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Renters insurance can help protect you from the unexpected, such as poorly maintained electrical work that starts a fire or thieves breaking in and stealing your belongings. But how much coverage do you really need?
To determine how much renters insurance you need, you'll need to factor in your landlord's requirements and the estimated cost to replace your belongings, plus any circumstances that could make carrying additional coverage worth it. Here's a look at the types of coverage you can choose from and strategies for determining the policy limits that are right for you.
Do You Need Renters Insurance?
Whether you need renters insurance depends on the terms of your lease, how much financial protection you want and what you can afford to pay out of pocket if you experience a loss. In many cases, your landlord may require you to purchase insurance as a condition of your lease. Whether your landlord requires it or not, here are some pros and cons to maintaining coverage.
| Pros and Cons of Renters Insurance | |
|---|---|
| Pros | Cons |
| Coverage is relatively inexpensive | Limited coverage for valuables |
| Pays to replace your possessions if they're damaged or stolen in a covered event | Actual cash value policies may not cover the full cost to replace your possessions |
| Provides liability protection if someone is injured on your property | Additional coverage may be necessary |
| Covers extra living expenses if your rental is damaged and you need to live elsewhere while it's being repaired | A deductible may be required before coverage kicks in |
Learn more >> Is Renters Insurance Required?
How Much Renters Insurance Do I Need?
The amount of renters insurance you need depends on whether your landlord requires it and how much financial risk you're willing to assume. Here are some tips for choosing adequate coverage amounts.
- Check your landlord's requirements. Landlords often require tenants to maintain liability coverage. If insurance is a condition of your lease, you must maintain at least the amount required by the landlord. You can purchase more for added protection, but you can't buy less.
- Estimate the value of your belongings. People often have more stuff than they realize. Instead of guessing how much you think it will cost to replace your possessions if they're destroyed, take an inventory of everything you own. Add up the value and use that as a guideline for your policy limit.
- Consider actual cash value (ACV) versus replacement cost value (RCV) coverage. ACV policies reimburse you for your property's current (or depreciated) value, which may be less than the replacement cost. RCV policies reimburse you for the cost to replace your belongings at today's prices. ACV policies typically cost less but may leave a gap between the insurance company payout and the cost of replacing your things.
- Determine loss of use limits. If you couldn't stay in your rental after a loss, would you be able to cover extra living expenses while waiting for your home to be repaired? Policies with loss of use coverage reimburse you for costs that exceed your current living expenses. The limits for some policies are a percentage of your personal property limit, and others are a specific dollar amount. You may be able to increase the limit for added protection.
- Consider additional coverage. Renters insurance doesn't typically cover damage from earthquakes or floods, and limits for valuables, such as jewelry and artwork, are usually low. You may need to purchase a separate policy or add an endorsement to your renters insurance for additional coverage.
Learn more >> Factors That Impact Your Renters Insurance Cost
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, many factors can affect the price of your premium, and you may pay more or less.
Learn more >> How Much Is Renters Insurance?
What Affects the Cost of Renters Insurance?
Insurance companies include many criteria in their premium calculations. Some factors that may affect the price you pay include:
- Policy limits: Policies with higher limits provide more protection but cost more. The higher the limits you choose, the more you'll pay for coverage.
- Deductible: A deductible is the amount you must pay toward a covered loss before your insurance policy kicks in. Policies with higher deductibles generally cost less than those with lower deductibles, but you'll pay more upfront if you need to file a claim. Be sure to weigh the benefits of a lower premium with the drawbacks of higher potential out-of-pocket costs.
- Where you live: Do you live in an area with frequent hurricanes, hail storms or high crime rates? If so, you'll likely pay more than someone who doesn't because these events increase the insurance company's risk.
- Credit scores: In many states, insurers can use credit-based insurance scores in their pricing calculations. Because people with good credit tend to file fewer insurance claims, they generally receive lower rates than those with lower scores.
- Type of coverage: When you purchase renters insurance, you may get to choose between an actual cash value and replacement cost value policy. A replacement cost value policy offers more protection, but it costs more.
- Insurer: Because insurance companies weigh rating criteria differently when determining the cost of a policy, prices can vary between providers. Getting quotes from multiple insurers is one of the best ways to ensure you get the lowest possible rate.
Is Renters Insurance Worth It?
Renters insurance can be well worth the cost of monthly premiums. It provides financial protection if your belongings are destroyed or stolen, you're liable for injuries someone outside of your household sustains in your home or you need to temporarily move out of your rental while it's being repaired. Without it, you'd have to cover those expenses on your own.
To understand the value of having renters insurance, consider the potential financial strain of paying out of pocket to replace your possessions or defend yourself in a lawsuit and cover damages if you were found liable for someone's injuries. Renters insurance is a form of protection against those worst-case scenarios.
Frequently Asked Questions
You can get renters insurance in a few simple steps.
- Decide how much coverage you need.
- Determine whether you want actual cash value or replacement cost coverage for your personal property.
- Choose your deductible.
- Get multiple quotes to ensure you don't overpay.
- Select the policy that meets your needs and fits your budget—you can often complete the process online.
Deductibles for personal property coverage typically range from $250 to $2,500, and no particular amount is right for everyone. It can be tempting to choose a higher deductible to save on your premium, but that means paying higher upfront costs when filing a claim. It's important to balance the potential savings on your premium with your ability to pay the deductible amount you choose.
Renters insurance isn't required by law. However, some landlords and property managers require tenants to purchase it as a condition of their lease. If your landlord requires insurance, you can't have less than the amount they require, but you can purchase more for additional protection.
Renters insurance typically provides three types of coverage: personal property, liability and loss of use. Personal property pays to replace items like electronics, clothing and furniture if stolen or damaged in a covered loss. Liability helps cover your legal costs and damages a court may award if someone is injured in your home and you're found liable. Loss of use coverage reimburses you for additional living expenses you incur if you cannot live in your home while repairs are being made.
Renters insurance doesn't cover damage to your physical rental, such as repairs to your kitchen following a fire; that's covered by your landlord's insurance.
The Bottom Line
When deciding how much renters insurance to buy, it's essential to choose limits that are high enough to minimize your out-of-pocket expenses if you experience a covered loss. Shopping around and comparing quotes from multiple insurers can help you find adequate coverage at a price that fits your budget.
You can usually get quotes from individual insurers online or comparison websites that aggregate data from multiple providers. If you're unsure what limits you should choose, you may want to speak with an insurance agent who can help find a policy that meets your needs based on your unique circumstances.
