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The cost of renters insurance varies depending on factors such as what's covered in the policy, your credit score and where you live.
If you're renting or interested in renting a new place, you may be wondering how much renters insurance costs and whether it's worth the money. Here's a look at the average price of renters insurance and some of the factors that affect it.
Is Renters Insurance a Waste of Money?
You aren't required by law to have a renters insurance policy, but some landlords and property managers may require it as a condition of the lease. In this case, buying insurance may not be a waste if it gets you into the apartment complex that's at the top of your list.
Even when it's not required, renters insurance can come in handy if the unexpected happens. In a perfect world, our possessions wouldn't get damaged or stolen, but life is unpredictable. Maybe you're a victim of a fire or theft—renters insurance could help you foot the bill for repairs or replacements or another place to stay. Your landlord may have an insurance policy for the property, but it likely would not cover your belongings if anything were to happen.
Renters insurance typically offers three types of coverage:
- Personal property coverage: If your furniture, electronics or other property needs to be repaired or replaced because of a covered event, insurance may pay for it up to a certain limit. Personal property coverage may also cover items stored in your car or storage unit.
- Liability coverage: Liability protects you up to a limit if you're found to be liable for someone's injuries or damage to their property that occurs at your rental.
- Reimbursement for living expenses: If you have to pay out-of-pocket costs for accommodation because of damage to your rental, you may get reimbursed for the expenses up to a certain limit.
Like homeowners insurance, renters insurance typically comes with a deductible that you're responsible for paying before the insurance company kicks in to pay their portion of the bill.
Keep in mind that renters insurance may offer limited coverage for jewelry, cash, furs and other valuables. So if you have family heirlooms or pricey wedding rings, pay close attention to the coverage limits. Be sure to also check what events are not covered. For example, loss resulting from floods or earthquakes may not be covered in a standard policy.
What Is a Fair Price for Renters Insurance?
The average premium for renters insurance in the United States is about $15 per month on average, or $178 per year, according to 2020 and 2021 data from car insurance broker Gabi. However, the quote you receive could be higher or lower depending on the policy you choose and other factors.
Choosing a policy with a low deductible could result in you paying a higher premium, but you may pay less out of pocket when a claim is approved. If you choose a higher deductible, the premium might be lower, but you could also pay more out of pocket if items are damaged. Here are a few other factors that can impact the price of your renters insurance:
- Your location: Attributes of your city and neighborhood may contribute to the cost of your insurance premiums. For example, safety issues could increase the premium.
- Your rental and possessions: Aspects of your home—such as the size, what you own and whether you have safety features like a burglary system—could affect the premium.
- Your credit score: Insurers may do a soft credit check when you apply for a policy, and having good credit could lower your insurance premiums.
- Your past claims: Insurance companies may check your history of claims to determine the risk of insuring you, and having prior claims could result in higher insurance rates. Your history of past claims can be found on your C.L.U.E. (Comprehensive Loss Underwriting Exchange) report. You can pull this report from LexisNexis for free every 12 months.
- Your insurance bundle: Bundling your renters insurance with car insurance or another insurance policy could help you qualify for a rate discount.
Can I Get Renters Insurance for 1 Month?
Some companies may offer temporary renters insurance policies, which could be a good option if you're renting on a short-term basis. But since you have the right to cancel your insurance policy at any time, almost any policy may be flexible enough to accommodate your needs.
If you cancel insurance before the term is over, you may get a refund. This is because insurance is typically prepaid, and you get your money back for the period that you will no longer be covered. However, some policies include a "minimum earned premium," which is an amount of your premium that an insurer may be entitled to keep when you cancel.
The Bottom Line
Renters insurance may be worth considering even if a landlord or property management company does not require it. It's a monthly expense that might not seem like a necessity, but if something happens, the policy could end up saving you thousands because you won't be solely responsible for replacing clothes, electronics, furniture, and more when damage occurs.
When shopping around for renters insurance, don't compare just the price alone. Look at the terms, watch out for exclusions and compare deductibles to ensure you're getting a good price for adequate protection. Otherwise, you could end up with a policy that doesn't provide the coverage you expect when you need it most.
