How much renters insurance do I need?

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If you’re 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’re living in, not your own possessions.

It’s a good idea to purchase a renter’s insurance policy even if your landlord doesn’t insist on it in your lease or rental agreement because a renter’s insurance policy will ensure that you are reimbursed for loss, damage or theft of your personal property. Your policy also covers you if someone is physically hurt in your rental.

If you’re asking yourself how to calculate your renters insurance needs, we can help.

How much does renters insurance cost?

According to the Insurance Information Institute, the average renters insurance cost is $182-$190 per year. The lowest average annual renters insurance cost in the United States is South Dakota, with an average cost of $114 per year. The highest is Mississippi with an average annual cost of $275 per year. The national monthly average rental insurance cost is $12 per month.

Is renters insurance worth it?

What does renters insurance cover that makes it worth the cost? It 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 should 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 natural disaster or stolen. It can also reimburse you for items that are lost and stolen from your car or when you are away from home.

The insurance also covers additional living expenses in case you’re displaced by fire, earthquake, flooding or another scenario that makes your rental unlivable.

How much renters insurance do I need?

You should purchase enough renter’s insurance to help you replace all of your personal possessions if they’re 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 purchase 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’ll have to pay $500 of the repair bill before the insurance company will pay the remainder. You can find the deductible listed in your insurance policy.

Decide if you intend to purchase additional coverage

Make sure that your financial and personal possessions are covered if you are affected by a disaster or involved in a lawsuit. If you don’t 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, make sure 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’d 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, make sure 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, 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, make sure that the insurance covers things like floods because not all policies cover every type of natural disaster.