Renters insurance is generally one of the most affordable types of coverage, especially compared to homeowners insurance. However, your rate can vary by location, coverage limits, and other factors. Take a closer look at what renters insurance covers, how much it costs, and how to fit it into your budget.
Read more: What is renters insurance? A complete guide.
What does renters insurance cover?
Personal belongings
Personal property coverage protects your personal belongings from covered perils, such as fire, theft, vandalism, and more.
These are examples of items that may be protected with personal property coverage:
Clothing
Furniture
Electronics
Liability protection
Liability protection can help pay for legal costs, medical bills, and other expenses if someone is injured at the property you’re renting and sues you.
Additional living expenses (ALE)
You can use ALE to pay for food and a temporary place to live, such as a hotel, if your rented property becomes uninhabitable due to a covered loss.
Common covered events include:
Fire
Theft
Smoke damage
Water damage (non-flood)
How much is renters insurance per month?
The average annual rate for renters insurance in the U.S. is about $170, according to the Insurance Information Institute’s most recent data. That’s about $14 per month.
However, if you look at the data of the least (North Dakota) and most expensive (Mississippi) states, the range is about $10 to $22 per month.
Average cost of renters insurance by state
State | Average monthly premium | Average annual premium | Rank |
|---|---|---|---|
What affects the cost of renters insurance?
Location: As shown above, your location is a primary factor in determining your renters insurance rate. Keep in mind that even within the same state, your premium can vary by location, such as living within a city or in a more rural area.
Coverage limits: In general, the more coverage you have, the greater your insurance premium.
Deductible: Adversely, the lower your deductible, the higher your premium.
Claims history: Insurance companies will consider you a higher-risk individual and adjust rates accordingly if you have numerous recent claims.
Credit: In some cases, your credit history can affect your insurance premiums. Individuals with lower credit scores may have to pay higher rates, depending on how an insurance company calculates its prices.
Pets: Having a pet may raise your premiums, as there’s a chance of increased damage or liability claims.
Add-ons: Purchasing optional add-ons, such as flood or earthquake coverage, will typically raise your rates.
How to lower your renters insurance cost
Bundle policies
Many insurance companies offer discounts if you bundle one or more insurance policies together with the same provider. For example, you may qualify for a discount if you bundle renters and auto coverage together.
Increase your deductible
Your deductible is the amount you pay out of pocket before your insurance kicks in. The lower your deductible, the higher your premiums will be.
You can consider raising your deductible if you want to pay a lower rate, but you should ensure you have the financial means to cover the deductible if you need to file a claim.
Lower your coverage limits
Depending on your provider, you can lower your coverage limits to decrease your premiums. This can be an easy way to save on your renters insurance policy if you’re paying for more coverage than you need.
Install safety features
Some insurance companies may give you a discount on your policy if your landlord installs safety equipment, such as fire and burglar alarms.
Improve your credit score
Having a good credit score can translate into lower premiums with insurance providers that use credit history to help determine coverage costs.
Shop around
If you think an insurance policy costs too much or doesn’t have exactly what you’re looking for, there’s no harm in seeing what other options are available. In fact, it’s recommended that you compare plans to find the best fit for you that strikes a balance between cost and coverage.
Pay in full
This depends on the insurer, but you may be able to get a discount if you pay in full rather than monthly.
Is renters insurance worth the cost?
It’s worth the cost if it helps you save money and avoid financial disaster. However, there’s no guarantee that you’ll ever actually need renters insurance for damaged personal belongings or to pay for legal expenses in a liability lawsuit. Still, there’s an easy way to compare the cost of renters insurance with other everyday expenses and decide whether it makes sense to purchase a policy.
First, let’s say a renters insurance plan costs about $20 per month. This is slightly on the high end, but it’s an easy number to remember. Now, what can you do to save $20 and put it toward insurance instead?
Here are a few ideas:
Cancel a streaming service or two (at the time of writing, Netflix Standard is $17.99/mo and Netflix Premium is $24.99/mo)
Cancel forgotten subscriptions
Switch to streaming over cable
Reduce your weekly habit from your favorite coffee shop
Eat out fewer times per month
As you can see, there are plenty of ways to save $20 per month if you want to include renters insurance in your personal finance setup.
Renters insurance FAQs
How is renters insurance for $100,000?
It depends on where you live and other factors, but a renters insurance policy with $100,000 in liability protection could cost as little as $13 per month or $156 per year.
Is $20 a month for renters insurance a good price?
It depends on where you live and other factors, but $20 a month is on the higher side for monthly renters insurance costs, according to data from the Insurance Information Institute.
Who has the cheapest renters insurance?
Progressive states that its average monthly costs range from $13 to $27, while Allstate says its renters insurance policies start as low as $5 per month. However, the actual cheapest insurance provider can vary by location and other factors. You can compare renters insurance companies to find the most affordable option in your area.
Why is renters insurance so cheap?
Renters insurance doesn’t cover the actual building, such as an apartment or condo. Instead, it typically covers your personal belongings and potential liability, which is often much less expensive than the cost of the structure.
Should I pay for renters insurance in full or monthly?
It depends on your situation. You may be able to receive a discount for paying in full, but if you plan to move soon, paying monthly may be the better option.
