Insuring where you live isn’t just important for homeowners: It’s a key part of protecting your home and financial stability for renters as well. Yet when it comes to the cost, there are several factors that influence the exact cost of renters insurance, including:
- The location of your residence
- Whether you rent a house, condo, or apartment
- Your credit score
- The amount of coverage
- Your deductible
In this blog, we examine the cost of renters insurance and walk you through some important considerations when choosing a renters insurance policy.
What Is Renters Insurance?
Renters insurance protects your belongings against damage or loss and protects you from liability when you’re living on rented property. A typical renters insurance policy includes three types of coverage, including:
- Personal Property: If items like clothes, electronics, or furniture are damaged or stolen, renters insurance can help cover the cost of repairing or replacing them.
- Liability: If a guest in your home is injured, or you’re sued for property damage, renters insurance can cover some of the legal expenses.
- Additional Living Expenses: If your home becomes uninhabitable due to a fire or a sewer backup, renters insurance can contribute to temporary living expenses while your home is repaired.
What Doesn’t Renters Insurance Include?
Renters insurance doesn’t include coverage for the building itself or any of the landlord’s property. It also doesn’t cover damage due to floods and earthquakes. If you live in a region that is prone to either, consider purchasing separate flood or earthquake insurance.
If you run a business from your rented home, remember that renters insurance doesn’t cover your business property or activities; you need a separate policy for that.
Most surprisingly, many renters insurance policies may not include coverage for expensive collectibles and valuables, such as jewelry. When you’re picking a policy, you should read it carefully to determine whether such items are included.
How Much Is Renters Insurance on Average?
The national average cost for renters insurance in 2024 is between $13 and $22 per month. While the exact cost varies according to the factors below, this number should serve as a useful baseline when comparing rates to ensure you get the most value for your money.
Factors That Affect the Cost of Renters Insurance
Location
Location is probably the biggest factor in the cost of renters insurance: Different states have different rules and requirements, and different areas of the country have different levels of insurance risk associated with them. Areas that are prone to hurricanes, wildfires, flooding, and other disasters have higher rates. High crime rates have an impact too.
Coverage Amount
Another reason an apartment is cheaper to insure than a home is simple math: the more coverage you need, the more your insurance costs. Additionally, a higher deductible means you pay lower premiums monthly, but you must pay more out of pocket in the event of a loss (more on this in a moment).
As an example, let’s compare a policy that provides $15,000 of personal property coverage with one that provides $50,000 of coverage.
Another factor to consider is the difference between Replacement Cost Value (RCV) and Actual Cash Value (ACV) coverage. RCV coverage pays to replace your belongings with new items of similar quality. ACV policies, on the other hand, pay the depreciated cash value and can leave you responsible for more of the financial burden of replacing your items.
Deductible
A higher deductible translates into lower monthly payments: You take on more of the financial risk in case of a potential loss, and the insurance company rewards this risk with lower monthly payments. This is a trade between your risk tolerance and your financial situation: If you can afford a high out-of-pocket cost in case of a loss, a high deductible can lower your monthly payments and save you money in the long term. If, on the other hand, a large one-time payment would be a challenge, consider a lower deductible.
Type of Residence
Single-family homes are more expensive to insure than multi-family dwellings. In multi-family dwellings, there are more likely to be shared safety features like fire alarms that contribute to insurance cost. Likewise, an older residence may have outdated plumbing or wiring that is more likely to fail and cause damage.
Credit Score
Your credit score can also affect your renters insurance premiums, with a higher credit score generally translating to lower insurance premiums. (Insurance companies do not use a FICO credit score; instead, they use something called a credit-based insurance score.) In theory, this practice keeps insurance company costs low by raising premiums in areas with higher risk of property damage. In practice, credit scores have been used by insurance companies to discriminate against non-white policyholders.
How To Estimate Your Renters Insurance Premium
To find out how much your renters insurance premium might be, the most reliable way is to contact an insurance agent who specializes in renters insurance. They are experienced in the local insurance market and should be able to quote you a price that best matches your particular situation.
Other options are found online: Many insurance companies have tools on their websites where you can input your information to get an estimate. You can also take advantage of tools like those available at PolicyGenius or Insure.com, where you can compare quotes from multiple insurance companies at once.
Renters Insurance by State
The cost for renters insurance varies by property values as well as by assessed insurance risk due to the likelihood of natural disasters such as wildfires, hurricanes, and earthquakes. For example, a policy on a single-family home in San Francisco is likely to have a higher premium than a similar home in Minneapolis due higher property values, as well as the increased risk of wildfires and earthquakes in Northern California.
New York, Georgia, Louisiana, Michigan, and Rhode Island have some of the highest average renters insurance premiums in the country. North Carolina, North Dakota, Iowa, Wyoming, and Wisconsin have some of the lowest.
Renters Insurance Discounts
To get the most out of your money, look for available discounts. Some common discounts that insurance companies offer are:
- Bundle discounts: If you have other insurance policies, such as auto or homeowners insurance, with the same company, you may qualify for a bundle discount.
- Home security discounts: Installing a home security system can lower your premium.
- Claim-free discounts: If you have a clean claims history, you may be eligible for a discount.
- Online enrollment discounts: Some companies offer discounts for enrolling in their policies online.
- Payment discounts: Paying your premium annually or in full may result in a discount.
Make sure to consult with your insurance agent to determine what discounts are offered by your particular insurance company.
Is Renters Insurance Worth It?
Renters insurance is almost always worth it. At an average cost of $13 to $22 a month, you get financial protection in case your belongings are stolen or damaged or someone is injured on your property. Additionally, renters insurance can protect you if you are found liable for property damage; this can cover legal fees (which add up quickly).
Let’s consider an example. Let’s say you rent a new-construction condo with a gorgeous waterfront view, and a hurricane comes through. The building is severely damaged, and almost all of your belongings have been damaged beyond repair. A renters insurance policy can not only cover some of the cost of replacing your belongings, it can also help pay for the food and lodging you need while your condo is being repaired. Without renters insurance, you have no financial help in place, leaving you responsible for the financial burden of the disaster.
How To Choose the Right Renters Insurance Plan
Choosing the right renters insurance can be complicated, but it’s a smart investment to protect you and your belongings from factors outside of your control. Make sure you consider the following factors when choosing your renters insurance:
- Coverage limits: Determine the amount of coverage you need to adequately protect your belongings. Consider the value of your possessions and any high-value items. If you have a valuable collection of some kind, make sure you have a good sense of the value of those items.
- Deductible: Decide on a deductible that balances affordability with your risk tolerance. A higher deductible generally results in lower premiums but requires you to pay more out-of-pocket in case of a claim.
- Additional coverage: Consider if you need additional coverage options like personal liability, off-premises coverage, or identity theft protection.
- Company reputation: Research insurance companies to find one with a good reputation for customer service and claims handling.
- Price: Compare quotes from multiple insurance companies to find the best price for the coverage you need.
- Discounts: Check if you’re eligible for any discounts, such as bundle discounts, home security discounts, or claim-free discounts.
FAQs About Renters Insurance
How Much Does Renters Insurance Cost on Average?
On average, renters insurance costs $13 to $22 a month. There are several factors that affect the exact cost per month, including location, property values, credit score, and type of residence. Make sure you consult your insurance agent to understand the specific factors that affect your insurance premiums.
How Important Is Renters Insurance?
Renters insurance is a sound investment that protects your property in case of theft or damage and provides financial protection in case you are found liable for property damage or personal injury while someone is in your home.
Do Some States Require Renters Insurance?
Not at this time. However, many landlords do require proof of renters insurance as part of a lease agreement. Check your local laws and your lease to determine the requirements for your situation.
Does Renters Insurance Cover Theft?
Yes, renters insurance typically covers property theft. Often there are limits and exclusions, however: Your policy has an upper limit on coverage. Additionally, there are sometimes exclusions on certain items; jewelry, antiques, and other high-value collectibles that sometimes require a separate policy. Remember to assess your own risk tolerance and financial situation when considering the deductible versus cost of premiums as well.
Does Renters Insurance Cover Water or Fire Damage?
Yes, renters insurance typically covers water and fire damage to your personal belongings. If, for example, the pipes burst in your apartment building or there is a fire in your condo complex, your personal belongings should be covered.
Why Is My Renters Insurance So High?
Factors like living in an area with high crime rates or in an area at high risk for natural disasters raise your premiums. Additionally, your rates can be higher because of personal factors like credit score or claims history. To understand more about your renters insurance cost, consider the following steps:
- Review your policy: Check the coverage limits, deductible, and any additional coverage options you’ve chosen.
- Get quotes from other insurance companies: Compare prices and coverage options to see if you can find a better deal.
- Ask your current insurance company: Contact your insurer to discuss the factors that contribute to your premium,and see if there are any ways to lower it.
How Much Is Rental Insurance in Florida?
According to NerdWallet, the average cost of renters insurance in Florida is $152/year or $13 per month. Your cost is likely to be higher depending on where you live and the amount of coverage you need, as discussed above.
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