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How Much is Renters Insurance?

A home is a home, no matter if you maintain it through a mortgage or monthly rent. It’s a place to gather with friends and family and create memories. It sees all aspects of your life, from the tragic to the beautiful. On a material level, it’s where you keep all your valuables.

Needless to say, whatever you call home is special because it’s yours. And when something is so exceptional, you naturally want to keep it safe from the dangers. Protection, in this case, comes in the form of renters insurance. This type of insurance is one of the best routes to keep your rented space protected should you be the victim of a crime or natural disaster.

But where to start with renters insurance can be a tough one, particularly when it comes to costs. Finding the best rates for yourself depends on a multitude of factors. This post explores what goes into insurance premiums, average prices, and how to find the best rates for your rented home.

What is Renters Insurance?

Renters insurance covers your personal belongings within the place you are renting, whether it be a home, condo, or apartment. Your landlord’s insurance covers the building you actually inhabit but does not extend to the things inside of it. Due to this, you need your own insurance to protect your valuables.

A standard renters insurance policy is made up of three types of coverage:

  • Personal property coverage - Your personal property coverage protects your personal belongings, like electronics and clothing. Some more valuable things like expensive televisions and jewelry may need expansive coverage to be fully protected.
  • Personal liability - Covers you if you are sued due to someone getting injured in your home or if you damage someone else’s property. If someone is injured, medical bills can be submitted through your no-fault medical coverage from your renters’ policy.
  • Additional living expenses - If your place becomes uninhabitable after a disaster, additional living expenses cover the cost of living outside your home. This includes the price for a hotel and meals.

How Much Renters Insurance Should You Get?

After looking into what exactly renters insurance is, you are probably wondering a few things, like how much renters insurance you should have and what it’s going to cost you? The cost will be broken down into more details later. For this section, we will focus on how much you should get.

As outlined above, there are three types of coverage, but the main one is personal property coverage. This is the portion where you want to figure out the value of your belongings and determine how much coverage you will need. A standard policy will help cover your personal belongings in the case of fire, theft, vandalism, and other disasters. Ideally, you want to have enough coverage that you can replace all of your possessions in the event of a tragedy.

In terms of liability coverage, you want to consider the cost it would be if you are sued due to someone getting hurt in your place or if you cause damage at someone else’s home. This coverage generally starts at $100,000, but it is recommended that you go for $300,000 if you can cover the increase in premiums.

It is better to be overprotected than to be underinsured. If that is not realistic, it is best to at least have a basic policy plan; you should try to also tack on any additional aspects to your policy to ensure all of your belongings will be safe.

Do You Need Renters Insurance?

Generally, yes. While it is not legally required by law, unlike car insurance, renters insurance still can be a vital element when it comes to protecting your belongings. As discussed previously, renters insurance does not cover the structure of your apartment but instead the personal property you keep within it. It also aids you in cases of legal liability situations. Having something like this on your side when tragedy strikes will be extremely helpful. And, for the rates, it does not hurt to set aside some cash towards it every month.

National Average For Renters Insurance

Now that we have established what renters insurance is and its status as a necessity let’s look at what it could actually cost you. Your actual quotes may be higher or lower depending on your situation, but this should still serve as a good baseline and accurately depict how inexpensive renters insurance can be. According to the Insurance Information Institute (III), pulled from their most recent data, the national average renters insurance policy costs around $179 per year. That comes out to be about $15 per month.

What Determines The Cost of Renters Insurance

As we have now established a bit of a standard for renters insurance policy premiums, it’s helpful to look into what exactly goes into these rates. Your quotes may be below or above the national average, and you probably want to know why that is. Such as the case for other types of insurance, there is a variety of factors that go into your premiums. Some of these are just circumstantial, while others are customizable.

Insurance Factors You Can Control

  • Coverage amount - The amount of coverage you want for your belongings directly relates to how much you will be asked to pay in premiums. The more coverage you want, the more expensive the insurance will be. Expansion of personal property coverage is where most of the price is going to come from. If you have more valuable items and want that drastic amount of coverage, you’ll have to make more room in your budget. If you wish to tack on any renters insurance policy add-ons, such as water and sewer backup coverage, that will cost you, too.
  • Deductibles - How much you’re willing to pay yourself in the event of a tragedy directly affects your rates. As a general rule of thumb, the higher the deductible, the lower the premium, and vice versa. But don’t just start raising your deductible to pay less every month. If something does happen and you cannot pay the deductible, that can lead to some serious issues.
  • Claim history - While this is never entirely under your control, being a mindful renter can help reduce the number of claims you make to your insurance company. Essentially, the fewer claims you file, the lower the premiums. Companies will see you as less of a risk as a claim of any type affects premiums.
  • Credit score - A bit controversially, insurance companies take your credit score in to account when offering you coverage. If you look to be financially responsible, you may have lower premiums. It is best to keep this in mind and to always stay on top of any payments.

Insurance Factors You Cannot Control

  • Location - What state you live in significantly affects your renters insurance premiums. While this will be explored deeper in the upcoming sections, the general idea is that states that experience more extreme weather will have higher insurance rates. This practice extends even to further levels such as cities and zip codes. If the neighborhood you live in has a higher crime rate, you will be paying more. The only way to have full control over this is to move, but that can be a bit costly for something like renters insurance.
  • Value of belongings - Sometimes, you can get lucky and control how much you own, but most likely, that is not realistic. Some items, like computers, you need so you can function in your daily life, and the value of them is out of your control. Renters insurance focuses a lot on your belongings, so their value is a big factor in your annual premiums.
  • The building - This goes hand-in-hand with location, but the actual structure your apartment or condo resides in can have an effect on your renters insurance rates. If you live in an older building that lacks security, you could be charged more for insurance. These aspects you generally do not have any say in, meaning it may be best to keep in mind what your building is like before renting there if you have that option.

Average Renters Insurance by State

As touched on briefly above, where you live has a significant impact on your renters insurance coverage rates. Factors such as consistently extreme weather and crime rates are taken into account by insurance companies. These events lead to more claims, making some areas more high-risk than others. The following sections explain which states are the cheapest and where costs may be higher.

Most Expensive States For Renters Insurance

Through a recent study done by Insurance.com, the most expensive state for lower-level renters insurance coverage ($20,000 in personal property and $100,000 in liability) was Louisiana, with an annual average rate of $388 per year. That ends up being about $32 a month. This is due to the fact that Louisiana is a coastline state and experiences some pretty harsh weather, especially during hurricane season. Other states the study found to be the most expensive are Mississippi and Oklahoma. Oklahoma tends to see higher insurance rates as it is more prone to tornadoes.

Least Expensive States For Renters Insurance

Referencing the same Insurance.com study, the cheapest state when it comes to renters insurance for lower coverage ($20,000 in personal property and $100,000 in liability) is Vermont, with an annual rate of $121 per year, or $10 a month. Even if you wish to expand coverage ($60,000/$300,000), Vermont still is the cheapest, with an average price of $218 per year. These rates can be due to the fact damaging weather is less common in Vermont. Other states with lower insurance rates include Wyoming and North Dakota.

Average Renters Insurance by Coverage

As previously mentioned, what kind of coverage and how much of it you need will greatly affect what you pay. A basic policy consisting of $25,000 in personal property coverage may cost you about $18 a month or $216 per year. Personal property heavily influences how much your rate will actually be, so, raising this coverage raises prices significantly. If you calculate the value of your belongings and find you need coverage of around $55,000, your monthly rate can be more like $32 a month. But none of this is for certain; this is just a general idea to show the increase in price. Beyond personal property coverages, increase liability coverage can also have an effect. It may not be as dramatic, but it is still considered expanding coverage.

There are also policy add-ons that can protect your belongings in more specific tragedies, like other insurance types. As mentioned before, something like water and sewer backup coverage can be added in order to protect your valuables in the event of water damage. High-valued items may not always be covered as policies typically have a set limit they pay for. Adding something like electronic coverage will help protect expensive laptops or televisions if they are damaged. Some renters insurance policies may also offer identity theft coverage which can help pay for costs related to restoring your identity.

Just keep in mind, the more you add, the higher your rates will be. Really take the time to look at your belongings and weigh the pros and cons. If you cannot afford to lose that state-of-the-art television, adding a couple of dollars to your monthly insurance costs can be beneficial.

Average Renters Insurance by Insurance Companies

Different companies offer different renters insurance rates. Outlined below is a general idea of the average annual rate you could be paying based on the company you choose. A study from the U.S. News and World Reports has been used as a reference for the estimated costs. Their rates were settled upon based on a policy that consisted of $30,000 personal property coverage, $100,000 in liability coverage, and a $500 deductible. This is just a very rough estimation for renters insurance premiums. Your quotes can be significantly higher or lower. Every person is different when it comes to any type of insurance. So, do not get attached to any of these prices.

Nationwide

According to the U.S. News and World Reports study, Nationwide was the cheapest insurance company for renters insurance that they analyzed. For the $30,000/$100,000 insurance policy above, they found that it would cost around $13 a month, about $156 per year.

State Farm

State Farm was found to fall near the middle of the pack for the study. If requesting the coverage of the $30,000/$100,000 policy explained above, you could be paying around $15 a month or $180 per year. That falls in line with the national annual average rate.

Farmers

U.S. News and World Reports believe Farmers to be the most expensive of the insurance companies sampled. For a $30,000/$100,000 policy plan, you could be paying somewhere around $22 a month. That comes out to be about $264 a year.

Erie Insurance

The Erie Insurance price outlined may be in your budget but be aware: this insurance is only offered in 12 states, mainly spanning parts of the midwest and eastern area. With that being said, it can still be helpful to get an idea of their rates. The U.S. News and World Reports study found that average renters insurance rates with Erie Insurance come out to be about $20 a month. That’s around $240 per year.

What Isn’t Covered With Renters Insurance?

Renters insurance, like many other kinds of insurance, is limited to what belongings of yours it protects and the events in which it protects them from. Catastrophes such as floods and earthquakes will typically not be covered by your standard policy. You can look at add-ons if you are concerned about these events.

Renters insurance will also not protect an asset like your car, even if it’s stored within the building you are renting in. Even if damage happens to it when not in use, renters insurance will not cover it. You should consider looking into comprehensive coverage through your car insurance provider.

Some companies will exclude home businesses from your policy. You may want to watch out for this if you plan to open any sort of business in your apartment. It may not be covered, unlike homeowners insurance which offers it as an add-on.

On the theme of ‘things’ in your apartment that may not be covered: roommates. Roommates and their items will not be protected under your renters insurance policy. They will need their own plan in order to have coverage for their valuables or be added to the policy.

Another example of things excluded from your renters insurance policy is the actual apartment structure. Despite it sometimes being taken into account in your rates, damage to the building is not covered under your insurance. It is up to the landlord to obtain insurance for the building.

Is Renters Insurance Worth it?

In short, yes. Looking at renters rates compared to other insurance, such as home insurance, which has a national average premium of $1,249 per year. However, it does come with some setbacks as it does not cover as much as home insurance. But that is very understandable as you are not living on property you own, and renters is more focused on your personal belongings. This isn’t to knock anything, though. Your personal belongings are very valuable, and you need protection that treats them as such. Offering up a couple of dollars a month can really save you in the future. Like any insurance, having some level of coverage will always be worth it.

How to Get Discounts on Renters Insurance

While the cost of renters insurance may not be steep for you, it never hurts to get an idea of what actions you can take to save a couple of bucks. The following sections explore different ways you can get discounts on your renters insurance policy.

Bundling

Much like bundling your home and car insurance, insurance companies let you bundle with renters insurance. This would mean something like receiving both your renters insurance and car insurance under one company. Taking this simple step could save you up to 10% on your monthly insurance premiums. If you are already paying for car insurance, it would not hurt to look into this. It can even sometimes be an easier way to organize your bills and stay on top of payments.

Shop Around

One of the most common ways to save on insurance of any kind is to shop around. Pulling quotes from a variety of companies can help you find the one best suited for you. Just remember to not pick a company strictly based on the price and review the policy coverage offered. Be sure to take that into consideration before signing up with anyone. Don’t forget to look both locally and nationally as smaller companies may offer good coverage at reasonable prices.

Safety Features

Companies may offer you discounts based on how many safety features your space has installed. Installation of features like smoke alarms and deadbolts can lower your rates. You may also get a break on rates by adding a fire extinguisher to your kitchen. All of these little things show companies that your home is safe and secure. When this is the case, you are less likely to make a claim for theft. For this, they give you a sort of “thank you” by decreasing your rates.

Higher Credit Score

Bettering your credit score can be a big way to save, but the process does take more time than other ways to save. Having a higher credit score tells insurance companies that your finances are stable and you are less likely to make a claim. As your credit score goes up, your rates can decrease. Always try your best to stay on top of your payments and keep a good credit score. It can help in the long run.

Increase Deductibles

As discussed briefly before, increasing your deductibles can alleviate some of your monthly costs for renters insurance premiums. Raising deductibles tells your insurance company you will put out more cash in the event of a tragedy before they have to step in. While it can be a quick way to reduce rates, you have to make sure you can actually pay for the coverage you are promising.

Review Your Policy

Every now and then, it can be beneficial to review your policy and make sure you still need the coverage that you are paying for. If, for example, you have forgone some of your belongings, your value may have gone down, thus meaning you will not need such high personal property coverage. Finding areas to adjust your plan can help to save you money but never go below what you realistically need. Insurance can seem like a pricey preventative measure to take, but you never know what the future is going to hold.

What’s The Best Renters Insurance Policy For You?

The best way to answer this question is to figure out the value of your belongings and think about any future liability situations you could find yourself in. If you have some really fancy, valuable collection of some sort, you probably want to protect it should anything happen. If you have guests over frequently, maybe look into having higher liability coverage. In the event that anything happens to them in your place, you could be protected if they sue. Also, remember to consider where you live. If you live somewhere that is prone to flooding, you may want to expand your renters insurance coverage a bit to stay protected. It will cost more but could come in super handy after a disaster. And don’t forget to shop around for coverage. Looking at reviews for insurance companies can help find the smartest price for your budget.