Standard renters insurance policies typically offer between $100,000 and $500,000 in liability protection, and most extend that coverage to family members living in the same household.
When deciding how much to carry, think about:
- Whether your landlord's policy requires a minimum amount of coverage
- Your assets and income, since higher earning potential means more exposure in a lawsuit
- Whether you have pets, which can create additional liability risk including dog bites
- How often you host guests or social gatherings
If someone slips and falls in your home and files a claim for medical expenses, your liability coverage handles the medical bills rather than you paying out of pocket. For smaller guest injuries, medical payments to others coverage typically handles expenses up to $5,000 quickly without a formal liability claim. Personal liability coverage steps in for bigger situations involving larger sums or legal action.
Lemonade includes liability protection as standard, with options to increase your policy limits up to $1 million based on your situation.
How much personal liability coverage do most renters need? A minimum of $100,000 covers basic situations. Move up to $300,000 or higher if you regularly host guests, have pets or have assets worth protecting. Start your quote with Lemonade to see your liability protection options.
5. Evaluate Additional Living Expenses Coverage
Additional living expenses coverage pays for temporary housing and increased costs if your rental property becomes uninhabitable due to a covered event like fire, water damage or vandalism. It's the part of your policy most people don't think about until they need it urgently.
Things to check when evaluating this coverage:
- How long the coverage lasts, as standard policies typically provide 12 months
- Whether there's a dollar cap or a percentage limit tied to your personal property coverage
- Whether the amount is realistic for temporary housing costs in your area
In expensive cities, temporary housing can cost hundreds per day or more, so the amount of coverage matters.
6. Compare Deductible Options and Renters Insurance Cost
Your deductible is the amount you pay out of pocket before your policy covers the rest. Higher deductibles mean lower monthly renters insurance cost but more upfront expense when you file a claim after a covered loss.
Common deductible ranges
- $250 to $500: Good if you have limited emergency savings and want lower out-of-pocket exposure after a covered event
- $500 to $1,000: A middle ground that balances renters insurance cost savings with manageable out-of-pocket costs
- $1,000 to $2,500: Makes sense if you have a financial cushion and want to lower your monthly premium
Some insurers apply different deductibles to different covered events. You might have a $500 deductible for theft and a $1,000 deductible for water damage or vandalism, so it's worth reading the policy details carefully before signing.
Renters insurance discounts worth asking about
- Bundle discounts for combining renters insurance with home insurance or auto insurance.
- Annual payment savings for paying your full premium upfront instead of monthly
- Protective device discounts for installing smoke detectors, deadbolts or monitored alarm systems
- Paperless discounts for managing your policy digitally
Lemonade automatically applies available renters insurance discounts when you get a quote.
7. Research the Insurance Company's Reputation
Renters insurance cost matters, but how a company handles claims after a covered event matters more. A policy that's hard to use when you need it isn't a good policy regardless of the monthly premium.
What to look for
- Financial stability ratings from agencies like A.M. Best or Standard and Poor's, which indicate whether the insurer can pay covered loss claims
- Customer complaint ratios through your state insurance department or the National Association of Insurance Commissioners
- Claims handling reviews from recent customers, specifically around speed and settlement satisfaction
- Digital experience, including whether the insurer offers app-based claims filing, 24/7 reporting and fast processing
On the digital experience front, Lemonade checks every box. Half of claims are handled instantly through the app with no phone holds or paperwork required. That track record shows up in the ratings too: Lemonade has been named Best Renters Insurance for Fast, Easy Coverage previously by CNBC and also ranked among Bankrate's best renters insurers. Lemonade also holds a world-class NPS score of 70.
8. Understand the Claims Process
Before you sign, make sure you understand exactly how to file a claim and what documentation you'll need after a covered event. A renters insurance policy is only as good as the experience of actually using it.
Questions to ask before purchasing
- Is claim filing available 24/7 or only during business hours?
- Can you submit photos and documentation through a mobile app?
- What is the average claim settlement timeframe after a covered loss?
- What documentation will you need to support a covered loss claim?
- How does the insurer handle medical payments or medical expenses for injured guests?
With Lemonade, claims are filed through the app. You submit a video explaining what happened, upload relevant documentation and in many cases receive a resolution the same day. Get a Lemonade quote to see how the process works before you commit.
How Lemonade Fits Into This Checklist
Lemonade renters insurance starts at $5/month, a fully digital claims process and half of claims handled instantly. You can add Extra Coverage for valuable items over $1,500, choose your own liability limits and deductible and manage everything in the app. When you sign up, you also select a cause you care about, and throughout the year Lemonade donates funds to charities connected to your causes.
Renters Insurance FAQ
Most renters need between $15,000 and $50,000 in personal property coverage. A home inventory is the most reliable way to land on the right number before getting a renters insurance quote.
Yes. Most insurers allow you to adjust your policy limits at any time, though decreasing coverage may require a waiting period depending on your insurer.
Named perils policies only cover specifically listed events like fire, vandalism and theft. Open perils coverage protects against all risks except those specifically excluded.
Yes. Your landlord's policy typically only covers the building structure, not your personal belongings or liability. You need your own renters insurance policy for your possessions and liability protection.
Annually, or whenever you make significant purchases, move or experience major life changes like adding family members or getting a pet.
Coverage availability and specifics vary by state and policy. Review your policy documents for details applicable to your situation.