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Average cost of renters insurance in 2023
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People are often familiar with home insurance and its benefits, but did you know that if you are a renter, you can insure your belongings as well? While a renters insurance policy does not cover the structure of the home, it can financially protect the renter if their belongings are damaged in a covered loss due to perils like theft, fire, vandalism and more. If you rent your home and are not insured, you may be faced with replacing any lost or damaged items entirely out of pocket. A renters policy can also provide financial protection against some liability if someone is injured while visiting you. But how much is renter’s insurance?
Average cost of renters insurance
Renters insurance is generally much cheaper than homeowners insurance. The Insurance Information Institute (Triple-I) estimates that a renters insurance policy costs $174 per year on average. Comparatively, the average price of homeowners insurance in the U.S. for 2023 is $1,428 per year for $250,000 in dwelling coverage, according to data from Quadrant Information Services. Renters insurance policies do not cover your home or apartment structure like homeowners insurance does, contributing to the lower premium.
However, the cost of your renters insurance policy will depend largely on how much coverage you buy. The minimum available amount of personal property coverage — the part of a renters insurance policy that covers your belongings like your clothing, furniture and some electronics — varies by company. Some insurers have a minimum personal property amount as low as $2,500, whereas others may require a minimum coverage amount of $20,000 to $25,000. However, regardless of the minimum amount required by your property insurer, you want to make sure you have enough coverage to replace your personal property should a loss occur.
Your liability coverage amount, any endorsements that you add and the deductible you choose will also affect how much you pay.
Factors that influence the cost of renters insurance
Understanding what affects renter’s insurance costs might help you feel more comfortable choosing coverage to build a policy that fits your needs and budget. This information can also help you to make strategic choices about which types of coverage you want and at what levels.
Renters insurance policies are made up of several standard coverage options. You can often choose higher or lower limits to fit your needs. The standard renters coverage types include:
- Personal property coverage: This is the main coverage type in a renters insurance policy and covers your belongings, like clothing and furniture.
- Loss of use coverage: Also called additional living expenses, this coverage pays for expenses incurred while you cannot live in your home due to a covered loss. Such expenses may include hotel bills or other temporary housing, laundry fees and even pet boarding fees in some cases.
- Liability coverage: Liability pays for expenses related to guest injuries that occur on your property that you are found negligent for, as well as damage to others’ property that you cause. However, liability might not cover damage caused to your rental unit itself.
- Medical payments to others coverage: Medical payments to others coverage is designed to help pay for the medical expenses of guests injured on your property. In cases where a guest is injured, but you are not legally liable for their medical expenses, medical payments to others can extend to help cover their bills.
Optional coverage types
You can also add optional coverage types that will increase your financial protection but will also increase your premium. Some common coverage options are:
- Contents replacement cost: This endorsement means you will be paid for the replacement cost of your damaged or destroyed personal property rather than its depreciated value.
- Scheduled personal property: If you have any high-value items, such as jewelry, collectibles or musical instruments, this option broadens your personal property coverage to include specific items that are more costly to replace.
- Water and sewer backup coverage: This coverage pays for the water damage to your belongings following a sewer or drain line back-up. Not every company offers this option for renters, but it is available.
- Identity theft coverage: Identity theft tends to occur more commonly as our world becomes increasingly digital. This endorsement can help pay for the costs associated with restoring your identity if it is stolen.
There are numerous other optional coverage types, and each renters insurance company offers a different suite of endorsements. A licensed insurance agent can help you choose coverage that is appropriate for your situation.
Your deductible is the amount of money you will pay out of pocket if you file a claim. This is called the “assumption of risk.” You are assuming — taking on — the responsibility of paying part of a claim. Because of this, your deductible impacts your premium.
Generally, the higher your policy deductible, the lower your premium. Many renters insurance policies have a standard deductible of $500, and with many insurers, this may be the lowest deductible that you can choose. You should always choose a deductible that you feel comfortable paying to ensure that you don’t find yourself in financial trouble after a claim.
If you have filed property claims in the past, your premium will likely be impacted. An insurance company views you as more likely to file claims in the future, and they compensate for the increased risk by charging you a higher rate.
Even if you lived at a different location, had a different insurer or filed a claim under a different policy type, like a homeowners or condo policy, your new insurance company will see your past claims on your CLUE report. Generally, only claims filed in the past five years will affect your premium, although this varies by company.
How to save on renters insurance
Although renters insurance is typically less expensive than homeowners insurance, there are ways to save. Here are some of the easiest ways to reduce your costs, but remember that it’s important to weigh other aspects of a company, such as its customer service or claims handling, in addition to price.
- Bundle your other insurance policies: If you have other policies like auto or life insurance, you could consider bundling these policies with one insurer. This might qualify you for a multi-policy discount on all of your insurance policies. Since renters insurance is generally cheap, the savings your bundling discount may provide could come close to the additional cost of your renters policy. In other words, your bundling discount could end up paying for most (or all) of your renters policy, making it an even better value.
- Choose a cash value policy: The main difference between an actual cash value (ACV) policy and a replacement cost value (RCV) policy is how your personal property is covered — at its depreciated value or its replacement cost. RCV policies generally cost more money because many of your items, like your TV and laptop, are likely to be more expensive to replace at the current market value. Because ACV policies pay for your items at their depreciated value, you receive less money for their replacement if you file a claim, but may also pay lower insurance premiums.
- Increase your deductible: Your deductible amount plays a role in your renters insurance premium. The lower your deductible amount, the higher your policy premium. If you want a cheaper renters policy, you could choose to have a higher deductible amount, but be sure that it is an amount that you could pay if a claim arises.
- Install safety equipment: Safety and security equipment, like smoke detectors or a security system, may qualify you for a discount. Security equipment might deter thieves and smoke alarms can notify you of potentially dangerous situations. Some insurers reward you for these preventive measures by offering additional savings.
- Adjust your payment method: Paying your annual premium in full may earn you a discount with insurers, but it could also save you from having to manage another monthly bill or pay billing fees. Talk with your insurer to see if this discount is an option.
- Review your personal property coverage limit: Another aspect of your renters insurance policy that you can control is the dollar amount you choose to cover your personal property for. Reducing the amount will likely reduce your premium. Before reducing your coverage, you may want to take the time to consider if you have included enough to cover the cost of replacing your personal property.