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How Much Is Renters Insurance?
Renters insurance can vary based on your property and where you live, but on average, it costs around $180 per month, according to data from the Insurance Information Institute. Having renters insurance can be a lifesaver if your apartment gets damaged or destroyed. Renters insurance protects your possessions in the event of certain perils like fire, explosions, theft and vandalism. Most renters insurance plans also protect tenants against liability from accidental injury to guests. So, when you’re budgeting for an apartment’s cost, make sure you factor in renters insurance premiums. Luckily, renters insurance is one of the most affordable kinds of insurance: Homeowners insurance can run well over $1,000 per year, as can car insurance.
It’s important not to rely on your landlord’s insurance for your own property. That insurance is designed to cover the building as a whole but won’t necessarily cover damage inside your apartment. One distinct advantage of renters insurance is personal liability and medical protection, which can both defray legal or medical costs if someone is injured inside your apartment. Your landlord can’t cover that.
To protect your stuff in the case of nearly any kind of damage, you have to have your own renters insurance.
[ Read: Does Renters Insurance Cover Theft? ]
Average cost of renters insurance
According to the Insurance Information Institute(III), the average cost of renters insurance in the United States was just $180 a year in 2017, the most recent year with aggregate data to study. Let’s look at how that affects your budget on a monthly, weekly and daily basis.
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While this number is the average, your actual cost could be higher or lower than this. Where you live plays a part in figuring the cost, as well as your credit score. While you might assume that more expensive housing will come with a higher price tag for renters insurance, that isn’t necessarily the case. Likelihood for damage based on your location will affect the cost, though, whether that’s weather or crime.
If your credit isn’t great, it can also bump up the cost of your insurance. Even what you’re choosing to cover will raise the rate. The more extensive coverage you require, the more your renters insurance will cost.
Location: Average cost of renters insurance by state
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The most expensive states for renters insurance
- Mississippi: $258
- Oklahoma: $236
- Alabama: $235
- Louisiana: $235
- Texas: $232
The least expensive states for renters insurance
- North Dakota: $120
- South Dakota: $123
- Wisconsin: $134
- Minnesota: $140
- Nebraska: $143
How credit scores affects the cost of renters insurance
There’s an advantage to having an attractive credit score. When your credit is better, you appear as less of a risk to an insurance company, meaning you have a good chance of getting a slightly lower rate on your insurance premiums. While the cost of the renters insurance may not differ greatly based on your credit, it can help you save some money in the long run.
With a clean credit history, you’ll have a higher credit score. A clean credit history shows the insurance company that you know how to manage your money properly, pay your bills on time, and keep lines of credit open without overusing them. All of these things add up to you being a low-risk person for them to work with, thus, you’ll get a better rate on your insurance.
[ Read: The Ultimate Guide to Renters Insurance ]
How the stuff you own affect renters insurance cost
The more things you want to insure, the higher your premium might be, but there’s more to it than that. Let’s take a look at how your stuff can change the price. You might see a basic renters insurance plan that covers $10,000 in property, which means in an extreme case, the insurance company would pay out $10,000 to cover you. However, if you have more property and you want to insure $50,000 worth of stuff, the insurance company would be on the hook for that, so they’re going to charge you more monthly because it’s a higher risk for them.
The same can be said for liability. If you have $100,000 of liability coverage, the insurance company, in an extreme situation, would have to pay that out. But if you get $500,000 of liability insurance, it’ll cost you more because of the higher risk to the insurance company.
Other factors that affect renters insurance cost:
The higher your renters insurance deductible is, the lower your annual rate will be. One of the best ways that renters can save money on their insurance is by raising their deductible, assuming they can afford the out-of-pocket cost if a claim occurred.
For example, say you have a deductible of $500 and your annual premium is $250. To save money, you could increase your deductible to $1,000, and only have to pay $190 per year for your premium.
However, it’s important to keep in mind that not every kind of renters insurance coverage type has a deductible. Typically, the only coverage that requires a deductible is personal property coverage, which protects your personal belongings from theft and damage.
If your possessions were damaged or destroyed, your deductible is the amount of money you would have to pay to replace them before insurance coverage takes over. For renters insurance, deductibles usually range between $500 to $1,000. The higher your deductible, the lower your premium will be. However, keep in mind that higher deductibles mean paying more money out-of-pocket towards a loss. Only choose a high deductible if you can afford it.
Types of renters insurance policies
When selecting a renters insurance policy, there are two main choices—cash value and replacement cost value. Let’s take a look at both policies and what they cover.
Actual Cash Value (ACV)
With an ACV policy, the insurance company will pay you what your belongings are worth today if they get damaged or destroyed in a qualifying event. The ACV policy factors in depreciation, so you won’t get back the full cost of what you paid for your belongings in the first place. In exchange for the lower payout after a covered peril, you get lower premiums.
Replacement cost value (RCV)
Under an RCV policy, the insurance company will pay you to replace damaged items with new ones that are of similar type and value. RCV does not include depreciation, so you’ll receive the same (or nearly the same) amount of money as you paid for an item originally. Because your insurer pays you out more with this type of coverage, your premium will be higher for an RCV policy
[ Read: The Best Renters Insurance ]
How to get cheap renters insurance
There are some factors outside of your control that affect the rates for renters insurance in your area. But you do have the power to lower your premiums by capitalizing on all available renters insurance discounts.
Here are a few of the discount options most renters insurance companies offer:
- Bundling: You get this discount if you buy your renters and auto insurance from the same company, for example. Usually, you can save anywhere from 5% to 20% when you bundle your renters insurance with your car insurance, but it varies by company.
- Deductible: If you opt for a higher deductible, your premium cost will go down. Keep in mind, though, that that means if you file a claim, you’re liable for covering more of the cost. For example, if your deductible is $1,000, insurance won’t pay any money on a claim until you’ve reached more than $1,000 in damage. However, your monthly cost will be lower than if your deductible is $500.
- Good credit score: Sometimes you can save money by showing that you have good credit, which shows insurance companies you may be less of a risk. This is only applicable in some states.
- Compare policies: You should always shop around before you settle on a company and a policy. Compare what everyone offers to make sure you’re finding the best rate for you.
- Safety: You can get this discount if your home is equipped with a security system, fire sprinklers, etc.
- Full payment: If you pay your premium in full instead of making monthly payments, you can save money.
- Claim-free: If you go a set period of time without filing a claim, you might be eligible for a discount.