Whether you live in a high-value rental home or a cozy apartment, renters insurance may be a good purchase. As of 2018, the most recent year with available data, a renters insurance policy costs $179 per year, according to the Insurance Information Institute (Triple-I). Renters insurance can provide you with many similar protections as a homeowners insurance policy, such as coverage for personal property, loss of use and liability, for those who rent their home.
Renters insurance could benefit you following unexpected occurrences such as fire, theft, vandalism and more. Though policy costs will vary based on the provider, location and other factors, for about $15 a month, renters insurance could be considered relatively inexpensive compared to how much you might lose if something goes wrong.
Average cost of renters insurance
If you have recently rented a new home or apartment, you might be wondering, “How much is renters insurance?”
Renters insurance is generally much cheaper than homeowners insurance. A renters insurance policy costs, on average, $179 per year, whereas the average price of homeowners insurance in the U.S. is $1,312 per year for $250,000 in dwelling coverage. 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 the cost of renters insurance might help you feel more comfortable choosing coverages to build a policy that fits your needs and budget.
Coverage amount and optional coverages
Renters insurance policies are made up of several standard coverages. You can often choose higher or lower limits to fit your needs. The common renters coverages are:
- Personal property coverage: This is the main coverage of 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.
- 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.
- 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.
You can also add optional coverages that will increase both your financial protection and your premium. Some common optional coverages 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 the coverage for any items specifically listed on the policy. It often comes with a lower deductible, sometimes even $0, than the rest of your policy.
- Electronics coverage: If you have an expensive laptop or top-of-the-line TV, you may want to increase the electronic coverage on your policy.
- 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.
- Identity theft coverage: Identity theft is becoming more frequent 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 coverages, and each renters insurance company offers a different suite of endorsements. A licensed insurance agent can help you choose coverages that are 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.
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 the cheapest renters insurance is not always the best.
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.
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 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
Choosing a higher deductible generally offers a lower premium. Just be sure to choose an amount that you can afford to pay if you file a claim.
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.
Frequently asked questions
Do you need renters insurance?
While renters insurance is not legally required, it may be required by your landlord or rental complex. A landlord’s insurance policy will typically cover losses impacting the actual structure of your rental building, but you are responsible for any damage to your personal property, as well as for the liability arising from any incidents that cause injury to your guests. Some renters insurance companies even have additional coverage available for your pets.
Is the cost of renters insurance worth it?
Renters insurance is about $15 per month, according to Triple-I. This coverage is designed to help protect you from financial stress if your items are damaged or you are found at fault for someone’s injuries or damage to someone’s property. Many policies also include loss of use coverage to cover temporary living expenses if your rental becomes uninhabitable due to a covered claim. To avoid being left with out-of-pocket expenses after an unexpected event, renters insurance may be an important piece of your financial planning.
What does your renters insurance policy not cover?
Renters insurance policies typically exclude damage resulting from earthquakes and floods. However, riders and additional insurance policies may be able to cover these events. Speak with an insurance carrier about what coverage options are available. Other scenarios, like a bed bug infestation and damage to property belonging to your roommate, may also be excluded from most standard policies.
Does renters insurance cover theft?
Yes, standard renters insurance policies cover theft. However, the way your policy covers these losses will vary. Your belongings can be covered on an actual cash value or replacement cost basis, which will result in different payouts from your insurer. Additionally, if high-value items like electronics, jewelry, cash or collectibles are stolen, a standard policy likely has limits on how much of a payout you will receive. Increasing your standard limits or scheduling high-value items can provide you with better protection.