For an affordable price every month, renters insurance can protect your personal belongings if they receive damage and protect you against liability claims. Keep reading this guide to determine what factors will affect the cost of your policy, how to save money on a premium, and tips for finding the best renters insurance for your home.
How Much Does Renters Insurance Cost?
The average cost of renters insurance is about $15 per month, or $180 a year. That gets you basic renters insurance coverage with a policy that looks like this:
Coverage Breakdown
| Areas of Coverage | Coverage Amounts |
|---|---|
| Personal property | $25,000 |
| Loss of use | $5,000 |
| Personal liability | $100,000 |
| Medical payments to others | $1,000 per person |
| Deductible | $500 |
Cost by State
The cost of a policy varies by state, so here’s a comparison chart with the five most expensive and least expensive states and their average renters insurance rates:
Cost Breakdown
| Most Expensive States | Yearly Cost | Cheapest States | Yearly Cost |
|---|---|---|---|
| Mississippi | $258 | South Dakota | $123 |
| Oklahoma | $236 | Wisconsin | $134 |
| Louisiana | $235 | Minnesota | $140 |
| Alabama | $235 | Nebraska | $143 |
| Texas | $232 | Iowa | $144 |
Factors that Affect the Cost of Renters Insurance
A variety of factors will affect the cost of your premium, including:
- Pets—You rate will go up if you have pets, especially ones that have a history of aggression toward people.
- Credit score—You’ll be considered more risky to insure if you have a low credit score, increasing the cost of your premium.
- Age/renting history—If you’re young with little renting experience, your insurance provider will likely charge you more.
- Claims history—If you have a history of filing a lot of insurance claims, your rate will be higher because the provider will assume you’ll continue that pattern of behavior with the new policy.
- Safety features—If your home has safety features like a security system, fire extinguisher, and smoke detector, you’ll get a discount because those features may decrease the amount of damage caused by a covered event.
- Age of building—If the property you’re renting is older, your rate will likely be higher because the building could have more issues that you would need to file a claim for.
- Proximity to fire station and fire hydrant—Insurance companies prefer to provide insurance for renters that are within five miles of a fire station and 1,000 feet from a fire hydrant, since this decreases the amount of time that firefighters need to put out a fire, which decreases the amount of damage done.
- Susceptibility to natural disasters—If you live in a state prone to natural disasters, like California, Louisiana, or Florida, your premium will cost more.
- Cost of living—If your state has a higher cost of living, your renters insurance will also be high.
- Deductible—The higher your deductible, the lower your policy premium.
- Amount of belongings—The amount of belongings you have will affect how much personal property coverage you get, which could increase or decrease your premium.
- Endorsements—If you purchase additional coverage for your base policy for events like identity theft and earthquakes, you may have to pay more for your policy.
Tips to Save Money on Your Insurance Policy
Here are some tips to help you lower your insurance premium:
- Bundle with auto insurance—Your first stop when looking for renters insurance should be your car insurance provider, if you have one. Insurance companies will give you a discount for bundling insurance policies, so consider getting a quote from your auto insurance provider to see how much you could save.
- Choose a higher deductible—Raising your deductible to $1,000 or more will decrease the cost of your premium.
- Look into discounts—Insurance providers often have several renters insurance discounts, including ones for having safety features in your home, using auto pay, and being claims-free.
- Maintain a healthy credit score—Maintaining a credit score of at least 700 will save you money because the insurance company will trust you more to pay your premiums and deductibles on time.
- Pay annually or semi-annually—Monthly payments are the most common method renters use to pay their premiums. However, all companies will allow you to pay for a full policy upfront, and some may even allow semi-annual payments two to four times a year. These less frequent payments end up being cheaper because insurance companies tack on interest to monthly premiums.
How to Choose the Best Renters Insurance
In addition to the tips above, keep these factors in mind as you search for a policy:
- Decide on an ACV or RCV policy—Personal property coverage comes as an actual cash value (ACV) or replacement cash value (RCV) policy. ACV policies will pay to replace your items based on their current, depreciated value. RCV policies are more expensive, but your insurance provider will pay for new items.
- Take a home inventory—Determine how much your personal belongings are worth before getting a quote. You can do this by taking inventory of your belongings and estimating their value or you can use an estimation tool that companies like Geico provide online.
- Consider customer service—If you like to speak with customer representatives, make sure the insurance company has a 24/7 customer service line. If you prefer self-service, determine if the company has a customer portal or mobile app.
- Shop around for quotes—Don’t just buy the first insurance policy you come across. Shop around and get at least three quotes from different providers so you can compare coverage and get the best policy for your budget.
Compare Renters Insurance Companies
If you’re not sure which renters insurance company is right for you, take a look at the coverage you can get from Allstate, American Family, and State Farm:
Renters Insurance Options Breakdown
| Companies | Allstate | American Family | State Farm |
|---|---|---|---|
| Monthly price | About $16 | Less than $15 | About $12 |
| Personal property coverage limits | $25,000–$150,000 | $10,000–$100,000 | No limit |
| Liability coverage limits | $100,000, $200,000, $300,000, or $500,000 | $100,000, $300,000, or $500,000 | $100,000, $300,000, $400,000, $500,000, $750,000 or $1,000,000 |
| Available discounts | 5 | 5 | 2 |
Our Conclusion
The national average for renters insurance is about $15 per month, but that cost will vary depending on your state, claims history, and other factors. To see how those factors will affect your premium, get renters insurance quotes from several companies before signing up for a policy.
Frequently Asked Questions About Renters Insurance
What is renters insurance?
Renters insurance is a type of policy renters buy to get protection for personal property and liability claims. If an event damages your belongings, your policy will cover replacement costs. If you’re liable for an event that injures someone or damages their belongings, your policy will also cover those expenses.
Most policies also include coverage for additional living expenses when an event makes your home temporarily unlivable and for medical payments when a guest is injured in your home.
What does renters insurance typically cover?
In general, renters insurance covers losses caused by the following events:
- Vandalism
- Theft
- Damage from vehicle
- Falling objects
- Weight of snow, sleet, or ice
- Fire
- Lightning
- Wind
- Hail
- Explosions
- Smoke damage
- Riots
Is renters insurance required?
No state requires insurance for renters, but many landlords will require you to purchase a policy to rent a unit on their property. Oftentimes, the landlord insurance requirement is $100,000 for liability coverage, but you can add coverage for your personal belongings for only a few extra dollars each month.
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