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How to Choose the Best Renters Insurance
Renters don’t need the level of insurance protection that homeowners need. However, if you rent a house or apartment, you’ll want to cover your valuable belongings and protect yourself against legal liability stemming from an accident in your home. You’ll also want to get reimbursed if you need to pay for a hotel room while your apartment is repaired. Getting renters insurance coverage is always a good idea. It’s cheap and it’s worth it should you ever need to use it.
America’s top-rated renters insurance
- Policies starting at just $5/month
- Sign up in seconds, claims paid in minutes
- Zero hassle, zero paperwork
According to The Insurance Information Institute, the average annual renters insurance premium is around $180. That’s incredibly budget-friendly, especially compared to the expense of replacing your personal property if a fire or storm causes major damage.
Whether you live in a home filled with valuable family heirlooms or a starter apartment with a couple of roommates, purchasing renters insurance makes good financial sense. Buying cheap renters insurance cheap renters insurance online is easy. You just need to know how to calculate the amount of coverage you need and ways to get a great rate. Requesting multiple renters insurance quotes will ensure you find the best price when researching the best renters insurance.
What is renters insurance?
Renters insurance is insurance coverage geared toward the renter, not the landlord. Renters insurance has two main purposes, both of which are to protect you.
The first is to protect your belongings. Should your belongings be damaged in a covered peril or stolen, your insurance provider will cover the cost of their replacement. The best thing about this is that they don’t even have to be at your home when something happens to them. You can be traveling, at work or even on vacation and still file a claim.
The second thing renters insurance does is provide liability protection should someone hurt themselves at your home. For example, if someone slips and falls on your kitchen floor or is bitten by your dog, renters insurance will cover that person’s medical costs as well as your legal fees.
You can purchase various amounts of personal property coverage and liability protection. How much you should purchase depends on your needs and belongings.
You can also purchase additional living expense (ALE) coverage, which covers expenses incurred if your property is damaged and uninhabitable for an extended period of time.
Note: You may have heard about landlord insurance, but landlord insurance does not protect you as the renter. Landlord insurance only protects the structure of the rented property itself and any personal property that the landlord has inside— it does not cover any of your personal property.
[ Read: Is Renters Insurance Really Necessary? ]
One might question where to even begin when shopping for renters insurance. You may want to start by knowing the answers to the most important questions on renters insurance, including:
Do I need renters insurance?
Renters insurance covers belongings such as furniture, clothes and electronics if they’re damaged in a rented home or apartment during a covered event. This could be a fire, flood or natural disaster, or some other covered event.
The purpose of renters insurance is to make it possible to replace your damaged property. Your items may not seem pricey, but when you calculate the cost to replace them, you’ll find out it would be a very expensive proposition.
In the event of fire, flood, or other event covered by insurance, you would need to file a claim for the contents of your property (or an injury); the landlord would file a claim for exterior structure damage.
Many renters can’t afford to replace all their belongings at once, so it’s highly important to have a renters insurance policy in place just in case. Some apartment buildings and landlords require tenants to carry renters insurance, and some will even require proof upon signing the lease. If proof is not provided, you could be in violation of your lease and face eviction and/or legal action.
What coverage should I get?
The main difference between policy types is what they cover. You want to make sure you have the exact type of coverage you need, so it’s important to know about the different coverage types.
Liability coverage protects you if another person is injured or their property is damaged while on your property. It can help cover medical expenses and legal expenses if you are sued. Damage must be accidental and unintentional to be covered.
Additional living expenses:
Coverage for additional living expenses will protect you if you’re facing any extra expenses outside of your property due to a natural disaster or emergency. For example, this coverage will often reimburse you for hotel costs, gas and food that you pay for while your rental home is uninhabitable due to damage or destruction.
Personal property coverage:
Personal property coverage pays to replace your belongings, such as clothes, furniture, electronics, kitchen utensils and anything damaged in a fire, flood or another event that’s covered by your policy.
It is important to understand the different ways insurers reimburse for personal property losses. The two types of reimbursement are actual cash value (ACV) and replacement cost value (RCV).
RCV is calculated according to what it would cost to replace an item without calculating in any depreciation.
ACV, on the other hand, is calculated according to the actual value of your item, which includes depreciation. The amount your item has depreciated is subtracted from the replacement cost. You’ll likely be reimbursed less for ACV than you would for RCV since RCV doesn’t take into account any depreciation.
|What is covered||What isn’t covered|
|Claims that the landlord is liable for; this generally occurs when the accident is caused by a fault in the property (which would be covered by the landlord’s insurance policy)|
|Personal Property||Renter’s damaged or stolen personal property|
Off-premises coverage (personal property stolen from a vehicle or hotel room) in some cases
|Exterior structureAccidental loss of property|
Damage by a pet or pests
A roommate’s property
May not cover theft, flood or earthquake damage unless specifically purchased as part of the policy*
|Additional living expenses||Hotel, gas and food while you are displaced due to damage to rental property||Expenses you would normally incur that are not related to being displaced|
*You should always check your policy to assure exactly what is covered. Some policies include coverage for theft, and some include natural disasters such as flooding and earthquakes. Some do not.
Where can I buy renters insurance?
You can buy renters insurance online, via a phone call with an agent, through an app or in person. Get quotes from renters insurance companies so you can compare costs and benefits. Choose the best one for you, your apartment and your geographical area. There are an increasing number of insurance companies that provide renters insurance, so it could be a little overwhelming at first. If you find it is, try shopping online so you can find out which ones offer renters insurance where you live. This will help narrow down your search.
Should I compare quotes?
Yes, just like shopping for anything else you should compare renters insurance quotes. Different companies will have different prices and offer different coverages. Shop around for the best price and benefits that fit your needs. Shopping around is important if you’re looking for the cheapest renters insurance available. Some basic coverage is better than no coverage at all. Determine how much renters insurance you need so you don’t overspend but you still have enough to cover your belongings should anything unexpected come your way. Here at The Simple Dollar, we’re here to help provide suggestions to help you live a frugal and financially stable life.
Is the cost of renters insurance low?
Yes, compared to other insurance options on the market, renters insurance is very low.
Consider this: the average cost of renters insurance across the nation is $180 a year (or $15 per month), which is a lot lower than other types of insurance. Via the Insurance Information Institute, the average cost of homeowners, auto and life insurance a year are:
- Homeowners insurance: $1,211 ($100 per month)
- Auto insurance: $1,005 ($84 per month)
- Life insurance: $905 ($75 per month)
Most people don’t hesitate to purchase car insurance but, on average, it’s five times more expensive than renters and there’s an equal need for both.
[ Next: How Much is Renters Insurance? ]
What makes up my renters insurance coverage?
Renters insurance comes with multiple coverage options. These include:
- Personal property: Renters insurance, first and foremost, pays for the cost to replace your belongings should they be damaged in a covered peril or stolen
- Liability: Liability protection will pay for any legal fees that are a result of someone getting hurt on your rented property
- Medical payments: If someone gets hurt at your home, your insurance provider will pay his or her medical costs, as well as any loss of income that is a result of the accident
- Additional living expenses: Should you need to live elsewhere after a covered peril, your insurance provider will pay for any lodging, travel and food expenses that exceed your normal living expenses until your home is repaired or you find somewhere else to live.
[ Read: Renters Insurance Terms to Know ]
Shopping for the cheapest renters insurance
- Inquire about exclusions: Exclusions are exceptions to your insurance policy where your insurance provider will not pay for coverage. A common exclusion with renters insurance is flood damage. Should a flood damage your belongings, your insurance provider will not pay for the replacement of anything you’ve lost. If you need flood protection, you can purchase it through floodsmart.gov.
- Ask about the deductible: Your deductible is the amount you pay before your insurance provider will provide coverage. A lower deductible typically means a higher premium, whereas a higher deductible typically equates to a lower premium.
- Ask if the policy is an ACV or an RCV policy: Actual cash value includes depreciation but replacement cost does not. Actual cash value is a cheaper premium but replacement cost provides more coverage.
- Ask about policy limits: Though you may get a higher coverage amount with certain premiums, that does not mean you have that entire amount to replace a high valued item. For example, many policies have a limit of $2,500 for fine jewelry. If you need more protection for certain items, you will need to speak with an agent about purchasing the right amount of protection to suit your needs.
How much coverage do you need?
Determining the amount of coverage you need isn’t difficult. Begin by taking an inventory of your personal belongings. Start in one room, then move from room to room until you’ve recorded everything in your home. Inventory all your personal property, including appliances, artwork, clothing, electronics, furniture, kitchen utensils and rugs, and determine their current value and replacement cost.
There are several ways to go about taking inventory. You can make a written inventory, which should include detailed descriptions of each item, along with serial numbers when applicable. Written inventories should also include pictures of each item. Some people use video cameras to inventory their homes, zooming in to capture details and adding voice descriptions.
Mobile apps are perhaps the easiest way to create a home inventory. Mobile apps, available for Android and Apple devices, make inventory taking easy, enabling you to take photos with your device’s built-in camera and add pertinent text information. Some apps even include barcode and QR code functionality, enabling you to print and attach a scannable code to items.
Apps also make it easy to update your inventory at any time, because you can delete items you’ve gotten rid of and add new things as you make purchases. Even after you’ve purchased a renters policy, retain your home inventory, in case you need to file a claim later.
After completing your inventory, add up the value and replacement cost of your personal belongings to determine how much coverage you need. If you have $15,000 worth of belongings, you will need at least $15,000 in renters insurance coverage.
Keep in mind that insurance companies set limits on claims for certain types of property. For example, a company may only pay up to $1,500 for jewelry and only cover theft, not damage. Other items that likely face claims limits include business property, collectibles, electronics, firearms and silverware.
Cash value vs. replacement cost coverage
When you file a renters insurance claim for personal property losses, the insurance provider will pay the actual cash value of the items or their replacement cost. In a cash value scenario, the insurance company will factor in depreciation of each item at the time of the claim, along with your policy’s deductible.
[ More: How to File an Insurance Claim ]
For example, if someone steals your two-year-old laptop computer, which you purchased new for $1,000, the insurance company may only give you $300 to replace it, based on its current value. On the other hand, a policy that offers replacement cost protection would pay the amount of money required to purchase an equivalent computer at today’s price.
Typically, standard renters insurance policies offer cash value coverage. However, most insurance companies offer replacement cost coverage for a slightly higher rate, usually around 10% more. So, if your policy costs $14 per month, you could increase your protection to replacement cost coverage for just $1.40 more. That’s a good deal.
Shopping for the cheapest renters insurance online
If you plan to buy renters insurance online, always get quotes from several insurance companies before taking out a policy. You can get renters insurance quotes by requesting quotes online at company websites.
Always shop for renters insurance using an apples-to-apples comparison. For instance, if you get a quote for $20,000 in personal property coverage and $100,000 in liability coverage, request quotes for the same coverage levels from other companies.
When shopping for cheap renters insurance, don’t base your decision entirely on premium rates. Ask questions to learn about a company’s claims process and coverage details to make sure you’re getting the best insurance for you Here are some questions you should make sure to ask:
- Is all of my personal property covered by renters insurance? Renters insurance typically covers your personal property (clothing, furniture, electronics, etc.) but may have claim limits on jewelry or other high-end items. You want to make sure you talk to your insurance provider or agent to see if you need any additional coverage.
- What type of events are covered? Renters insurance tends to cover a standard array of perils like smoke damage, fire, wind, theft and water damage from bursting pipes or overflows. But they don’t usually include perils like flooding or earthquakes. So it’s good to talk to your insurance agent about what perils will be covered in case you need to file a claim.
- If I move to another apartment does my renters insurance move with me? This is important to know if you’re not planning on staying in your current rental property forever, so make sure you ask your agent what your options are if you end up moving. Most companies will let you take your renters insurance with you — but in some cases you may have to take out a whole new policy.
- Will my renters insurance cover my roommate? Typically, the only time a roommate is covered by your renters insurance is if they are specifically named in your policy – so it’s a good idea for each roommate to carry their own renters insurance. But you can talk to your agent about more options.
If a standard policy does not offer enough protection for your property or does not provide coverage for certain types of perils, you may consider taking out a rider or endorsement.
Get insurance company and agent recommendations from friends and family members to narrow your search. When you find a great renters insurance rate, check the company’s financial rating on the AM Best website and its customer service track record on the Better Business Bureau webpage. Also, make sure the company holds a valid license in your state by using the insurance company lookup tool on the National Association of Insurance Commissioners website.
J.D. Power, a market research company, produces an annual study of renters insurance companies. Using a five-star rating system, J.D. Power ranks renters insurance companies based on factors such as claims handling, customer interaction, billing process and price. The J.D. Power study is a great source of information for narrowing down the list of companies from which you request quotes.
America’s top-rated renters insurance
- Policies starting at just $5/month
- Sign up in seconds, claims paid in minutes
- Zero hassle, zero paperwork
How to lower your renters insurance premium
Although renters insurance is inexpensive in most places, you can lower your premium by raising your deductible. For instance, you may choose to increase a $500 deductible to $1,000. Keep in mind, raising your deductible will increase the amount you must pay out of pocket if you need to file a claim.
To keep a low deductible and reduce your rate, ask your agent about discounts. Insurance agents offer loads of discounts for new and existing policyholders.
Allstate discount programs include:
- Multi-policy discounts for customers who also purchase Allstate auto insurance.
- Up to a 15% discount for houses and apartments equipped with burglar or fire alarms.
- Up to a 25% discount for retirees 55 years of age and older.
Likewise, Liberty Mutual offers several great discounts for renters, including:
- Military discounts for active duty, reserve and retired military members.
- Early shopper discounts up to 45% for new customers who get a quote from Liberty Mutual before their current policies expire.
- Smart home discounts for dwellings equipped with smart home devices such as thermostats and security systems.
- Preferred payment discounts for customers who pay automatically using a checking account.
Discounts often vary by state, so check with an agent to find out which programs are available in your area.
Renters insurance is a valuable investment in case anything happens to your belongings or apartment, but you don’t have to spend a fortune on it if you shop around and look for discounts online, and choose coverage that meets your needs without exceeding them.
How to choose the best renters insurance company
Choosing the best renters insurance company will depend on your priorities and particular circumstances. For example, if you live in the gulf coast, you’ll want to make sure you’re covered for any hurricane damages to your apartment. If you live in the north, you’ll want to be covered should your pipes freeze and burst in the winter.
How you prefer to shop can also depend on which company you choose. If you prefer to talk to an agent in person for a quote and with any questions or concerns you might have, you’ll want to go with a renters insurance company that has a physical office near you. If you prefer to do everything online, make sure the company you choose has a website with the capabilities you’ll need, such as getting a quote, talking to someone via a live chat and filing a claim.
If your biggest concern is price, then you’ll want to find the company with the lowest price. If your biggest concern is coverage, you’ll want to find the company that offers the best add-ons.
You should also ask friends and family based on their experience with renters insurance companies and read online reviews to get a feel for which one will suit you best.
How to choose the best renters insurance coverage?
What is the best renters insurance for you? The best way to determine this is to calculate the worth of your belongings to find the amount of personal property coverage you need. The best way to determine this is by creating an inventory of the items that you need or want covered.
How to create an inventory
- Start by creating a document that you can easily locate in emergencies. You can create an inventory of your belongings on paper or digitally. The easiest way to create a digital inventory is to use programs like Word, Excel or a list-making app. You’ll use this to jot down all of your items and the estimated costs for each.
- Go from room to room to inventory your possessions. You’ll need to do a room-by-room tally of your items — including the stuff stored in your closets, cabinets, garage, basement, attic and shed. List all major furniture items, appliances (large and small), electronics and jewelry in your home that you own.
- Take photos or videos of your items. You’ll need these photos for claims in the future. Be sure to upload the images to the cloud, email them to yourself or store them on a hard drive or USB in a fireproof safe or safety deposit box.
- Always keep receipts (paper and/or email receipts) for big-ticket items. This includes receipts for appliances, furniture, art, décor, jewelry and designer clothing. You’ll need the receipts to prove your actual cash value to the insurance company when filing a claim.
- Keep a designated file folder or email file folder for big-ticket items. Move digital receipts or scanned copies there at the time a purchase is made.
- Be sure to update files with new purchases and update photos and videos as changes are made in your home. Keeping your inventory list up-to-date will assure you are reimbursed for your latest purchases if something occurs.
Note: If you opt to keep a paper file or inventory list, you should store that off premises so it isn’t destroyed during a weather event or another type of disaster. You don’t want to lose that list with your belongings if something happens.
You’ll likely be surprised to find out how much you own once you’ve completed your inventory. Do this as soon as possible — you won’t be able to do that if you’ve lost the items in a fire, to theft or another type of disaster.