The Best Renters Insurance for 2020
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More people prefer renting to home ownership. Research out of Harvard shows this to be a decades-long trend with no signs of slowing down. Millions of these new renters will be required to get renters insurance to protect their belongings. Even if your lease contract doesn’t explicitly require you to get renters insurance, you should look into buying a policy for your own peace of mind. Renters insurance offers a lot of benefits and is surprisingly cheap.
In a crowded marketplace, it’s hard to decide which insurance company best meets your needs. While our research of national and local companies found Allstate to be the best all-around renters insurance provider, it’s still wise to compare options in your area and against your criteria. Choosing an insurance policy can be as personal as picking out a new couch.
In addition to our top picks, you’ll also find advice on choosing the best renters insurance provider for your circumstances. If you’re a renter who’s finally ready to take the plunge into home ownership, we already shared our take on the best home insurance companies in a previous post.
2020 Best renters insurance companies
- Best for online tools: Allstate
- Best for extended coverages: Nationwide
- Best for discounts: Liberty Mutual
- Best for competitive rates: American Family
- Best for policy management: State Farm
- Best for customer service: MetLife
- Best for military members and families: USAA
- Best for people over 50: AARP
Who needs renters insurance?
Renters insurance protects your valuables in case of theft, damage or loss. Often, your landlord’s home insurance policy doesn’t include coverage for your personal property. It may cover the building and its grounds, but it won’t replace your vinyl collection if your neighbor’s pipes burst and flood your living room.
Because renters insurance is so affordable and provides so many benefits, The Washington Post bluntly states that anyone renting a home or apartment needs to “get renters insurance yesterday.” 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 you purchase a policy, you have the assurance of knowing your possessions are protected.
Who needs renters insurance? Almost everyone who rents their home, but the following groups should be especially interested in finding good renters insurance.
If you live in a dorm or a rental unit on your college campus, there’s a good chance you’ll be covered by your parents’ renters or homeowners insurance policy. This assumes they have one of these policies. But the same is not true if you rent a house or apartment off-campus. If you live off-campus, you should consider purchasing an inexpensive renters insurance policy.
College student living in a dorm
Renters insurance for college students tends to be cheaper than most home or other renters policies. Insurers limit your coverage as a college student to 10 percent of your parents’ personal property coverage. If your parents have $100,000 of personal property coverage, as an eligible college student you could receive 10 percent or $10,000 of coverage for your possessions. The exact percentage you’re eligible for varies from policy to policy, so check with your parents before you assume you’re covered.
College student living off-campus
If you rent a house or apartment off-campus, you’ll need to get your own policy. Start with a free online quote and go from there. As a college student, you might not think your belongings have a lot of value, but the cost of replacing your computer, cell phone, books and clothes can quickly add up.
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.
While your college possessions may have consisted of a couch you found on the street and some lamps from Craigslist, 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.
Many property management companies that manage multiple complexes in big cities make renters coverage compulsory, even if it’s not legally required. Whether it’s a requirement of your lease or you’re taking the initiative, protecting your new investments with a renters policy is a wise move.
Senior citizens who rent a home or apartment or who live in an assisted living facility are good candidates for renters insurance. Retired seniors living on a fixed income could have a difficult time replacing items after a major incident.
Older adults also might have valuable jewelry or family heirlooms they’ve 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 renters insurance policy.
Does renters insurance require an inspection?
No, renters insurance doesn’t require an inspection. This is because renters insurance doesn’t protect the apartment or house you’re renting but instead protects your personal belongings. It also covers the medical costs and legal fees if someone is injured in your home or by a pet.
Choosing the best renters insurance
All of the best renters insurance companies provide a similar set of basic coverage options. Therefore, factors like price, customer service and the ease of policy management take on more importance when shopping for renters insurance.
Furthermore, individual circumstances will play a role in which renters insurance policy you ultimately end up choosing. For instance, military members and families get special benefits by using USAA’s renters insurance, and individuals older than 50 will get unique perks from using AARP’s renters insurance policy.
The following sections dig deeper into these topics and illustrate why Allstate comes out as our all-round top pick.
Managing your renters insurance policy starts with determining your coverage amount. You don’t want to overestimate your coverage level and pay for unneeded insurance, but you also don’t want to underestimate. Underestimating your coverage needs or signing up for a large deductible that you can’t pay could put you in a bad situation if you have a major loss.
Many of the best insurance companies provide a simple calculator to help estimate the replacement cost of your possessions. However, the online tools provided by Allstate stand out from the competition.
Allstate’s “What’s Your Stuff Worth?” tool helps you to visualize how much stuff you have, how much it’s worth and how much it would cost to replace everything without insurance. The app walks you through every room in a typical home and allows you to give a rough estimate of its contents. Using this basic information, Allstate quickly gives you an idea of the true value of your belongings.
Digital Locker mobile app
Apps can make it easier to manage your policy on-the-go and see updates, so any provider that has an app should stand out in your mind if you like to use apps on your phone.
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 makes it incredibly easy to keep your inventory current and makes filing a claim easy 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 (but not including flood damage)
Review the included perils you’re protected against when you get a renters insurance quote. If you live in an area particularly susceptible to fire or lightning, verify that these perils are listed in your policy.
Type of reimbursement
Review whether your policy is based on actual cash value or replacement cost.
- Actual cash value: With this type of policy, your possessions are covered but not at the cost you purchased them. Depreciation is taken into account, meaning your property’s age and condition are taken into consideration when determining the amount your provider will give you. An actual cash value can save you money month-to-month. It’s also a good option if the items you want to insure are relatively new because they will not have depreciated that much.
- Replacement cost: With this option, it doesn’t matter how old the item is or what it’s condition was at the time it was damaged. The cost to replace your item is paid to you in full. This type of coverage is a great option if you have a lot of aged, yet valuable property. The downside, of course, is that a replacement cost policy is more expensive than an actual cash value policy.
To decide which one is for you, review your belongings. If you don’t have that many high-value items, an actual cash value would probably suffice, but review your policy limits before deciding. Estimate what it would cost to replace everything you own in the event of a catastrophic event. If partial coverage would leave you with a lot of out of pocket expenses, it may be worth your while to purchase additional coverage.
Types of rental insurance coverage
All of the best insurance carriers 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, furniture and specialty items like your jewelry collection or musical equipment. You’ll want to look into extended coverage for expensive items.
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. If your computer is stolen when you take a quick bathroom break at a coffee shop, you’re still covered. If you’re storing items outside your apartment, however, you’ll want to see if any limitations apply.
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
This 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 household members.
Additional living expenses/loss of use
This 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.
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 top insurance companies like Allstate, Liberty Mutual and Nationwides.
Factors that impact renters insurance
Several factors 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.
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.
The deductible is the amount of money you pay out of pocket before the insurance kicks in. The formula for deductibles is straightforward: a low deductible means higher premiums while 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 pay.
Replacement cost vs. actual cash value
Most providers give you the option to choose between replacement cost and the actual cash value when insuring your belongings. 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.
How much does renters insurance cost?
The average cost of renter’s insurance is $180 a year across the nation, according to the Insurance Information Institute. When you think about the amount of coverage you get with it (personal property protection and liability), it’s cheap insurance compared to other types of insurance. For example, homeowners insurance costs, on average, $1,211 a year, auto insurance has an average cost of $944 a year and life insurance runs about $841 a year.
Though you may want to own a home one day, you can at least take comfort in the fact that you’re saving, on average, about $1,031 in insurance by renting. However, depending on where you live, you could be saving a lot more than that depending on the cost of homeowners insurance versus renters insurance.
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. Another big factor is where you live, as there are large variations in price based on what state you live in. But it’s important to remember that, on average, even the best renters insurance policies are 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 to $30 per month for a typical policy.
Using the same renter profile, we generated quotes from three different companies. 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 close to what the studies and experts suggest.
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 insurance companies offer discounts to give you cheap renters insurance rates, especially as a new customer. The most common discounts include:
- Multi-policy: This is available if you have an auto insurance or other policy with the same company.
- Claims-free discount: This discount is available if you haven’t filed a claim over a certain period of time.
- Protective devices: This is 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…|
|4||American Family||Competitive rates|
|5||State Farm||Policy management|
|7||USAA||Military members and families|
|8||AARP||People over 50|
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.
If a neighbor leaves a cigarette burning when they go to sleep or their bathtub overflows, you’ll be impacted. When you actually crunch the numbers, the cost of replacing everything you own adds up. 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.