Why Renters Insurance Is So Important (Plus It’s Cheaper Than You Think)

Woman holding a plant in her new apartment
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When you rent rather than own your home, your landlord most likely has insurance on the property. But that insurance won’t cover anything beyond the physical building if disaster strikes, leaving you vulnerable. That’s why renters insurance is so important.

It can protect you from disaster, and it’s typically very affordable — much more so than homeowners insurance.

But before deciding on a provider for your renters insurance, it’s important to understand the basics.

 

What Does Renters Insurance Cover?

Let’s look at a few things renters insurance policies might cover.

Personal Property

Renters insurance covers your personal belongings and replaces them if you’re the victim of a fire, storm damage or theft.

Liability

Renters insurance usually includes liability coverage, which protects you if someone injures themselves at your house or apartment. It will help compensate them for their medical bills or other related expenses, and also helps cover your legal costs if the injured party sues you.

Accommodations

Renters insurance policies usually help cover temporary accommodations if you’re forced to move out during repairs due to water, smoke or fire damage.

Additional Riders

A rider is something you add onto an existing policy, usually to cover a specific valuable item, such as a piece of jewelry, bicycle, snowmobile or art collection.

For example, your renters insurance might only cover $2,000 in jewelry, but you might have a piece worth $5,000 alone. In this case, you would want to add a rider to cover that specific piece of jewelry.

How to Choose the Best Renters Insurance

When you’re looking for the best renters insurance, you need to find a policy that’s within your budget and that offers the coverage you need. When researching an insurance company, ask the following questions:

  • How much is the monthly premium?
  • How much is the deductible?
  • What does the basic policy cover?
  • What add-ons do you offer and how much do they cost?

6 Factors That Impact the Cost of Renters Insurance

According to the National Association of Insurance Commissioners, renters insurance premium is between $15 and $30 per month. Your costs will vary depending on the size and location of your house or apartment, and how much your possessions are worth.

1. Location

Your location will have a big impact on how much you pay for renters insurance. For example, if you live in a quiet suburban community with low crime rates, your premiums will be lower. But if you live in a high-crime area, you’ll probably pay more.

Likewise, if you live in an area that’s not prone to natural disasters, you’ll pay less for renters insurance. But if you live in a high-risk area, such as a low-lying state that’s prone to flooding or a state where hurricanes or tornadoes are common, your insurance will be more expensive.

2. Amount of Coverage

With renters insurance, you can determine how much coverage you want. Typically, the more coverage you get, the more expensive your premiums will be.

The best way to figure out how much coverage you need is to take inventory and of your personal belongings and how much they’re worth so you’ll know how much it would cost to replace them after a disaster.

3. Deductibles

As with most types of insurance, renters insurance has a deductible. If you sign up for a high-deductible policy, you’ll pay less each month but will pay more out of pocket when you make a claim. In the same vein, a low-deductible policy means you will pay more for your monthly premiums but won’t have to splash out as much at the time of a claim.

4. Your Credit Score

Insurance companies use a version of your credit score to determine your renters insurance premium. If you have a poor credit score, insurers see you as more likely to file a claim or miss payment, so you’ll pay more money.

5. Previous Claims History

Insurers will look at your previous claims history to determine how much you will pay for your policy. If you have a history of filing a lot of claims, chances are you will pay more than someone who has insurance but rarely or never files a claim.

6. Replacement Cost

When you create your policy, you will have the choice of a replacement cost value policy or an actual cash value policy. A replacement cost policy will reimburse you for the amount you paid if your property is damaged, whereas an actual cash value policy takes depreciation into account and will pay market value for your item.

While you can save money on your policy by going with actual cash value, you’ll pay the price if and when you make a claim on your renters insurance.

FROM THE INSURANCE FORUM

6 Ways to Save Money on Your Renters Insurance Policy

No matter what company you choose for renters insurance, it’s worth doing some research to see how you can save even more on your monthly premium. Here are a few common ways to save money.

1. Bundle Your Policies

Just as you can save money by bundling internet and TV, you can save by bundling your insurance. Many insurance companies offer discounts when you sign up multiple policies through them. So consider getting renters insurance through your auto insurance company, or get quotes for both types of insurance to see if you can save.

2. Ask for Professional Discounts

Many insurance companies offer discounts for military members, teachers, first responders and nurses. It’s worth asking whether your profession qualifies you for any discounts when you gather insurance quotes.

3. Improve Your Credit Score

Consumers with lower credit scores are more likely to pay higher insurance premiums. If you can get your credit score up to a good or excellent rating, you could see your premiums drop.

4. Set up Auto Pay

You could get a nice discount on your renters insurance by setting up an automatic monthly payments. Insurance companies like auto pay because it pretty much guarantees you will pay your bill, so they are likely to offer you a lower premium.

5. Look for Safety Discounts

Ask prospective renters insurance companies if they offer discounts for safety equipment, like security alarms, deadbolts, fire sprinklers and fire extinguishers. Of course, if your rental doesn’t already have these items, you’ll need to check with your landlord before installing them.

6. Ask About a Claims-Free Discount

Ask your insurer if you’re eligible for a discount after being claim-free for a certain period of time. This could help decrease your overall renters insurance cost.

Ultimately, the best way to find affordable coverage where you live is to do your homework and shop around. You can also ask family and friends for recommendations and get quotes from those companies. The key is to not settle for the first quote you get.

Catherine Hiles lives in Ohio with her husband and their two children. By day she manages a team of writers and graphic designers, and catches up on her own writing in her spare time.