Renters insurance is usually one of the most affordable types of coverage, especially compared to homeowners insurance. However, your rate may vary depending on location, coverage limits and other factors. Take a closer look at what renters insurance covers, how much it costs, and how to fit it into your budget.
Read more: What is renters insurance? A complete guide.
What does renters insurance cover?
Personal belongings
Personal property cover protects your personal belongings against covered perils, such as fire, theft, vandalism, etc.
These are examples of items that may be protected with personal property coverage:
clothing
Furniture
Electronics
Protection of liability
Liability protection can help pay for legal fees, medical bills, and other expenses if someone is injured and sues you at the property you’re renting.
Additional Living Expenses (ALE)
You can use ALE to pay for meals and a temporary place to stay, such as a hotel, if your rental property becomes uninhabitable due to a covered loss.
Common covered events include:
the fire
theft
Smoke damage
Water damage (non-flooding)
How much is renters insurance per month?
According to the latest data from the Insurance Information Institute, the average annual renter’s insurance rate in the U.S. is about $170. That’s about $14 per month.
However, if you look at the data for the least (North Dakota) and most expensive (Mississippi) states, the range is $10 to $22 per month.
Average cost of renters insurance by state
State | Average monthly premium | Average annual premium | Rank |
|---|---|---|---|
How does renters insurance affect the cost?
Location: As shown above, your location is the primary factor in determining your renters insurance rate. Keep in mind that even within the same state, your premium may vary by location, such as living in an inner city or a more rural area.
Coverage Limits: Generally, the more coverage you have, the higher your insurance premium will be.
Deductible: Conversely, the lower your deductible, the higher your premium.
Claims Date: Insurance companies will consider you a high-risk individual and adjust rates accordingly if you have multiple recent claims.
Credit: In some cases, your credit history can affect your insurance premium. People with low credit scores may have to pay higher rates, depending on how the insurance company calculates its rates.
Pets: Having pets can increase your premiums, as damage or liability claims are likely to increase.
Add-ons: Purchasing optional add-ons, such as flood or earthquake coverage, will typically increase your rates.
How to lower your renters insurance costs
Bundle policies
Many insurance companies offer discounts if you bundle one or more insurance policies with the same provider. For example, you may qualify for a discount if you bundle renters and auto coverage together.
Increase your deductible.
Your deductible is the amount you pay out of pocket before your insurance starts. The lower your deductible, the higher your premiums.
You can consider raising your deductible if you want to pay a lower rate, but you should make sure you have the financial resources to cover the deductible if you need to file a claim.
Lower your coverage limits.
Depending on your provider, you may be able to lower your coverage limits to lower your premiums. This can be an easy way to save on your renters insurance policy if you’re paying more for coverage than you need.
Install security features.
Some insurance companies may give you a discount on your policy if your landlord installs security equipment, such as fire and burglar alarms.
Improve your credit score
A good credit score can translate into lower premiums with insurance providers who use credit history to help determine coverage costs.
Shop around
If you think the price of an insurance policy is too high or doesn’t have exactly what you’re looking for, there’s nothing wrong with looking at what other options are. In fact, it is recommended that you compare plans that strike a balance between cost and coverage to find the best fit for you.
Pay in full.
It depends on the insurer, but you may get a discount if you pay in full instead of monthly.
Is renters insurance worth the cost?
It’s worth the price if it helps you save money and avoid financial ruin. However, there’s no guarantee that you’ll actually need renters insurance to pay for damaged personal property or legal expenses in a liability lawsuit. Still, there’s an easy way to compare the cost of renters insurance to other everyday expenses and decide whether buying a policy makes sense.
First, let’s say a renters insurance plan costs about $20 per month. It’s a bit on the high side, but it’s an easy number to remember. Now, what can you do to save $20 and put it toward insurance instead?
Here are some ideas:
Cancel a streaming service or two (at the time of writing, Netflix Standard is $17.99/mo and Netflix Premium is $24.99/mo)
Cancel forgotten subscriptions.
Switch to streaming on cable.
Cut down on your weekly habit from your favorite coffee shop.
Eat fewer times a month.
As you can see, there are plenty of ways to save $20 per month if you want to add renters insurance to your personal financial setup.
Renters Insurance Frequently Asked Questions
How about $100,000 in renters insurance?
It depends on where you live and other factors, but a renters insurance policy with $100,000 in liability protection can cost as little as $13 per month or $156 per year.
Is $20 a month a good price for renters insurance?
It depends on where you live and other factors, but according to data from the Insurance Information Institute, $20 a month is high for monthly renters insurance costs.
Who has the cheapest renters insurance?
Progressive says its average monthly cost ranges from $13 to $27, while Allstate says its renters insurance policies start as low as $5 a month. However, the actual cheapest insurance provider may vary by location and other factors. You can compare renters insurance companies to find the most affordable option in your area.
Why is renters insurance so cheap?
Renters insurance does not cover the actual building, such as an apartment or condo. Instead, it usually covers your personal belongings and potential liability, which is often much less expensive than the cost of the structure.
Should I pay in full or monthly for renters insurance?
It depends on your situation. You may be able to get a discount on paying in full, but if you plan to move soon, monthly payments may be a better option.