Updated February 21, 2014
In my last post, I shared my take on the best home insurance companies and this time I’m focusing on the best renters insurance companies. With the growing popularity of renting, I conducted some additional research to determine which companies are the best for renters.
After analyzing several national and local companies, Allstate stands out as the best renters insurance provider.
If you want a free online quote, you can get started right away. Continue reading and I’ll explain why you need renters insurance and discuss the major components of a solid policy.
Here are the 4 best renters insurance providers on a national level:
Selecting Allstate as the best ultimately boils down to three important factors:
- Policy Management
Who Needs Renters Insurance?
To put it simply, if you’re currently renting an apartment or home, it’s in your best interest to get a renters insurance policy. It’s easy to get a free online quote and learn exactly what your rates will be. Once your policy is purchased, you then have the assurance of knowing your possessions are protected.
Some people mistakenly assume that a landlord’s home insurance policy includes coverage for your personal property. In most cases, this is not true. Chances are, your landlord’s policy does not cover your personal possessions.
Needing renters insurance as a college student depends primarily on where you live. If you live in a dorm or a rental unit close to your college campus, there’s a good chance you’ll be covered by your parent’s renters or homeowners insurance policy (assuming of course they actually have one of these policies). The same is not true if you rent a house or apartment off campus.
College Student Living in a Dorm
Many home or renters policies limit your coverage as a college student to 10% of your parent’s personal property coverage. To give you an example of how this might work, if your parents have $100,000 of personal property coverage, as an eligible college student you could receive 10% ($10,000) of coverage for your possessions. The exact percentage you’re eligible for varies from policy to policy, so be sure to verify with your parents before you assume you’re covered.
College Student Living Off Campus
If you rent a house or apartment off campus, get your own policy. The best thing to do is start with a free quote and go from there. As a college student, you might not think your belongings have a lot of value, but just the cost of your computer, cell phone, books, and clothes can quickly add up.
You may’ve been able to get through college using a couch you found on the street, but
chances are you’ve made some improvements to your standard of living. Maybe you bought a new TV, overhauled your furniture, or upgraded your electronic devices. Along with these improvements, you’ve probably moved into a nicer apartment. According to research conducted by the National Multifamily Housing Council, roughly one-third of apartments in the U.S. are rented by someone under 30 years old.
Although it’s not legally required, many property management companies that manage multiple complexes in big cities make renters coverage compulsory. Whether it’s a requirement of your rental agreement, or you’re just taking the initiative, protecting your new investments with a renters policy is a wise move.
If you have a grandparent that rents a home or apartment, you should check in with them to make sure they have some protection. Many seniors are retired and living on a very fixed income. If a major incident were to occur, it could be especially tough for them to get back on their feet.
Older adults also have valuable jewelry or family heirlooms they have collected over the years. Some of these items may have more sentimental value than anything else, but it’s still worth it to protect these items with a basic policy.
Finding the Best Renters Insurance
All of the best insurance companies provide a similar set of basic coverage options. Knowing that you can get the basics covered, factors like price and the ease of policy management start to take on more importance. The following sections dig deeper into these topics and illustrate why Allstate comes out on top.
Managing your renters policy really starts with determining how much coverage you need. This is an important part of the purchasing process that you need to get right.
You don’t want to overestimate your coverage level and pay for insurance you don’t need. But you also don’t want to underestimate and end up in a bad place if you have a major loss.
Many of the best insurance companies provide access to a simple calculator to help you estimate the cost of your possessions. But the online tools provided by Allstate are a step above what much of the competition has to offer.
To begin with, Allstate’s What’s Your Stuff Worth? tool walks you through several categories like clothing, electronics, hobbies, office and living, kitchen, and more. As you progress through each category, the tool shows you images of common items and enables you to specify how many of each item you own.
For example, in the clothing section, you might specify that you have four pairs of shoes and six pairs of pants. Meanwhile, a calculator in the lower right of the screen keeps track of your running total.
Digital Locker Mobile App
Allstate’s Digital Locker app includes several features that help you manage your policy. Perhaps most useful, the app enables you to catalogue your possessions with pictures. You use the app on your smartphone or tablet to take pictures of all your possessions, assign values to each item, and upload the images to your account.
Available on Apple and Android platforms, the app also enables you to:
- Organize your possessions by room, category, or in lists.
- Provide more accurate estimates by using the Google or barcode search (especially helpful if you’re uncertain of the value of an item).
- Take advantage of room and category templates to help make sure you don’t overlook anything important.
Using the Digital Locker app makes it incredibly easy to keep your inventory current and gives you the peace of mind of knowing that if you ever have to file a claim, all the information you need is literally at your fingertips.
With all the tools and resources provided by Allstate, managing your policy is a breeze.
In the insurance world, a “peril” is a cause of loss. Most renters policies are listed as “Named Peril” policies, meaning that your policy will identify exactly what you’re insured against.
Some of the most common perils include:
- Water Damage
When you get a quote, be certain to review the perils you’re protected against. If you live in an area particularly susceptible to fire or lightning, verify that these perils are listed in your policy.
Types of coverage
All of the best renters insurance companies provide access to four types of basic coverage:
Personal Property Coverage: This includes coverage for items you use on a daily basis, like your clothing, appliances, and furniture, as well as specialty items like your jewelry collection or musical equipment. (You’ll want to look into extended coverage for really expensive items, but more on this later).
Liability Coverage: This portion of your policy provides protection when you are legally liable for bodily injury or property damage that occurred as a result of an accident or incident involving you or another member of your household.
Medical Payments to Others: Covers the medical costs for any house guests that are injured at your residence, regardless of whether you are liable or not. Medical payments could include things like x-rays, doctor’s fees, or hospital stays. It’s important to note that medical payments protection does not cover you or other members of the household.
Additional Living Expenses/Loss of Use: Covers additional living expenses if damage to your home or apartment is so severe that you are temporarily displaced. This could include hotels, restaurants, or other similar expenses. Your policy will specify how long you have access to the coverage.
Nationwide is one company that stands out for offering superior coverage options. In J.D. Power’s 2013 U.S. Household Insurance and Bundling Study (Renters), Nationwide was one of only two companies to be rated among the best in Policy Offerings.
As alluded to earlier, there are a few circumstances where additional renters coverage is worth looking into. Extended coverage (also called a floater policy) is appropriate if you have a particularly expensive piece of jewelry, a valuable stamp collection, or other similar item that has especially high value.
Similar to what I mentioned in my post about home insurance, the best renters insurance carriers provide access to an online quote tool. Getting a quote really is the only way you can see how much it will cost given your unique circumstances. Many first-time purchasers are surprised at how affordable renters insurance is. Past studies by the Independent Insurance Agents & Brokers of America and Trusted Choice Independent Insurance Agents indicate the average price for $30,000 of renters coverage ranges from $12-$15 per month, while experts at the National Association of Insurance Commissioners suggest you can expect to pay $15-$30 for a policy depending on your level of coverage.
I was curious to see how these numbers held up and got quotes from three different companies using the same renter profile. The quotes were generated for $30,000 worth of coverage, with replacement cost, for a rental unit just outside a major U.S. city. Here’s what the monthly rates looked like:
- American Family: $11.50
- Allstate: $17
- Nationwide: $22.42
These rates are pretty close to what the studies and experts suggest, but rates always vary based on your location.
The bottom line is that you can cover $30,000 worth of possessions for roughly the cost of a large pizza.
As you can see, the difference in price between the providers will definitely add up over time. If you’re looking for the cheapest renters insurance, the best thing to do is to compare quotes from at least two providers.
All of the best renters insurance companies offer discounts. The most common discounts include:
- Multi-Policy: Available if you have an auto insurance or other policy with the same company.
- Claims-Free Discount: Available if you haven’t filed a claim over a certain period of time.
- Protective Devices: Available if you have fire or smoke detectors or a home security system installed. Although there are not as many discount opportunities when compared with home insurance, taking advantage of all available discounts can result in big savings.
Factors That Impact Renters Insurance
Similar to home insurance, there are several factors that influence the cost of your renters insurance premium.
Level of coverage: The level of coverage you choose is one of the major factors that impacts the price on your renters premium. The level of coverage you need is going to vary from person to person. The easiest way to determine what you need is by using the estimation tools provided by Allstate and other top companies.
Location: If you live in an area that has higher crime rates or is more susceptible to wildfire, tornadoes, or other natural disasters, you can expect to pay more for your policy.
Deductible: The deductible is the amount of money you pay out of pocket before the insurance kicks in. The formula for deductibles is pretty straightforward: a low deductible means higher premiums; a high deductible means lower premiums. Again, you might be tempted to choose a high deductible, but be sure to choose a level you can realistically meet.
Replacement cost vs. Actual cash value: Most providers give you the option to choose between replacement cost and the actual cash value. If you choose replacement cost, you are covered for the actual cost to replace the item that has been lost. If you select an actual cash value policy, the insurance company covers what the item is worth at the time of the loss. In other words, it would be the replacement cost minus depreciation. Replacement cost is the more expensive alternative, but you won’t regret going with this option if you ever have to file a claim.
Is Renters Insurance Worth It?
When you live in an apartment building or a house with multiple units, it doesn’t matter how careful you are — you are only as safe as your most irresponsible neighbor.
When you actually sit back and crunch the numbers, the cost of replacing everything you own can add up quick. This is exactly what makes finding the best renters policy so important.
Renters insurance is affordable, it’s easy to get, and has a huge upside. Choosing to live without a policy may end up being a big financial mistake.
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