A Comprehensive Guide to Renters Insurance: Costs, Factors, and Savings

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How Much Does Renters Insurance Cost?

If you rent your home, apartment, or condo, a renters insurance policy can help protect the value of your belongings and your overall financial health. Renters insurance kicks in if your possessions are destroyed, someone gets hurt in your home, or you’re unable to stay in your rental if it’s damaged by a covered event.

Here’s a look at how much you can expect to pay for renters insurance, plus factors that can affect the price of a policy and ways to lower your premium.

How Much Does Renters Insurance Cost?

The average premium for renters insurance in the United States is about $14 per month, or $166 per year, according to 2023 data from Experian. However, the quote you receive could be higher or lower than average depending on multiple factors.

Because renters insurance doesn’t cover the physical structure of your home (that’s your landlord’s responsibility), it typically costs significantly less than homeowners insurance.

What Affects the Cost of Your Renters Insurance Policy?

The price of renters insurance may vary for many reasons. Here are some common factors that can affect how much you pay:

Your Coverage Limits

Not all insurance policies provide the same amount of coverage. The higher your policy limits, the more it will cost. You don’t want to skimp on coverage that can help protect you if the unexpected occurs, but you also don’t want to pay for coverage you don’t need. Instead, select policy limits that provide adequate protection based on the value of your possessions and your potential legal liability.

Your Deductible

Policies with higher deductibles usually cost less than policies with lower deductibles. If you opt for a policy with a higher deductible, you must pay more upfront if you need to file a claim. It’s important to weigh the benefit of saving on your premium with the potential out-of-pocket expenses you may incur in the future.

Your Location

Where you live can affect how much you pay for coverage. People in areas with more severe weather events, elevated crime rates, and higher-than-average insurance claims typically pay more because they represent a greater financial risk to the insurance company.

Your Credit Score

Many states allow insurers to include credit-based insurance scores in their pricing criteria. Research shows that people with good credit are generally less likely to file a claim than people with poor credit. As a result, they typically qualify for lower rates.

Your Claims History

Insurance companies may check your claims history to determine the risk of insuring you, and having prior claims could result in higher insurance rates. You can find your past claims history on your LexisNexis Comprehensive Loss Underwriting Exchange (C.L.U.E.) report, which you can request for free every 12 months.

How to Lower Your Renters Insurance Cost

Getting the protection you need doesn’t have to break the bank. These tips can help make your policy more affordable:

• Increase your deductible: In general, higher deductibles result in lower premiums. If you choose a higher deductible, be sure you can afford to pay it if you need to file a claim.
• Bundle your renters and auto insurance: Many insurers offer discounts to policyholders who purchase multiple insurance policies.
• Improve your credit scores: Late and missed payments and high credit usage negatively affect your credit. Paying your bills on time and reducing credit card debt can help improve your credit scores, which may help you get a lower rate on your policy.
• Install home protection devices: Items like security systems, smoke detectors, and water detection systems can help prevent and alert you to potential problems so you can take care of them quickly and minimize damage. Having these items in your home may result in a lower premium.
• Shop around: Because insurers use proprietary formulas to determine pricing, rates can vary significantly between companies. Shopping around and comparing quotes from multiple providers is one of the best ways to find the lowest possible rate.

How Much Renters Insurance Do You Need?

To determine how much renters insurance you need, start by estimating the cost to replace your possessions. Take an inventory of your possessions to get an accurate estimate of how much they would cost to replace. Even with a high limit for your personal possessions, your policy may only provide limited coverage for jewelry, cash, artwork, and other valuables. You may need to purchase a separate policy or add an endorsement to your renters insurance to cover these costly items.

Next, choose your liability limit. Most renters insurance policies have limits starting at $100,000. However, you may need more than that. A good rule of thumb is to maintain liability coverage equal to your net worth, so your assets are protected if someone files a lawsuit against you.

If your policy has loss of use coverage, you need to decide how much your living expenses will be if your rental becomes uninhabitable. Your insurance policy will only cover costs that exceed what you’re currently paying. To determine your limit, consider what you would likely pay in your area for a short-term rental or hotel stay, as well as meals, transportation, and other expenses you might incur.

Frequently Asked Questions

Still have questions about renters insurance? Here are some answers to commonly asked questions:

• What Does Renters Insurance Cover?
• Is Renters Insurance Worth It?
• Can I Get Renters Insurance for One Month?

The Bottom Line

The price of a renters insurance policy varies based on many factors but is generally more affordable than homeowners insurance. The best way to get a policy that provides adequate coverage at an affordable price is to shop around and compare quotes from multiple providers. Bundling policies, increasing your deductible, and adding security features to your home can also help you save.

If you’re unsure how different coverage options and policy limits may affect your premium, check with the insurance company or work with an agent to get answers to your questions before you buy.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you with the best mortgage solutions!

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