If you are renting a place to live, your landlord may ask you to buy renters insurance as part of your lease or rental agreement. The landlord’s insurance policy only covers damages or loss for the structure you are living in, not your own possessions.
However, you may want to consider purchasing a renters insurance policy even if your landlord does not require it. Your renters insurance policy will ensure that you are reimbursed for loss, damage or theft of your personal property in covered losses. Your policy also covers you if someone is physically hurt in your rental.
Renters insurance is generally a low monthly expense, but you may be wondering how much coverage you need to make the cost worth it. Like other forms of insurance, there are standard coverages, but there may also be applicable add-ons depending on which items or situations you would want financial assistance in. Knowing these factors could help determine the amount of renters insurance you need.
How much does renters insurance cost?
As of 2021, most U.S. renters do not pay more than $60 for a renters insurance policy each month. Bankrate gathered this year’s average quoted rates from across the entire country and found that the average cost of renters insurance is $509 per year, or about $42 per month. With this, 46 states — as well as Washington, D.C. — have average monthly costs of $60 or less. The remaining states have slightly higher premiums, but still average monthly costs under $90.
What affects the cost of renters insurance
While the average national monthly cost of renters insurance is $42 per month based on policies issued this year, several factors will ultimately determine how much your renters insurance policy costs. These include considerations for:
- ZIP code
- Credit score
- Home inventory
- Rental size
- Actual cash value (ACV) vs. replacement cost value (RCV)
- Security and fire systems
There may also be other factors that influence your rate, such as the insurer you choose and amount of liability you opt for. By considering factors such as these, you could begin receiving quotes based on your personal selections for a personalized rate.
Is renters insurance worth it?
What does renters insurance cover that makes it worth the cost? It typically includes personal liability protection to pay for attorney fees and damages or medical treatment for someone who is hurt in your rented home, apartment or condo. The liability protection will likely include no-fault medical coverage so that if someone is hurt on your premises, they can submit their medical bills and expenses to your insurance company and you can prevent a lawsuit.
Renters insurance also covers your personal possessions if they are damaged in a covered natural disaster or stolen. It may also reimburse you for items that are lost and stolen from your car or when you are away from home.
While some people may assume that their personal belongings are not worth an additional monthly cost, it may be worthwhile considering the cost of replacing those items in unplanned circumstances that cause damage. You might own a small wardrobe and few decorative items, for instance, but a theft could cost you upwards of $1,000 for your home office set-up between your television and electronics. This and similar scenarios are why insurance experts recommend insuring your personal property. Renters insurance also generally covers additional living expenses in case you are displaced by fire, earthquake, flooding or another scenario that makes your rental unlivable.
How much renters insurance do I need?
Experts recommend purchasing enough renters insurance to help you replace all of your personal possessions if they are stolen, lost or damaged.
A good way to figure out the value of everything you have is to create a list, or inventory, of all of your possessions and include dates of purchase, serial numbers, appraisal documents and any receipts. Use your cell phone or an app to take photos and save your inventory so that you can add to it if you make any new purchases. Include all expensive items and electronics, including computers, devices, home security systems, jewelry, instruments and any appliances you’ve purchased. Use the internet to identify what it would cost to replace those items, and then use that result to decide the minimum amount of renters insurance coverage you need.
All tenants with pets should also consider purchasing liability insurance to cover property damage caused by their pets. If you have a large dog or a dog breed with more requirements from your insurance company, you may need to purchase additional liability insurance.
How do I calculate renters insurance coverage?
Determine your desired deductible
When buying renters insurance, one factor that helps to calculate the cost is to figure out how much of a deductible you want to pay. A deductible is the amount that you must pay before the insurance company pays you for any claims that you file. Essentially, the deductible is the amount “deducted” from the loss when you file it.
For example, if you agree to pay a $500 deductible on your renters insurance and you have to file a claim for flood damage, you will have to pay $500 of the repair bill before the insurance company will pay the remainder. You can find the deductible listed on your insurance policy.
Decide if you intend to purchase additional coverage
You can check whether your financial and personal possessions are sufficiently covered if you are affected by a disaster or involved in a lawsuit. If you do not think you have enough coverage on your renters insurance policy, you can also purchase an umbrella policy. This is an additional liability insurance policy that covers you when you reach the limit on your renters or auto insurance policies, and it also covers you for libel and slander.
Off-premises coverage for travelers
If you travel, it might be worth checking that you have off-premises coverage to insure possessions (such as a laptop or cell phone) that you take with you when you travel with the same coverage that you would have if you were using them at home.
Consider adding a floater
If you have expensive items or one-of-a-kind, collectible items like sports memorabilia, original artwork, antiques, expensive jewelry or furs, consider adding a floater to your renters policy. The floater adds additional coverage for more expensive items if they’re lost, damaged or stolen.
Double check your policy for additional living expense coverage
If you live in an area where there are natural disasters like fires, floods, earthquakes or mudslides, it could be important that your policy includes enough insurance for Additional Living Expenses (ALE). Additional living expenses include paying for a hotel, eating at restaurants and other expenses from having to live away from your rental home while it is being repaired.
Insurers will pay the difference between your regular living expenses and your added living expenses from being displaced after a covered event, but they may only do so for a limited time. Read the fine print to make sure you have enough coverage for any anticipated future disaster. Also, consider checking that your insurance covers things like floods because not all policies cover every type of natural disaster. Flood damage is usually excluded from standard renters insurance policies, but may be purchased either through your provider or directly from the National Flood Insurance Program (NFIP).
Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on 40-year-old male and female renters with a clean claim history, good credit and the following coverage limits:
- Coverage C, Personal Property: $25,000
- Coverage D, Loss of Use: $5,000
- Coverage E, Liability: $100,000
- Coverage F, Medical Payments: $1,000
The renters also have a $500 deductible.
These are sample rates and should be used for comparative purposes only. Your quotes will differ.