The Best Renters Insurance for 2018

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More people are moving into cities than ever before, and this urban influx has spurred an increase in the number of renters. The growth of renting currently outpaces the growth of home ownership, meaning millions of new apartment dwellers might be required to get renters insurance to protect their stuff. Even if you’re not required to get renters insurance, you might want to get a policy for your peace of mind. Given the state of the rental landscape, we decided to do some research to determine which companies provide the best renter’s insurance.

After researching several national and local companies, Allstate stands out as the best renters insurance provider in 2018.

If you’re comparing the best rental insurance options in your area, the easiest way to get started is by getting multiple quotes. (If you’re looking for homeowners insurance information, we already shared our take on the best home insurance companies in a previous post.)

 

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4 Best Renters Insurance Providers on a National Level

The Simple Dollar’s Top Picks:

  1. Allstate
  2. Nationwide
  3. Liberty Mutual
  4. American Family

Who Needs Renters Insurance?

Buying renters insurance is crucial to achieving peace of mind and protecting your valuables, Beth Marlowe writes in the Washington Post. And because renters insurance is so affordable, Marlowe bluntly states, “You need to get renters insurance yesterday.”

Some people mistakenly assume that a landlord’s home insurance policy includes coverage for your personal property.  The folks at usa.gov warn that this is likely not the case. Their guide to property insurance says that “if you are a renter, do not assume your landlord carries insurance on your personal belongings.”

If you’re currently renting an apartment or home and you want to be compensated should an accident destroy your possessions, 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.

College Students

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 they 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

The best renters insurance for college students tends to be cheaper than most home or renters policies because they 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.

Young Professionals

You may have been able to get through college using a couch you found on the street, but chances are you made some improvements to your standard of living once you joined the workforce full time. 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.

Grandparents

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 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 might 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 exploring whether you want to protect these items with a basic policy.

Choosing the Best Renters Insurance

All of the best insurance companies provide a similar set of basic coverage options. That being the case, 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.

Policy Management

Managing your renters insurance policy starts with determining how much coverage you need. This is an important part of the purchasing process that you want to do your best 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. That being said, 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 does a great job of helping you to visualize how much stuff you have, how much it’s worth, and how much it would cost to replace everything without insurance. It walks you through every room in a typical home and allows you to give a rough estimate of how many possessions you have in each room. Using this basic information, Allstate is able to quickly give you an idea of the true value of your belongings. The tool is genuinely fun to use, which is not something you often say when interacting with an insurance company.

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 catalog 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, which is available on the Apple and Android platforms, 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.

Coverage

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:

  • Theft
  • Water damage
  • Vandalism
  • Fire
  • Smoke
  • Lightning

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 Rental Insurance 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).

A nice perk of renters insurance is that it typically covers your property no matter where it is, instead of just when it’s inside your apartment. So if your computer is stolen when you take a quick bathroom break at a coffee shop, you’re still covered. If you’re storing things outside your apartment, however, you’ll want to see if any limitations apply.

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.

Extended Coverage

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 anything else that has especially high value.

Extended coverage is offered by Liberty Mutual, American Family, Nationwide, and other top insurance companies.

Comparing Renters Insurance Cost

Similar to what we mentioned in our post about home insurance, the best renters insurance carriers provide access to an online quote tool. Getting a quote is the best way to compare renters insurance prices since it’s the only way you can see how much your unique circumstances will influence the cost of your policy.

Many first-time purchasers are surprised at how affordable renters insurance can be. The amount you pay will depend on factors such as the size of your place and your credit history, but on average the policies are quite affordable. A recent study by the  Trusted Choice Independent Insurance Agents indicates that the average renter pays $16 per month, while experts at the National Association of Insurance Commissioners suggest you can expect to pay $15-$30 per month for a typical policy.

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.

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.

Discounts

All of the best insurance companies offer discounts to give you the cheapest renters insurance rates, especially as a new customer. 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 aren’t as many discount opportunities when compared with homeowners insurance, taking advantage of all available discounts can result in big savings.

Best Renters Insurance: Summed Up

Renters Insurance Best For…
1 Allstate Online Tools and Policy Management
2 Nationwide Extended Coverages
3 Liberty Mutual Discounts
4 American Family Competitive Rates

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 will determine 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.

I’ll never forget the time my friend’s apartment in San Francisco burned down due to a carelessly tossed cigarette. Thankfully no one was hurt, but many of his most precious items were destroyed. He had no renter’s insurance, so he couldn’t recoup any of his losses.

When you actually sit back and crunch the numbers, the cost of replacing everything you own can add up quickly. This is exactly what makes finding the best renters policy so important.

Renters insurance is affordable, it’s easy to get, and it has a huge upside. Choosing to live without a policy may end up being a big financial mistake.

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