What is renters insurance?
Renters insurance, or tenant insurance, is a type of policy that covers your personal belongings.
Even if the home you rent is covered by a homeowners insurance policy, none of the contents of the space will be protected. So if there is a fire, flood, accident or theft in your home or apartment building, without renters insurance, you’re on the hook to replace everything.
There are a few different types of coverage, but the average renters policy is broken down into three categories:
- Personal property coverage. This covers the replacement or repair of your belongings.
- Personal liability coverage. This offers financial protection if you cause damage or someone is hurt on your property and is facing expensive medical bills.
- Loss-of-use coverage. This covers hotel and additional living expenses if you can’t stay in your home due to damage.
How much is renters insurance?
On average, renters insurance costs about $15/month, according to data from the Insurance Information Institute.
What you’ll pay depends on a few factors. First, insurance policies range in expense based on the state you live in. Some states like Georgia, Texas and Louisiana have more expensive premiums, while others like North Dakota, South Dakota and Minnesota fall on the cheaper end of the range.
You’ll also pay more if you require more coverage. The average policy provides $30,000 in personal property coverage, $100,000 in personal liability coverage and 40% of your costs for loss-of-use coverage, according to PolicyGenius, an online insurance marketplace.
If you have more than $30,000 worth of belongings in your home, you’ll want to upgrade from the standard renters coverage to ensure all your property will be covered.
As with other insurance policies, like car insurance, you’ll face a deductible. A deductible is simply the amount your insurance agent will require you to pay out of pocket in order to settle a claim.
As a general rule: The higher your level of coverage, the more your deductible will be.
Experts suggest you aim for around $500 for your deductible, but just make sure it’s an amount you can actually afford if it comes down to it.
Do I need renters insurance?
You may be wondering, “Is renters insurance necessary?”
In some cases, yes, it is. Certain property management companies or landlords require you to take out a renters insurance policy as part of the terms of your lease.
But even when it’s not a strict requirement, it’s not a bad idea for a renter to hold an up-to-date insurance policy.
If you live in an area with a high rate of crime, older homes or a big apartment complex, you’re facing an increased level of risk of theft or damage due to your aging home or your neighboring units.
As a renter, you never know when an overflowing bathtub in the apartment above you can drip down and cause significant damage to your entire unit. In addition to having to deal with soggy furniture, ruined electronic devices and construction in your apartment, you don’t want to have to be on the hook financially to cover replacing everything.
For the price of the average renters insurance policy, it doesn’t make sense not to get covered. Depending on your insurance provider, you may even be able to get a discounted price if you bundle it with your life or auto insurance coverage.
Another way to save yourself a little money — whatever amount of coverage you require — is to shop around for a few different quotes before you pick a policy. Experts will recommend you explore three to five options before settling on one that meets your needs best.
How much renters insurance do I need?
Again, this depends on how much coverage you’ll require.
When you’re figuring that out, it’s helpful to make a list of all your belongings and jot down what you think it would cost to replace them. Remember, the cost of replacing these items doesn't always reflect what they’re worth now or what you paid for them initially.
Once you have your list, you should have a good estimate of how much coverage you’ll need. Make sure you update your list — and your coverage limits — as you acquire new belongings.
Holding onto this list can also be helpful if you ever need to file a claim: You’ll already have it handy to present to the insurance company. You’ll no doubt be grateful to your forward-thinking past self.
Compare insurance quotes and save money
Did you know that you could be saving some serious money just by switching insurance companies?
It’s true. You could be paying way less for the same coverage. All you need to do is look for it.
But don’t waste your time hopping around to different insurance companies. Use a website called SmartFinancial to see all of your options at once.
SmartFinancial will provide you with a tailor-made list of possible policies from all major and most relevant insurance carriers.