How much is Renters Insurance?

This article offers an overview of renters insurance and what it covers, more importantly, it tells us how much renters insurance is?

Renter’s insurance is property insurance that provides coverage for a policyholder’s belongings, liabilities, and possibly living expenses in case of a loss event. This is extremely important for tenants nowadays because the crime rate has increased in America. According to the Statista Research Department, the total rate of property crime was 1,958.2 cases per 100,000 inhabitants, with theft/larceny at 1,398 cases, inhabitants burglary at 314.2, and robbery at 73.9.  This depicts how essential it is, nowadays to have your personal belongings insured in case of any theft or fire. This allows you to cover the cost of unexpected expenses, even if you have the necessary savings to pay for uncertain costs of legal liabilities. In the event of a major disaster, a renters insurance claim will cover you for damage far above the cost of your premium, even if you’ve been paying for the policy for years.

Now coming on to the matter in question: How much is Renters Insurance? Read this article to find out about the average renter insurance cost in each state.

What is renter’s insurance?

Renter’s insurance is a type of property insurance that covers a policyholder’s belongings, liabilities, and possibly living expenses in the event of a loss. It is available to people who rent or sublet a single-family home, apartment, duplex, condo, studio, loft, or townhouse. The policy covers losses to the tenant’s personal property within the rented property. Furthermore, a renter’s insurance policy protects against losses resulting from liability claims, such as injuries sustained on the premises that are not the result of a structural problem with the property (in that case, the owner’s policy, not the renter’s, would apply).

Renters insurance is a policy that protects you if your personal property is damaged while you are a tenant. Perhaps more importantly, it shields you from liability claims.

For example, if someone slips and falls in your apartment or your dog bites him or her, that person has the right to sue you for compensation. Renters liability insurance would cover the costs of defending yourself as well as any settlement or judgment costs if you lost the case.

Renter’s insurance is intended for occupants who do not own the property but wish to protect their personal belongings while living in or on it. Renters should be aware that the property owner’s insurance policy does not cover them or their belongings. If the renter’s belongings are damaged or destroyed, the renter’s insurance policies will reimburse a renter for the cost of replacing property that is lost or damaged while on the property.

The benefits of having renters insurance come from its varied coverage, which insures you against the following.

  • Personal property damage: The average renter’s possession costs an average ranging from $20,000 to $30,000, according to various major insurers. If your personal property is stolen or damaged by a covered peril, such as a fire, renters insurance will cover the loss up to your selected limits.
  • Personal liability: Renters insurance covers the costs if you’re held liable for bodily injury or property damage.
  • Additional living expenses: If your rental home or apartment becomes uninhabitable due to a covered peril, a renters insurance policy will cover you for costs above your normal expenses. This ensures your budget will stay the same even as you temporarily live elsewhere.
  • Medical expenses: This feature covers medical costs for guests injured on your property, usually up to a limit of several thousand dollars.

All of these features provide coverage that far outweighs the amount you will pay for a policy each year. For example, a typical renters insurance policy will cover $30,000 in personal property damage and $100,000 in liability costs, and these limits can be adjusted depending on your needs. Your coverage levels are thus much higher than the cost of an average renters insurance policy, which is about $190 per year.

Here are some examples of events that are covered, and not covered, by typical renters insurance standard policies:

Covered:

  • Fire
  • Smoke damage
  • Falling object
  • Explosions
  • Theft
  • Riots
  • Lightning and Electrical damage
  • Snow, sleet, and ice

Not Covered:

  • Flood
  • Earthquake
  • Damage from pets
  • Personal Injury
  • Damage from Pests
  • Car damage
  • Sinkholes
  • Terrorism

Steps before you buy renters insurance

There are certain steps that you need to take before buying a renters insurance

You must take inventory of your personal property. The renter’s insurance will pay or replace your belongings provided they are ruined in a fire or any other calamity. You must take an inventory of the average cost of your belongings such that you know how valuable they are and how much worth of coverage you need.

For instance, if the worth of your personal belongings is $20,000, including furniture, clothing, TV, laptop, and other electronics, you should get a renters insurance policy with a personal property coverage limit of $20,000 or more. Anything less and you risk being unable to replace your things.

When taking a home inventory, you don’t have to write down every single thing you own, but you should aim for a rough estimate of the contents of each room, and consider recording the specific value of any big-ticket items. There are a few ways you can do this.

  • Document your personal property with photographs or videos
  • Keep receipts or print out bank statements when you purchase new furniture or expensive items
  • Hire professional appraisers for expensive or rare items
  • Update your inventory after a big purchase or every few months

There are free home inventory apps available, as well as other services that help you catalog your personal property. When you file a renters insurance claim, these records will be used to prove that you owned your belongings and that they were in good condition before the loss. Make a special note of any items that are difficult to replace or are expensive, such as art, collectibles, or jewelry.

Many policies, if they cover these things at all, have lower coverage sub-limits for expensive items that may not be equal to their actual value. As a result, you may want to consider purchasing additional coverage in the form of a renters insurance endorsement.

How do renter’s insurance claims work?

Renters insurance reimburses you for damaged or stolen personal property. You have to file a claim with the renter’s insurance company, including information about the covered loss.

Here’s how to file a renters insurance claim:

  • If it’s a theft or break-in, notify the police and file a police report.
  • Notify your landlord. The landlord may need to file a separate claim with their insurance if there’s structural damage.
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  • Take photos or videos of the damage. Make a list of stolen or damaged possessions. Don’t throw away damaged items until the renter’s insurance company tells you to discard them.
  • Contact your renter’s insurance company. Don’t wait to notify the insurer. Renters insurance policies may only give you two or three days to report a loss.
  • Fill out the claims form with the applicable information. The insurance company will review and contact you about the process. A claims process can take hours to days depending on the severity of the claim.

Filing a claim may increase your renter’s insurance rates. Insurance companies base rates on risk. If you’ve filed a claim, an insurer may view you as a bigger risk. Hence, the higher renters policy rates.

Before filing an insurance policy claim, think about how much the company may reimburse you for the loss and whether it’s worth it to file the claim. If a thief stole a 20-year-old TV and you have actual cash value coverage, you may get very little from the insurer if you file a claim.

What affects the cost of renter’s insurance?

Following are the few factors that affect the cost of Renter’s Insurance

1. Personal property coverage

Personal property coverage is the most important aspect of your renter’s insurance. This coverage compensates you if your belongings are damaged or destroyed as a result of a covered peril. Items such as furniture, electronics, clothing, and jewelry are frequently covered. Although you most likely have a lower limit for jewelry coverage, you may need to seek additional coverage via a rider or endorsement.

So, if a fire or hurricane destroys your personal belongings, or if they are stolen from your home, your renter’s insurance will come in handy. All you have to do is file a claim, pay your deductible, and your insurer will handle the rest, providing you with a check to replace your belongings.

It will cost you more money to insure your personal belongings if you have more of them. This is due to insurance companies taking on more risk for more belongings. If you insure $10,000 in personal belongings, an insurance company is only required to pay $10,000 if everything is destroyed. If they have to pay out $50,000, they will charge you more in premiums to compensate for the increased risk.

2. Liability coverage

Liability insurance is also an important component of your renter’s insurance policy. It can help pay for medical bills if someone is injured on your property and you are found liable, property damage you cause to someone else, dog bites on or off your property, and legal fees if one of those incidents results in a lawsuit being filed against you.

Renters’ insurance policies include $100,000 in liability coverage as standard. If you file a claim, the insurance company will only pay a maximum of $100,000. If the damages exceed that amount, you must pay the difference. Your insurer will typically provide up to $500,000 in liability coverage, with an umbrella policy providing $1 million or more.

3. Additional living expenses coverage

Another important controllable factor influencing your renter’s insurance cost is additional living expenses coverage. This is the amount of money that an insurance company will pay toward unexpected costs if a covered peril causes you to be forced to temporarily vacate your rental property due to damage. If you set your policy’s maximum at $2,000, your insurance company will only pay up to that amount for relocation expenses such as finding a temporary place to live, extra gas money for longer commutes, a storage unit to house the belongings you can’t bring with you, and other related costs. If you set it at $20,000, your insurance company may be required to pay that amount.

4. Deductible amount

Your policy’s deductible determines how much you must first pay before the insurance company kicks in and pays the rest. The higher your deductible, the lower your renter’s insurance cost. This is because you will have to pay more, and the insurance company will pay less per claim.

Deductibles for renters typically range from $500 to $1,500. If you have a $500 deductible and incur losses totaling $20,000, you must pay $500 and your insurance company will pay the remaining $19,500. If you have a $1,000 deductible and incur losses totaling $2,000, you must pay $1,000 and your insurance company will pay the remaining $1,000.

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In the latter case, it may be worthwhile to pay for the damages out of pocket. Filing a claim can raise your premiums, and the more claims you file, the riskier you become to insurers.

5. Actual cash value vs replacement cost

You can choose between two types of coverage that will pay to repair or replace your personal belongings if they are damaged, destroyed, or stolen as a result of a covered peril: actual cash value and replacement cost. Actual cash value considers depreciation due to aging and general wear and tear, which reduces the value of your possessions. Replacement cost simply pays you the amount you paid for an item — even if it’s ten years old.

So, depending on which coverage they choose, a renter who files a claim for a stolen laptop may receive two different amounts. If the laptop was purchased for $1,000 five years ago, a renter with replacement cost coverage would receive the entire $1,000 from their insurer. If the insurer determines that the laptop has a 10-year lifespan, a renter with actual cash value coverage may only receive $500. Because replacement cost coverage almost always pays out more than actual cash value coverage, it raises your monthly renter’s insurance cost.

6. Pets

Owning a dog may result in significantly higher renter insurance rates because they are deemed to pose a higher risk. Dog bites are one of the most common causes of home insurance claims, costing insurers hundreds of millions of dollars each year. Certain breeds are also thought to be more dangerous than others.

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7. Location

The location of your rental home also influences the cost of your monthly premium. If you live in a high-crime area, your premiums will be higher due to the increased risk of theft. If you live in a state or area prone to natural disasters, your premiums will rise in comparison to locations that don’t see much natural disaster activity.

8. Residence type

Are you looking to rent a single-family home, an apartment, a duplex, a mobile home, or something else? Each type of residence has its own set of risk factors, which all have an impact on your monthly premium.

Storm damage is more likely in mobile homes. Because your neighbors could accidentally start a fire or cause water damage to your belongings, living in an apartment increases your risk factor. While houses are typically more sturdy to withstand natural disasters and do not see the damage risk caused by neighbors, they may be an easier target for theft and vandalism.

9. Discounts

Many safety features can be added to your home to lower your monthly premiums. Smoke detectors keep a fire from spreading and causing additional damage. Thieves are deterred from breaking in and stealing their belongings by a monitored security system and reinforced door locks. During strong winds, impact-resistant windows keep your belongings safe. All of these factors can play a significant role in lowering your monthly premiums.

10. Bundling

If you combine your renters and auto insurance policies with the same company, you could save a little money each month. Furthermore, if you stay with the same company for a certain number of years, they may be more inclined to provide a discount as a reward for your loyalty.

How much is the renter’s insurance cost by the state

 

State Average monthly rate Average annual rate
Alabama $29 $346
Alaska $16 $187
Arizona $17 $204
Arkansas $30 $360
California $16 $195
Colorado $15 $180
Connecticut $19 $228
Delaware $20 $245
Florida $29 $348
Georgia $25 $300
Hawaii $19 $224
Idaho $16 $192
Illinois $14 $168
Indiana $20 $240
Iowa $17 $204
Kansas $17 $204
Kentucky $18 $218
Louisiana $37 $442
Maine $13 $156
Maryland $16 $191
Massachusetts $16 $192
Michigan $34 $408
Minnesota $15 $176
Mississippi $27 $318
Missouri $22 $260
Montana $14 $168
Nebraska $14 $172
Nevada $18 $216
New Hampshire $12 $139
New Jersey $16 $195
New Mexico $22 $264
New York $13 $150
North Carolina $17 $200
North Dakota $15 $185
Ohio $20 $237
Oklahoma $30 $360
Oregon $15 $180
Pennsylvania $14 $168
Rhode Island $16 $193
South Carolina $19 $230
South Dakota $14 $162
Tennessee $22 $260
Texas $26 $312
Utah $12 $144
Vermont $14 $168
Virginia $16 $192
Washington $15 $180
West Virginia $19 $228
Wisconsin $15 $180
Wyoming $12 $148

 

The most expensive states for renter’s insurance

The Renters in Southern states see higher rates in comparison to other states. The average cost of renters insurance is highest in Louisiana, closely followed by Michigan, Arkansas, and Oklahoma. In the top four most expensive states, the monthly premium came out to at least $30 — or $360 per year of coverage. Mississippi rounds out the top five. The common thread here is extreme weather. Mississippi, Louisiana, and Arkansas, and Michigan are all coastal states that are prone to strong storms, while tornadoes are common in Oklahoma. Insurance companies will consider these states to be higher-risk, implying that residents are more likely to file a claim.

  1. Louisiana: $37
  2. Michigan: $34
  3. Oklahoma & Arkansas (tie): 30
  4. Mississippi: $27

The  U.S average for renters insurance is $19

The most economical states for renters insurance

The states with the cheapest renters insurance, on the other hand, are much better protected from extreme weather and natural disasters. If you’re planning a move, it’s a good idea to be aware of state-by-state differences so you can account for the cost difference in your budget. The Western states experience the lowest premiums. On the other end of the cost spectrum, renters in New Hampshire, Utah, and Wyoming pay an average of around $12 per month or about $144 annually. Two of these states are located inland and experience fewer natural disasters that drive insurance rates higher along the coast.

  1. New Hampshire: $12
  2. Utah: $12
  3. Wyoming: $12
  4. New York: $13
  5. Maine: $13

What is the cheapest renter’s insurance you can buy?

The most affordable renters insurance will provide the least amount of coverage. If you choose a low deductible ($500 to $2,500) and a low coverage amount for personal property (say, $10,000), personal liability ($100,000), and medical payments to others ($1,000), you could get renters insurance for as little as $5 to $8 per month. When looking for the most affordable renters insurance, you can compare quotes online.

How much does additional coverage cost?

Natural disasters are not covered by renters insurance, so if you live in an area prone to floods or earthquakes, you will need to add additional coverage to your policy to cover those perils. As you increase the coverage limits on your renter’s policy, your premiums rise. But keep in mind that renters insurance is extremely affordable, so even significant increases in coverage can cost only a few dollars more per month.

For example, even if you increase to the most common coverage amounts — $25,000 for personal property, $300,000 for personal liability, and $2,000 for medical payments to others — your monthly premiums can often be less than $20.

You can also buy endorsements to increase your coverage for specific items. For example, if your basic policy only covers $1,000 in jewelry but you have a $5,000 ring, an endorsement could cover the difference in coverage. These additions can be as little as a few dollars more per month, or even less in some cases.

How can you get discounts on renters insurance?

  • Installing approved security devices: Smoke alarms and carbon monoxide detectors can lead to a discount. You can reduce your insurance premiums by installing more safety and security features in your home. Many renters insurance companies provide discounts if your home has one or more of the following features:
  • Local fire/smoke alarms (sounds in-home)
  • Central fire/smoke alarms (alerts monitoring system)
  • Automatic sprinklers
  • Fire extinguisher
  • Local burglar alarm (sounds in-home)
  • Central burglar alarm (alerts monitoring system)
  • Deadbolt lock
  • Buy an insurance policy with a high deductible: The higher your deductible the lower your premium. Just make sure you have enough saved up to cover your deductible if there’s an emergency.
  • Improve your credit: Having bad credit or a low credit score may raise your premiums. Pay down your debts and make any bill payments on time and in full, which should raise your score and possibly lower your premiums.
  • Pay your premium in full: If you pay a year’s worth of premiums upfront (instead of monthly or bi-annually) then your insurance company may offer you a discount.

An insurance company may also offer discounts if you combine your renters before insurance with another insurance policy, such as auto insurance, or if you pay your annual premium in one lump sum rather than monthly. Increasing your credit score is another excellent way to save money. This one takes time, but as your credit score improves, you may be able to get lower renters insurance rates.

Is renter’s insurance worth it?

Renters insurance is worth it because it protects you from unforeseen circumstances, that too at an affordable price. In certain instances, renters insurance is required by your landlord as a prerequisite for signing the contract or moving in. Landlords often require it because they don’t want to be held liable in case someone gets injured in their tenant’s home. Not to mention, renter insurance is beneficial for the tenant, as it protects items that are not insured by the landlord’s insurance. Even if renters insurance isn’t required by the landlord, you must get one to protect yourself from the financial burden an unexpected loss can bring. If you don’t want to commit too much money at first, the good news is that there are some reasonably priced policies offered by reputable providers. Furthermore, if you purchase a bundled policy from your insurance provider, you may be able to save money on your rate. To avoid being left with out-of-pocket expenses after an unexpected event, renters insurance may be an important piece of your financial planning.

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 Conclusion

Now that you’ve gone through the article you must be well acquainted with the renter’s insurance and its cost. It is of utmost importance that you install approved security devices and take other measures mentioned to avail a discount on your renter’s insurance. Likewise, purchase a bundled policy from your insurance provider to save money. This policy provides you with protection from an unexpected loss, so don’t miss out on the protection and buy yourself renter’s insurance.

Charles Bains

Charles Bains

Charles Bains started his insurance career as a marketing intern before pounding the pavement as a commercial lines agent in Orlando, FL. As an industry journalist, his articles have appeared in a variety of trade publications. His insurance television career, short-lived but glorious, once saw him serve as the expert adviser on an insurance-themed infomercial (yes, you read that correctly). Having recently worked for various organizations, coupled with his broader insurance knowledge, Charles is able to understand our client’s needs and guide them accordingly. He is a gem for Insurance Noon as his wide area of expertise and experience have been beneficial in conducting further researches to come up with solutions and writing them in a manner which is easy for everyone including beginners to comprehend.

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