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How to find cheap renters insurance

By Posted :

If you're leasing an apartment or other residence, you may think you don't need insurance coverage. The truth is, your landlord’s insurance only goes so far. That’s why you need renters insurance

Renters insurance protects you if your personal property is stolen, damaged or lost or if you’re legally liable for an injury on the property or damage you cause there. 

The good news is that you can often find inexpensive renters insurance. The key to saving money is to understand the coverages you need, compare renters insurance companies and bundle policies for a discount if possible.

What coverage does renters insurance provide?

Renters commonly assume that their landlord has insurance to protect them. Actually, the landlord or property manager probably carries insurance for the building itself. That coverage won’t protect your personal belongings in the event of a loss. And you may be on the hook to pay for any damages and injuries for which you're liable.

"If you rent, you can definitely benefit from renters insurance," says Jenna Bruce, a licensed insurance professional with Soleau Insurance Agency. 

She says a standard renters policy will usually include coverage for:

  • Personal property -- Handles damaged, lost or stolen furniture, clothes and other belongings. 
  • Personal liability -- Protects you if you’re legally liable for an event that results in someone filing a lawsuit against you. 
  • Loss of use -- Helps you with additional expenses, such as hotels and meals, if you’re displaced from the rental. 
  • Medical payments -- Insures you for an accident or occurrence you’re liable for that results in bodily injury.

You can also opt for additional riders that provide extra coverage for things like expensive jewelry, collectibles, personal watercraft and snowmobiles.

Jason Christiansen, co-founder of Young Alfred, cautions that renters insurance doesn’t cover normal wear and tear or intentional damage.

"It does cover sudden and unexpected damage from one of the multiple perils listed in your insurance policy documents," he says.

Why you may need renters insurance

Renters insurance goes beyond your personal contents and shields you for much more. Renters insurance is worth every penny, says Christiansen

"Lacking renters insurance, you may have $10,000 in personal belongings that, if you lost these items, wouldn't completely devastate your finances. But it would be devastating if you accidentally back up the dishwasher or toilet, causing $150,000 in water damage to the 10 units below yours. An event like that would be covered by your personal liability coverage."

It's also easy to overlook and underestimate the coverage needed for additional living expenses.

"Consider that landlords are usually only required to give you a prorated amount of your rent if the premises can't be occupied. So, if your landlord needs you out of the unit to repair damages, they can ask you to leave and give you a prorated rent for the time you're out," Bruce explains. "For example, assume your rent is $900 per month. The landlord needs you out for 10 days. You'll only be given $300 in prorated rent for those 10 days. This will not cover the number of days you are displaced from the unit and have to pay for a hotel. That's why loss-of-use coverage is so essential."

Jonas Bordo, CEO/co-founder of Dwellsy, says renters insurance may be mandatory in some leases. 

"Renters insurance coverage is often required by landlords -- at least personal liability protection," he says.

How much renters insurance do you need?

To determine how much coverage you need and the right coverage limits, Bruce recommends asking yourself several questions.

  • How much would it cost to replace everything I own? To help determine this, create a detailed inventory of your possessions and estimate their net worth.
  • How long would it take to move into a new place in my area?
  • How much would it cost to live in a hotel or motel for at least a certain number of days?
  • What would happen if someone got injured in my rental unit and tried to sue me?
  • What would happen if I caused an accident or mishap that resulted in property damage in the building?

An average renters insurance policy provides at least $100,000 in liability coverage. That coverage is usually enough for most renters. However, you may want to increase the amount if you often host many guests.

"I recommend $300,000 of liability coverage to be on the safe side," suggests Christiansen.

Many standard renters insurance policies offer up to $30,000 in coverage on personal property. That should be more than enough for most renters; but plan on having at least $10,000 in coverage here, advises Christiansen.

For loss of use, carriers either cover a flat amount -- often between $1,500 and $5,000 -- or a percentage of your personal property coverage. If, for example, you have $10,000 in personal property coverage and your loss of use is covered up to 20%, your claim will pay out up to $2,000 for loss of use.

When it comes to medical payment coverage, the experts recommend having at least $1,000 in place to cover medical expenses should a guest or other party sustain an injury on your rented property.

 

How much renters insurance costs do you need?

Bruce says the premium for a standard renters policy runs around $201 a year, or $16.75 per month. That’s coverage for about $10,000 in personal property covered at replacement cost value, $3,000 in loss-of-use coverage, $100,000 in personal liability coverage and $1,000 in medical payments coverage.

Of course, you may be able to find the cheapest renters insurance policies for comparable coverage by shopping around.

"If you want liability-only coverage, you may pay closer to only $10 per month," Bordo notes.

Beyond the premium, you'll also pay a deductible, which is what you’ll have to pay when you file a claim. Deductibles are often $500 per incident.

"This means in the event of a loss, you'll pay $500 out-of-pocket before the insurance company pays anything. For example, if you have a loss of $4,500, your insurance carrier will reimburse you $4,000," says Bruce.

Renters insurance premiums are based on risk. You can get cheaper rates if the insurer feels you’re a lower risk. Christiansen says you'll likely pay less if you have:

  • No insurance claims history of claims
  • A strong credit rating 
  • Don't live on the ground level

How to shop for cheap renters insurance

When it's time to hunt for inexpensive renters insurance, you should first check with your current insurer and see if it offers bundling discounts. Bundling discounts allows you to save when you have more than one policy with an insurer, such as auto and home policies.  

"If you already have an auto insurance policy and add a renters insurance policy under the same insurance provider, that will likely trigger a discount. In many cases, this discount can cover most if not all of the renters policy premium, essentially giving you the renters coverage for a very low cost," explains Eric Vaden, the local agency owner of Geico Boston-South Shore.

Even if you qualify for that discount, it pays to request quotes from several different insurance providers and carefully compare coverages and costs. Ask about all the details on the coverages you're being quoted for and understand your limits, exclusions and deductibles.

"Consider adding riders where needed, such as for high-value items like an engagement ring or watch," suggests Christiansen. "Also, think about adding water backup, coverage that's not often included by default, but which can save you if you are liable for a flooding event."

Cheap renters insurance by state

What you'll pay for renters insurance will depend on where you reside. Research conducted by Insurance.com found that the average yearly premium paid by state can vary from as little as $169 (in Vermont) to as much as $600 (in Louisiana and Mississippi).

A separate Insurance.com analysis reveals that the national average renters insurance cost for a policy with coverage levels of $40,000 for personal property, $100,000 of liability protection and a $1,000 deductible is $326, or about $27 a month.

State Average Premium
Vermont$169
Wyoming$183
North Dakota$207
Arkansas$218
Hawaii$220
Washington$223
South Dakota$231
Utah$244
New Hampshire$247
Iowa$249
Oregon$249
Wisconsin$268
Maryland$269
Montana$280
California$281
Pennsylvania$286
Colorado$292
North Carolina$297
District of Columbia$300
Idaho$307
Nebrasksa$307
Florida$313
Maine$316
Virgina$321
Indiana$324
Minnesota$324
New York$328
West Virginia$328
Illinois$330
Arizona$336
New Jersey$350
Tennessee$350
Nevada$355
Connecticut$359
New Mexico$359
South Carolina$381
Delaware$383
Missouri$386
Kentucky$388
Rhode Island$392
Texas$396
Kansas$404
Ohio$405
Arizona$428
Massachusetts$443
Michigan$525
Georgia$536
Alabama$542
Oklahoma$561
Louisiana$600
Mississippi$600

Who has the cheapest renters insurance?

Shopping around for renters insurance can lead to lower rates. 

The same insurance companies don’t always have the lowest rates for each type of coverage. Let’s take a look at the cheapest renters insurance on average by company: 

Barebones coverage

Here are the 10 best deals in terms of minimum annual premiums for renters insurance with a maximum of $12,000 for personal property, $100,000 for liability and a $500 deductible:

  1. Auto Owners Insurance: $24
  2. USAA: $30
  3. Erie Insurance: $41
  4. Safeco: $48
  5. West Bend Mutual Insurance: $48
  6. Liberty Mutual: $50
  7. Concord General Mutual Insurance: $75
  8. American Family Insurance: $80
  9. Hanover Insurance: $81
  10. Nationwide Insurance: $84

Mid-level coverage

Here are the minimum annual premiums you'll pay for renters insurance with a maximum of $20,000 for personal property, $100,000 for liability, and a $500 deductible:

  1. Auto Owners Insurance: $25
  2. USAA: $43
  3. Erie Insurance: $54
  4. Liberty Mutual: $66
  5. West Bend Mutual Insurance: $68
  6. Concord General Mutual Insurance: $75
  7. American Family Insurance: $80
  8. Hanover Insurance: $81
  9. Nationwide Insurance: $84
  10. Citizens Property Insurance: $86

High-end coverage

Here are the minimum annual premiums you'll pay for renters insurance with a maximum of $60,000 for personal property, $300,000 for liability, and a $1,000 deductible:

  1. Auto Owners Insurance: $25
  2. Liberty Mutual Insurance: $51
  3. USAA: $54
  4. Erie Insurance: $71
  5. Concord General Mutual Insurance: $87
  6. American Family Insurance: $90
  7. Hanover Insurance: $90
  8. West Bend Mutual Insurance: $101
  9. State Farm: $106
  10. Hanover Insurance: $107

As you can see from these charts, you can pay $25 or less per year for even higher-than-recommended renters insurance coverage -- much less than the $326 paid annually, or $27 per month, on average, forked over by most consumers. 

But as is true with any insurance plan, the price you are quoted can vary and depend on your creditworthiness, history of claims and other factors. Make sure to compare multiple renters insurance companies to find the best rates for your specific coverage.