The Average Cost of Renter’s Insurance
Renter's insurance protects against loss or damage to your personal belongings when you live in a rental property. This can be a house, condominium, apartment, mobile home or any similar type of residence. Renter's insurance can also provide liability protection for you in the event someone else is injured on the property you are renting.
It's important to note that renter's insurance does not provide coverage for the building or structure itself. It's equally important to know that any insurance coverage held by your landlord does not provide protection for your personal belongings. (For more, see: 6 Good Reasons To Get Renter's Insurance.)You Have a Choice
As a renter, you can decide whether to have renter's insurance. Homeowners often have no choice because the bank that carries their mortgage typically requires homeowners insurance as a condition for getting the loan. This fact does not diminish the risk you would face in the event of a loss or injury on property you are renting. Required or not, having renter's insurance is usually a very good idea.Two Types of Coverage
The two types of coverage available to renters are actual cash value and replacement value. Actual cash value coverage pays what the property was worth at the time damage or loss occurred and is the least expensive type of renter's insurance available. Replacement value pays the cost of replacing the items or property and is about 15% more expensive than actual cash value coverage. Unless the cost of insurance is an issue, replacement value coverage is best.The Cost
Compared to homeowners insurance, renter's insurance is relatively inexpensive. Rates vary from state to state, from company to company and, of course, based on the amount of insurance and other factors, including the amount of the deductible you choose.
On average, according to Independent Insurance Agents & Brokers of America (IIAB), you can purchase $30,000 worth of insurance on your belongings and $100,000 worth of liability coverage for about $12 per month. The National Association of Insurance Commissioners places the average cost of renter's insurance slightly higher, at about $15 to $30 per month.What's Covered
Your premium dollars provide coverage for your personal possessions within your rented living space. Typical named perils covered include fire, theft, vandalism, plumbing and electrical malfunctions, certain weather-related damage and other named hazards. Coverage is also often available for your possessions while away from your house or apartment.
In addition, most renter's insurance provides liability coverage in the event that someone is injured in your rented space. Medical coverage is available as well. Some policies protect you in the event you cause damage to the house or apartment and are sued by the property owner.What's Not Covered
Floods and earthquakes are not covered by renter's insurance. Remember, any coverage your landlord has only covers the building – not your belongings. If flooding or earthquakes are a possibility in the area where you live, you may want to consider separate coverage for those hazards.
Less dangerous but still important is the matter of pets. If you own a pet, you must declare it; chances are your premium will be higher.
If you have to find other living arrangements following a fire or flood in your rented apartment or house, specific coverage is required. In other words, if it is not listed, coverage is not provided. Also carefully look at what property is covered. If you have valuable jewelry, for example, you may need a rider or a separate policy (see Does renters insurance cover jewelry? and A Quick Guide on How to Insure Jewelry).The Deductible
The amount you are willing to pay before insurance kicks in, known as the deductible, generally affects the cost of insurance. Deductibles can range from $500 to as much as $2,000. The higher the deductible, the lower the premium.
For example, esurance quoted an annual premium of $206 to cover a two-bedroom apartment in Santa Clara, California, with $35,000 in property coverage, $100,000 in liability coverage and $1,000 in medical payments with a $500 deductible. The same coverage cost $187 if the deductible increased to $1,000.Discounts
Renter's insurance often provides substantial discounts for measures taken by you (or your landlord) to lessen the risk to the insurer. These can include fire or burglar alarm systems, fire extinguishers, sprinkler systems or even deadbolt locks on outside doors.
If you have other insurance with the same company – auto insurance, for example – you might be eligible for an additional discount. It's always worth asking about any discounts when you first look into a policy. (For more, see: Renters' Guide: Renter's Insurance.)The Bottom Line
Because you are insuring personal belongings with renter's insurance, it's important to have a full and complete inventory, including replacement cost, for everything you own. You don't have to insure the full value of everything, but whatever amount of coverage you choose will be the limit paid by the insurance company, minus the deductible. Renter's insurance is so relatively inexpensive that there's really no reason not to have it.