When you buy a home, it is completely normal to purchase a homeowners insurance policy as well. However, most tenants who choose to rent a home do not purchase renters insurance. Part of the reason is that most of them do not know enough about it, whereas the other part is they believe it is too expensive.
The truth is, renters insurance is much cheaper than homeowners insurance, and both of them are equally important for protecting your valuable possessions. The price of renters insurance depends on a lot of different factors, but the monthly payments rarely surpass several hundred dollars.
This is not going to be the ultimate guide to renters insurance coverage, but we will tell you everything that you need to know about the costs involved.
The Average Price of Renters Insurance
The exact cost of renters insurance is determined after taking numerous factors into consideration; we will take a closer look at those later on. On average, you can get a $30,000 of personal property coverage for around $150 to $300 per year. Most of the times, it can be even less than that.
According to Brokers of America and the Independent Insurance Agents, the average cost of renters insurance is just $12 per month. For that amount of money, you will get $30,000 of property coverage against natural disasters, fire, and theft, as well as $100,000 of liability coverage.
Moreover, you can lower the cost of your renters insurance if you get it from the same company that issues your car insurance. These are the so-called multiple-peril insurance bundles — you should definitely consider them.
Factors That May Increase Your Renters Insurance Rate
Depending on certain factors, you might have to pay higher rates than the average.
Location Where You Live
The most important factor in determining the price of renters insurance is where you live. If you live in an area that has a high crime rate or is prone to natural disasters, you will end up with a higher monthly/annual premium. Also, premiums differ between rural and urban areas. Generally, renters insurance is cheaper in areas with fewer people.
Amount You Want to Cover
The more you pay, the higher your coverage will be. On average, renters insurance will cover $30-$40,000 in property and around $100,000 in liability. If you think that that is not enough and you need more, you will have to pay more as well.
There are numerous riders that you can purchase and add to your basic renters insurance policy. For example, you can add earthquake coverage if you live in an area prone to earthquakes, jewelry coverage if you have a lot of valuables, or flood coverage if you live near water. That will drive the price up.
Bad Credit and Multiple Insurance Claims
The cost of renters insurance, like any other insurance, depends on prior insurance claims and the state in which your credit is. If you have a bad credit rating and you have had multiple insurance claims before, there’s a high chance that you will have to pay a higher premium for your renters insurance coverage.
Factors that May Lower Your Rate
Likewise, if you’re lucky enough, some factors might drive the cost of your renters insurance down.
The higher your deductible, the lower your monthly premiums will be. A deductible of $1,000 is much better than a deductible of $500 when it comes to monthly payments. However, that also means that you will have to pay a lot more out of your pocket before you can file a claim, which can be a problem.
Installing Safety Features
Having a burglar alarm or other safety features in your home can significantly decrease your monthly premiums. These are an investment, but you can save money on your monthly payments in the long run if you have them.
Being a member of a certain club can get you a discount on your renters insurance rates. Some examples include wholesalers like Costco or organizations like Triple-A. But it all depends on the insurance company and their affiliations.
Actual Cost Policy
An actual cost policy pays you for what your possessions are worth now and not for what they were worth when you bought them. Therefore, monthly premiums are lower for this type of policy.