How Much Does Renters Insurance Cost?
If you’re considering buying renters insurance and have never researched it before, you’ll be pleasantly surprised by the cost. This article will not only give you a good idea of the cost of renters insurance, but you’re going to know how insurance companies arrive at their rates, how to save money on your renters insurance, how to make sure you get the right coverage, and more.
The cost of renters insurance will vary according to many factors. However, according to the national PropertyNest survey, the average basic renters insurance cost is $17 monthly or $206 yearly.
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Factor’s Impacting the Cost of Renters Insurance
Many factors impact the cost of your renters insurance. They include:
The state you live in
You’ve probably read news stories about insurance companies paying out billions of dollars in claims for a single hurricane hitting Louisiana, Florida, or another coastal state. Because of the increased risk of damage to your property, your rates will be higher in storm-prone areas, including states where tornados are common, such as Oklahoma or Arkansas.
On the other hand, you’ll pay less for renters insurance in states with fewer and less catastrophic weather events, like Indiana or Ohio, even though they have an event periodically.
The location you live in
Your zip code dramatically impacts the cost of your renters insurance. For example, your price will be higher than average if you live in a zip code with a high crime rate or one with more exposure to violent storms.
Your insurance company
Each insurer has its own methods of calculating rates, including the losses they’ve suffered in the area you’re renting in. For example, while one company may be competitively priced in New York City, another carrier may not be.
The coverage you choose
The more comprehensive your coverage is, the more you’ll pay. For example, Replacement Cost coverage provides more protection than Actual Cash Value coverage, but you’ll pay more.
Your deductible amount
Similar to health insurance, the higher your deductible, the lower your premium. Renters insurance companies charge renters less if they share more of the risk of financial loss by carrying a higher deductible.
Your other coverage
Some insurers will give you a discount if you have renters insurance and additional coverage with them, like car insurance. You’ve probably heard it referred to as “bundling.”
Having safety features
Some insurers will also discount your renters insurance rates if you’ve installed things like deadbolt locks, smoke detectors, or video cameras. Living in a gated or secured community can also lower your rates. As you can see, many factors impact your renters insurance cost. Knowing them can help you make decisions that will lower your rates.
How Do You Buy Renters Insurance?
Buying renters insurance isn’t a lot different than buying car insurance. There are a few steps in the process, but it’s not complicated, particularly if you buy it online.
Follow these steps to get a policy that best meets your needs.
- Decide what you want to cover. Before you can decide your coverage limits, decide what you want to be covered by your policy. For example, if you have a brand new bedroom suit, that’s something that you want to be covered. But, if you also have an old refrigerator you plan on replacing, you may not want to include that in your coverage.
- Determine how much coverage you need. Once you decide what you want to cover, you can calculate the total value and policy limits you’ll need.
- Choose a deductible. You’ll have a choice of deductibles, typically $250, $500, or $1,000. Don’t choose a deductible you’d have difficulty paying.
- Decide if you want to buy online or work with an agent. Many people prefer to purchase insurance from the comfort of their own homes, while others want to consult with an agent and get guidance on choosing a policy. Either method will get you covered, which is what matters most.
- Get your quote. Based on what you decided in the first couple of steps, you’re now ready to get a quote.
- Buy your policy. If you have possessions that you value, don’t put off buying renters insurance. You won’t mind having paid for it if you have a claim.
How Can You Save Money on Renters Insurance?
Everyone wants to save money on their insurance, including renters insurance. Here are some tips to help you keep more money in your pocket.
Get quotes from at least three insurers before you decide on a policy. Shopping could cut your premiums by as much as 50%.
Bundle your coverage
If possible, get your renters insurance from your auto insurance carrier and get their bundle discount if they offer one.
Increase your deductible
Raising your deductible from $250 to $1,000 can significantly reduce the cost of your renters insurance. Only do this if you can afford the higher deductible.
Lower your coverage limits
Take an inventory of what you have and what you want to be covered. You may find you can lower your limits by not covering older, less valuable items that aren’t important to you.
Change your payment method
Some insurers may give you a discount if you pay your premium annually instead of monthly.
Have your landlord install safety and security equipment
There may be common areas where your landlord can place security cameras, or they can make safer. You’ll get discounts if you live in a more secure home or building.
Look for discounts
Whether you buy online or through an agent, check into the insurer's available discounts and see what you qualify for. It can save you quite a bit of money over time.
Switch from Replacement Cost to Actual Cash Value coverage
You won’t get reimbursed as much for lost or stolen items, but you will lower your premium.
Consider moving to a different neighborhood
If you live in a community with a high crime rate, you’ll pay more for your coverage. If you can, move to a safer, more secure zip code to lower your premiums.
Maintain good credit
Insurers take your credit into account when determining rates. They believe that your credit score is an indicator of how responsible you are.
What Does Renters Insurance Cover?
The exact details of what your renters insurance does and doesn’t cover will be spelled out in your policy, but here’s what you’ll typically find.
Renters insurance generally provides these four types of protection.
Personal property damage
If your property is lost, damaged, or stolen, renters insurance will cover the cost up to your policy’s limits. The cause of the loss must be named in your policy.
If someone is injured or their property is damaged while they’re visiting you and you’re blamed for it, your policy will cover liability costs, including any legal expenses you have to defend yourself. Standard policies include up to $100,000 in liability coverage.
Additional living expenses
If your rental home is damaged by a covered peril to the extent that you can’t live in it while it’s being repaired or rebuilt, your renters insurance will pay for expenses higher than your everyday living expenses, such as a higher housing cost or dining out.
Your renters policy will cover a guest's medical costs if they’re injured on your property, up to the policy’s limits. Unlike your personal liability coverage, medical payments under this coverage cover the medical costs regardless of who was at fault.
Additional coverage to consider
In addition to the four primary coverages we just looked at, renters insurance often provides several supplementary coverages:
If your property is a total loss and needs to be carried away, this is covered under your personal property limits.
Building alterations or additions
If you paid for alterations or upgrades damaged by a covered event, you can be reimbursed up to a certain percentage of your personal property coverage limit, typically 15%.
Credit card check and forgery
Your renters insurance policy may reimburse you for losses caused by the theft and fraudulent use of your credit cards or forged checks. However, coverage is usually limited to $1,000.
If your power goes out for an extended period and you lose food due to spoilage, your renters policy will cover you up to your personal property limits.
What Doesn’t Renters Insurance Cover?
Your renters policy will also contain a number of exclusions, including:
Bed bugs and pests
Bed bugs are considered a maintenance issue, along with other pests. Your landlord should address this if bugs and pests are a problem.
Car theft or damage
Your car insurance policy covers your car being stolen or vandalized. Renters insurance does not cover the belongings inside a vehicle when stolen. Auto insurance policies cover theft or damage to a vehicle, while renters insurance covers personal belongings in a rented property or storage unit.
If your roommate isn’t listed on your policy, loss or damage to their belongings won’t be covered.
Earthquake and flood damage
Standard renters insurance policies don’t cover these, although some insurers offer it as an add-on. You can buy a separate earthquake or flood policy if yours doesn’t.
What Are “Named Perils,” and Does My Renters Insurance Cover Them?
A named peril is a peril or risk specifically listed in your policy. Some of the most common named perils are:
- Fire or lightning
- Windstorms or hail
- Damage caused by vehicles
- Vandalism or malicious mischief
- Damage caused by the weight of ice, sleet, or snow
Perils that are not usually covered and named in your renters insurance policy are things like:
- Riots or civil commotion
- Damage caused by aircraft
- Volcanic eruptions
- Falling objects
Should You Buy Extra Coverage for Collectibles & Other Valuables?
Your renters insurance personal property coverage limits don’t apply equally to your high-value possessions. Electronics and jewelry, for example, may only be covered under separate sub-limits because of the potential of a significant loss for the insurer. For example, if you have a ring valued at $10,000 and it’s stolen, you may only be covered up to $2,000, which is the standard amount of jewelry renters insurance policies cover. To cover high-value items like that ring, you’ll have to buy additional coverage specific to that item.
How Do You File a Renters Insurance Claim?
Like all types of insurance, to be reimbursed by your renters insurance, you must first file a claim for theft or damage to personal belongings, personal liability, or additional living expenses you paid for. To help your claims experience go smoothly, follow these steps:
Create an inventory before anything happens
Walk through the home, condo, or apartment you’re renting and take a picture of everything you own and is at that location. It’s even better to make a video of your belongings and narrate it as you name the item and its value.
Your inventory can also consist of sales receipts or Amazon confirmation emails confirming the purchase and price of the item. A written list of items and their values is also acceptable.
Document the damage
After the loss occurs, take pictures, make a video, or write down the damage. The police and your insurance company will want a complete description of what happened and what was lost.
File the claim
Many people lose a lot of money by not describing their loss in detail. For example, when you file a claim for a stolen flat-screen television, don’t just list the item as a “flat-screen television.” Your insurer may reimburse you for a flat-screen TV you can buy on sale at Walmart for $350.
Instead, list it as a “Sony 65-inch LED flat-screen television purchased for $1,350.” You’ll find that your reimbursement amount will be substantially higher if you do this for all of the items lost. Filing a claim can be a long, tedious process, but the more detail you can provide your insurer, the faster your claim will be processed and the larger the payment you receive will be.
Renters insurance is highly customizable as it lets you select your deductible, coverage limits, the items you want covered, and any additional coverage you want, such as for high-value items. Considering that the average rent in most major cities exceeds $2,000 per month, paying $15 to $30 per month to cover your belongings is affordable for most renters.