Does Renters Insurance Cover Natural Disasters?

With natural disasters growing in severity and frequency as a result of climate change, now is a great time to think about what you would do in the event of one happening where you live. If you’re a renter, you should have renters insurance to protect your belongings and help you afford alternative accommodations if something happens. Learn what disasters your policy will—and won’t—cover.

Key Takeaways

  • Tornadoes, fires, hail, and rain and snow damage (non-flooding) are covered by most renters insurance policies.
  • Floods and earth movement (earthquakes and sinkholes) aren’t covered by renters insurance.
  • Consider including loss-of-use coverage in your renters policy if you’re in a disaster-prone area.
  • If you are affected by a non-covered disaster or don’t have renters insurance, the Federal Emergency Management Agency (FEMA) may be able to help.

Covered Disasters

Most renters policies cover common disasters like tornadoes, fires (including wildfires), damage from rain (but not flooding), hail, and damage from snow. This means that if the property you’re renting sustains enough damage to harm your belongings or prevent you from living there due to one of the covered disasters, then your renters insurance policy should kick in and provide some financial compensation for your losses. 

Be aware that loss-of-use coverage isn’t included in every policy, so check yours to see if you would be provided funds for housing if your rental becomes unlivable after a tornado or fire. Replacing your $300 Craigslist couch won’t mean much if you can’t afford to rent another apartment. During widespread disasters like hurricanes or wildfires, housing that is undamaged is often much more expensive. If you live in an area frequently affected by wildfires, tornadoes, or hurricanes, strongly consider adding robust loss-of-use coverage to your policy.

$148 Billion

The total cost of weather and climate-related disasters in 2021. The second worst year on record, with 20 events and 724 deaths.

Non-Covered Disasters

Just like with homeowners insurance, standard renters insurance policies do not include coverage for floods or earth movement (earthquakes and sinkholes) unless you explicitly seek out those policies. If you live in an area prone to earthquakes, getting a policy that covers them may be cost prohibitive. If you live in an area prone to flooding, you may be able to get flood insurance subsidized by the National Flood Insurance Program, but this flood insurance still may be cost prohibitive to many renters.

The Role of FEMA

The Federal Emergency Management Agency (FEMA) may be able to help you if you don’t have renters insurance or if the renters insurance doesn’t cover enough and you’re in an area that FEMA has declared a disaster. Once the disaster is declared, federal grants and loans become available to help individuals in the affected areas repair housing and obtain safe, sanitary, and functional repairs to make a home fit to live in.

If you live in an area where a disaster has been declared and need help obtaining or paying for housing, you may qualify for housing through FEMA. You also may be given access to a low-interest disaster loan through the Small Business Administration (SBA). Renters can access up to $40,000 to replace personal property, including vehicles. These loans usually carry much better interest rates than those on auto loans, personal loans, or credit cards. If you think you may qualify, you should apply.

Why do I need renters insurance?

If you’re renting a property, the landlord has insurance on the property, so why do you need renters insurance? The landlord’s insurance covers the building itself and the landlord’s belongings, but it doesn’t cover your property, your use of the building, or any liability on the property that may be your fault (such as if your dog bites a guest). Covering these things is where a renters policy kicks in.

What is the difference between cash value and replacement cost?

Cash value is usually much lower than replacement cost. Let’s say you bought a backpacking sleeping bag in 2016 for $300. The cash value of that bag may only be $150 once it’s six years old, but you may not be able to replace that bag for less than $300. A renters insurance policy that uses cash value will usually cost you less in premiums, but your ability to actually replace your items will be very reduced unless everything you own is brand new and has a high cash value. 

What is loss-of-use coverage?

Loss-of-use coverage will help you pay for housing if you’re no longer able to live in your rental. Adding this coverage to your policy will make your policy more expensive, but if you don’t have savings to cover housing in a disaster, then you’ll need it. If your current rental is $2,000 a month, consider that housing may be more expensive after a major disaster. Compare the cost for loss-of-use coverage against the amount that you currently pay in monthly rent. Even if you have savings, calculate your ability to pay for housing if a large disaster like a wildfire shuts down businesses in your area for a long period of time.

The Bottom Line

Disasters are becoming more common, more severe, and more devastating. If you are a renter who can’t afford to replace all of your items after a disaster or find alternate housing, consider getting a robust renters insurance policy. While renters insurance doesn’t cover disasters like earthquakes and floods, FEMA may be able to help if you find yourself in trouble from these events. Be sure to research your options.

Article Sources
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  1. Federal Emergency Management Agency. “How FEMA Can Help: File Insurance Claim First.”

  2. Insurance Information Institute. “Your Renters Insurance Guide.”

  3. National Centers for Environmental Information, National Oceanic and Atmospheric Administration. “Billion-Dollar Weather and Climate Disasters.”

  4. Federal Emergency Management Agency. “Flood Insurance.”

  5. Federal Emergency Management Agency. “How a Disaster Gets Declared.”

  6. Progressive. “What Does Loss of Use Cover?