Guide to Renters Insurance in Chicago

What is Renters Insurance?

What could be worse than coming home to your loft apartment to find that your beloved new bike, electric guitar, laptop, and television have been stolen? Here’s what’s worse: experiencing that terrible loss and realizing that you have to finance the replacement of those things because you don’t have renter’s insurance.  After a break-in, tenants often turn to the landlord to cover the loss. But the landlord is not responsible for damage or theft of the tenant’s property (except in cases of theft arising from the landlord’s negligence, like if the landlord refused to fix a broken lock or smashed first-floor window), and the landlord has no obligation to pay. 

How Much is Renters Insurance in Chicago?

With a starting price of about $5.00 per month, a Chicago apartment renter can buy a renter insurance policy that will cover the actual cost, or the replacement cost, of stolen items or damaged items.  

What Does Renters Insurance Cover?

A renter insurance replacement cost policy will pay what it would actually cost to replace the stolen or damaged items, minus the deductible. In contrast, an actual cost policy will pay what the property was truly worth when it was stolen, minus the deductible.  Consider your two-year-old tablet. A replacement cost policy would pay out enough to buy a new tablet of similar quality, whereas the actual cost policy would pay out what the tablet was worth at the time of the theft – an amount significantly less than you paid a couple of years ago. Premiums for replacement cost policies are more expensive, but they pay out more. If you have a lot of electronics, which quickly depreciate in value, a replacement cost policy might be a better bet for you. 

Renters insurance in Chicago also covers damages from accidents that could otherwise quickly drain a renter’s savings. Imagine leaving a faucet running in the bathroom, thereby causing a flood into the downstairs apartment or causing a small grease fire in the kitchen – the renter’s insurance policy will cover the damage (up to a certain limit), protecting you from forfeiting the security deposit and paying out of pocket for the rest.  The policy will also respond if one of your visitors is injured in the apartment, perhaps by tripping over the Red Eye newspapers you’ve left piled by the door for recycling. 

Lastly, if your rental apartment becomes uninhabitable because of fire, flood, or a massive pile of Lake Effect snow falls through your roof, renter’s insurance would cover the cost of a hotel when your apartment is unavailable to you. 
But beware: if you are operating an Airbnb out of your apartment – which would be illegal in Chicago, by the way, if you don’t have a Chicago vacation rental license and your landlord’s permission – the renter’s insurance policy won’t cover theft or damage done to your home by the Airbnb tenant. 

Should Landlords Require Renter Insurance?

Landlords should encourage renters to buy a Chicago renters insurance policy to cover the value of the tenant’s personal property and cover liability.  Even the most careful tenant might do accidental but massive damage to the apartment.  Particularly now that most Chicago landlords have moved away from collecting security deposits -- the onerous requirements of the Chicago Residential Landlord Tenant Ordinance are quite the deterrent --  the following line of defense against a tenant’s accidental damage is their own renter’s insurance policy.  Sure, the landlord can also make a claim on their policy of general commercial liability on the property to finance repairs necessitated by a tenant’s damage – but the landlord will have to pay higher premiums down the line. 

Similarly, suppose the apartment becomes unavailable due to a fire, flood, or another catastrophe. The landlord will benefit if the tenant can cover their hotel costs through the renter’s insurance policy. 

Remember, landlords, that if it is your policy to require renters insurance, you should require it of all tenants – don’t require it only of tenants of a certain sex, age, family status, or other protected category.