You might think you don’t own very much, but think back to the last time you moved. Remember all that stuff you schlepped from one apartment to another? You need enough renters insurance to cover all those personal belongings if they were destroyed by a problem like a fire.
Without renters insurance, you’d have to replace all of your belongings out of your own pocket. And you might be surprised to find out it’s much cheaper than you think. You can find the best renters insurance for about $14 per month.
How Much Renters Insurance Do I Need?
You need enough renters insurance to at least cover your personal belongings. For example, if you own $15,000 worth of stuff, you can buy renters insurance with $15,000 in personal property coverage. If you’re not sure how much stuff you own, you can create a home inventory to find out.
But your personal property coverage is just a starting point. A renters insurance policy comes with other coverage types, such as liability insurance and additional living expenses coverage. Additional living expenses coverage reimburses you if you can’t live in your home temporarily due to a problem covered by your policy, such as a fire.
You can also buy more coverage, as needed. For instance, you’ll want to buy enough liability insurance to cover your net worth.
How Much Is Renters Insurance?
Renters insurance cost $14 per month for $15,000 in personal property coverage, according to Forbes Advisor’s analysis of renters insurance rates. That’s $173 per year. The average cost of renters insurance for a policy with $30,000 of personal property coverage is $19 per month.
| Average cost per year for $15,000 in renters insurance | Average cost per year for $30,000 in renters insurance | Average cost per year for $50,000 in renters insurance | |
|---|---|---|---|
|
$106
|
$149
|
$210
|
|
|
$114
|
$178
|
$276
|
|
|
$122
|
$160
|
$209
|
|
|
$126
|
$165
|
$216
|
|
|
$150
|
$178
|
$230
|
|
|
$152
|
$195
|
$249
|
|
|
Westfield
|
159 |
$186
|
$221
|
|
$166
|
$218
|
$294
|
|
|
$193
|
$253
|
$319
|
|
|
$204
|
$302
|
$414
|
|
|
$217
|
$274
|
$357
|
|
|
$363
|
$464
|
$669
|
|
|
Average
|
$173
|
$227
|
$305
|
Rates are based on average costs nationwide for a renters insurance policy with the personal property coverage amounts shown, $100,000 in liability coverage and $1,000 in medical payments coverage.
Source: Quadrant Information Services.
What Affects the Cost of Renters Insurance?
The cost of renters insurance depends on factors such as:
- The amount and type of coverage you select.
- The deductible you choose.
- Your location.
- Your claims history.
- Your credit.
Is Renters Insurance Worth It?
Renters insurance is worth it because for a relatively low monthly cost you can buy a good amount of coverage. It’s a lot more affordable than paying out of pocket to replace all of your belongings if a disaster like a tornado or fire rips through your home.
Here are more reasons why renters insurance is worth it:
- You can’t rely on your landlord’s insurance. A landlord’s insurance covers damage to the building, but it doesn’t cover your personal belongings.
- Renters insurance pays for your legal costs after an accident. If a guest accidentally gets hurt in your home or your dog bites someone at the park, the liability portion of a renters insurance can cover your legal fees if you get sued.
- Renters insurance pays for temporary housing. If a problem like a fire makes your home temporarily uninhabitable, the additional living expenses portion of renters insurance covers costs like hotel bills, meals and laundry services.
- Renters insurance covers minor injuries to others. If a guest suffers a minor injury (like a laceration), the medical payments to others portion of renters insurance can cover small medical bills, like a trip to urgent care for stitches, without regard to who was at fault.
What Does Renters Insurance Cover?
A standard renters insurance policy includes coverage for personal property, liability, additional living expenses and medical payments to others. Here’s a breakdown of each coverage type.
Personal Property Coverage
A landlord’s insurance covers structural damage to the building where you rent, but it doesn’t cover damage or theft of your personal belongings. That’s where a renters insurance policy comes in.
The personal property section of a renters insurance policy covers your belongings that are damaged or destroyed by a problem covered by the policy. Some of the problems covered by renters insurance include:
- Fire
- Lightning strikes
- Windstorms
- Hailstorms
- Vandalism
- Theft
- Accidental water backups
- Weight of ice, snow or sleet
- Frozen pipes
Floods and earthquakes are generally excluded from coverage. Look into earthquake insurance and flood insurance for renters if you’re interested in coverage for those natural disasters.
A renters insurance policy also covers belongings that are stolen. This includes belongings inside your residence, such as computers, clothes and furniture. It might also cover personal property that’s swiped when you’re away from home, such as belongings taken from your car or a hotel room.
Personal property coverage typically includes an insurance deductible, such as $500. The amount of your deductible will be subtracted from any claim payout you receive for the repair or replacement of your personal property.
For example, if you have a $500 deductible and your $2,000 leather sofa is destroyed by a fire, you’ll receive an insurance check for $1,500 ($2,000 – $500 = $1,500).
Liability Insurance
Liability insurance pays for injuries and property damage accidentally caused to others. For instance, if your dog bites a neighbor down the street, liability insurance can pay for their medical bills. Or if your child throws a baseball through a neighbor’s window, liability insurance can cover the cost of the damage.
Liability insurance also pays for your legal costs, including judgments and settlements, if you are sued because of an accident.
Additional Living Expenses
Another component of a renters insurance policy pays for what are known as additional living expenses. This portion of a policy covers expenses you rack up when a problem covered by your policy (like a fire) makes your home temporarily unlivable. This can include such expenses as hotel stays and restaurant meals.
Medical Payments Coverage
Your renters insurance also includes medical payments coverage, which helps cover smaller medical bills for guests who are injured while visiting you no matter who is at fault for the accident. The policy limits are usually between $1,000 to $5,000.
For example, if a guest slips and sprains their wrist in your apartment, medical payments coverage can pay for a trip to urgent care.
1
American Family
$149
19 states
2
Lemonade
$160
28 states + DC
3
Erie
$182
12 states
Calculating How Much Renters Insurance You Need
To help calculate how much renters insurance you need, you’ll want to add up how much your belongings are worth. You can do this by taking an inventory of your personal property and assigning a value to your belongings. You’ll also want to figure out how much coverage you want for liability and additional living expenses.
How Much Personal Property Renters Insurance Do I Need?
A key step in figuring out how much renters insurance you need is to put together a home inventory that lists your belongings. An ideal home inventory will include:
- Description of each individual piece of personal property (such as your laptop) or each group of belongings (such as your wardrobe).
- Estimated value of each item or group of items.
- Date you bought an item or group of items.
- Receipts.
- Make, model and serial number for electronics and similar items.
- Photos or videos of your belongings.
Several apps are available to make it easier to put together a home inventory. For instance, the home inventory app offered by the National Association of Insurance Commissioners can be downloaded for free from the App Store or Google Play.
Once you’ve got all of your belongings cataloged in a home inventory, it’s time to add up how much all of your belongings are worth. This will give you a rough idea of how much personal property coverage you’ll want to buy.
How Much Renters Liability Insurance Do I Need?
The liability portion of a renters insurance policy might default to a standard amount such as $100,000. But you can certainly bump up that amount. In fact, you may want to add more liability protection to make up for what could be taken from you in a lawsuit.
You might also want to consider adding umbrella insurance. This coverage gives you extra liability coverage that can pay your legal fees, settlement costs and even medical payments in a lawsuit stemming from an accident such as someone slipping and falling on a rug in your apartment.
How Much Coverage Do I Need for Additional Living Expenses?
Coverage for additional living expenses (ALE) may either be a flat amount, such as $5,000, or a percentage of your personal property limit. For example, if your policy provides $30,000 in coverage for personal property and the ALE figure is 40%, you’d be covered for up to $12,000 of what’s known as “loss of use” expenses.
If you need more ALE than your policy’s default, you can typically buy more.
Figure Out Your Deductible
When you file a claim under your renters insurance policy, your insurance deductible is the amount that will be subtracted from your claim check from the insurance company.
Let’s say a grease fire in your kitchen causes $3,000 in damage to furniture and cooking equipment that you own. If your deductible in this scenario is $500, then your insurer would write you a claims check for $2,500 to cover the damage.
Personal property coverage generally comes with a deductible. It’s worth noting that liability and ALE coverage don’t have deductibles.
Renters insurance deductibles usually are anywhere from $250 to $2,000. The higher your deductible is, the lower your insurance premium will be.
To choose your deductible amount, consider how much money you’d need to come up with to cover damaged, destroyed or stolen belongings. For instance, if your deductible is $2,000 and your $1,500 laptop computer is stolen, then your policy would provide no coverage. You’d be responsible for the full cost of replacing the computer.
Bottom line: Weigh the benefits of a higher deductible and lower premiums against the out-of-pocket costs you might be stuck with if your deductible is too high.
Additional Renters Insurance Coverage to Consider
Replacement Cost vs. Actual Cash Value
When you buy a renters insurance policy, you’ll typically have the option to choose between replacement cost or actual cash value (ACV). Here’s the difference between the two:
- Replacement cost coverage pays to replace your damaged items with new, similar items.
- Actual cash value coverage takes depreciation into account and will only pay the current value of your item.
For example, let’s say your $1,000 bicycle was stolen. Replacement cost will pay for a new bike. ACV will only pay for the depreciated value of your bike. Replacement cost coverage is more expensive but it’s generally the better coverage.
Schedule High-Value Items
If you have expensive belongings you can “schedule” them separately from the rest of your belongings. This gives them full coverage for theft and damage.
Some renters insurance policies include what are called “special limits” for the theft of certain types of valuables. For example:
- $1,500 for loss by theft of jewelry, watches and furs.
- $2,500 for loss by theft of firearms.
- $2,500 for loss by theft of silverware.
Earthquake Insurance
A standard renters insurance policy excludes coverage for damage caused by earthquakes. So, if you live in an earthquake zone, you might look into buying earthquake insurance. For those living in quake-plagued California, for instance, earthquake insurance for renters purchased through the California Earthquake Authority might cost as little as $35 a year.
Flood Insurance
Standard renters insurance doesn’t cover damage caused by floods. If you live in a flood-prone area, you might want to purchase renters flood insurance to fill that void. The National Flood Insurance Program says flood insurance for renters starts at $100 a year.
Tips for Buying Renters Insurance
You can find cheap renters insurance without a lot of hassle. Here’s how to do it:
- Shop around. Get renters insurance quotes from multiple companies. You can get free quotes online, by contacting an independent insurance agent or by contacting an agent who represents only one company..
- Ask about discounts. Insurers offer an array of discounts that can help bring down your renter insurance premiums. For example, you usually qualify for a discount if you buy your renters and auto insurance from the same company.
- Think over the deductible. Determine whether you’re more interested in saving money up front with a higher deductible or choosing a lower deductible that results in somewhat higher rates. If you have a large claim, the deductible amount is subtracted from the claims payment check.
- Decide on the coverage limits. Make sure you’ve got enough coverage so you can repair or replace items lost in an incident covered by your policy without suffering a financial setback.
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