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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.
Learn More >> Is Renters Insurance Required?
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.
Learn more >> Ways to Reduce the Cost of Your Renters Insurance
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.
Renters insurance typically provides three types of coverage, including:
- Personal property: If you need to replace your belongings because of a covered event, insurance may pay for them up to the policy limit.
- Liability coverage: Liability coverage protects you if someone is injured or their property is damaged at your rental, and you're found liable.
- Loss of use: If your rental is damaged and you can't live there while it's being repaired, loss of use coverage may reimburse you for living expenses, such as rent and transportation, beyond what you'd normally pay.
The law doesn't require renters to maintain insurance, but some landlords or property managers may as a condition of your lease. Even if your landlord doesn't require it, purchasing renters insurance is usually a good idea because it can help protect you from the unexpected. Without it, you'd likely be on the hook for replacing your possessions if they are damaged or stolen, paying for medical bills and legal fees if someone gets hurt on your property and covering extra living expenses if you're unable to stay in your rental after a covered loss.
Renters insurance is usually written for a one-year term. However, you have the right to cancel your insurance policy at any time, so you can keep it for as long as you need it and cancel it when you no longer need coverage. If you cancel your policy before the term ends, you'll get a refund for the unused portion of your premium. Some insurers may charge a fee for canceling your policy before the end of the term.
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.
