In this article:
- 1. Shop Around
- 2. Bundle Coverage
- 3. Increase Your Deductible
- 4. Lower Your Coverage Limits
- 5. Change Your Payment Method
- 6. Have Your Landlord Install Safety and Security Equipment
- 7. Look for Discounts
- 8. Switch From Replacement Cost to Actual Cash Value
- 9. Consider Moving to a Different Neighborhood
- 10. Maintain Good Credit
- Worth the Right Cost
It's a good idea to carry renters insurance in case of catastrophic events, but if you just don't have the cash to cover the premium, it can be hard to justify. Renters insurance premiums fall between $15 and $30 a month, according to the National Association of Insurance Commissioners, but a cost of up to $360 a year for something you may not have to use can feel like a budget stretch. Luckily, the cost of renters insurance is not set in stone and there are some ways to reduce it.
You can reduce the cost of renters insurance by shopping around for the best deals, bundling coverage and installing security equipment, among other options. Read on to learn 10 ways you can reduce your coverage cost.
1. Shop Around
The first rule of insurance shopping is to gather quotes and information from several providers. It's important to find out the range of prices and services you can expect and not just take the first quote you get. But as you shop, make sure to compare apples to apples.
A certain policy may be significantly less expensive than others, but probably for a reason. It may have narrow coverage rules, for example, or low monetary reimbursement limits. So be sure to compare the amount you pay with the amount of coverage and find the most affordable ratio.
2. Bundle Coverage
Shopping around for the best price is important, but if you have the opportunity to bundle renters insurance with your current auto or other insurance provider, this may be your best bet. Bundling can lead to savings averaging around $130 a year with a combo of auto and renters insurance.
3. Increase Your Deductible
Increasing your deductible—the amount you pay out of pocket before your insurance policy kicks in—is a strategy that's useful across many types of insurance, including renters, to save money. When you increase your renters insurance deductible, you are essentially saying you want to pay less now in premiums but are willing to pay more out of pocket if you need to file a claim in the future.
But only consider this if you can handle covering a higher deductible should you have an emergency, such as a fire in your rental. If you don't think you'll have the cost of your deductible in your checking or savings account regularly, increasing your deductible to save money on your premiums may not help in the long run.
4. Lower Your Coverage Limits
You can also lower your coverage limits to get your premiums to a comfortable cost. Insurance is meant to mitigate losses in the event of damages like a burst pipe—but you might not need to have every expense covered.
Talk to your insurance company about adjusting your policy if you have a healthy emergency fund in place to cover out-of-pocket costs and you're not worried about carrying less coverage.
5. Change Your Payment Method
Does your insurance policy let you pay for a full year's premium all at once? If so, this may come with some sizable savings such as an off-the-top discount.
Similarly, there may be a discount applied to accounts with autopay. Companies like assurances that all payments will be made on time and may reward customers who show plans to pay.
6. Have Your Landlord Install Safety and Security Equipment
Some renters insurance policies may drop their price if your landlord has installed safety and security equipment such as fire and burglar alarms. The insurance company has an interest in making sure your belongings are well-protected.
7. Look for Discounts
You may be a member of a group that receives discounts from certain insurers. For instance, seniors may qualify for a lower rate. Or perhaps your job offers a lower rate through a partner insurance company as a benefit. You may even benefit from a parent having insurance with the same company. Check organizations that you are associated with for discount potential.
8. Switch From Replacement Cost to Actual Cash Value
Renters insurance that promises replacement cost—money to replace your belongings as if you had to buy them brand new today—may cost a little more upfront. Instead, consider getting a policy that just insures actual cash value.
If you were to file a claim, an actual cash value policy would pay out on the value of your depreciated belongings as they were on the day of the damages. It would likely not be enough to repurchase them in full but could still help mitigate losses should you ever have an incident—and you'll enjoy lower premiums in the meantime. Again, consider this type of price reduction only if you feel confident that you'll be able to pay for excess replacement costs should the need arise.
9. Consider Moving to a Different Neighborhood
Your renters insurance is impacted by your location, and costs can come down to which block you live on or how old the building is. If there's something about your neighborhood that you think increases your risk profile, such as a high crime rate or older, run-down buildings, consider moving if it works with your budget.
10. Maintain Good Credit
Insurance companies in most states can check something called your credit-based insurance score when considering you for a renters insurance policy. It considers your credit history as well as how likely you may be to file a claim, helping an insurance provider gauge its risk in insuring you. Maintaining good credit can help keep costs lower when you are purchasing renters insurance. You can check your credit report and score for free with Experian to see where you stand.
Worth the Right Cost
Renters insurance can help pay for losses and liability in the case of emergencies. However, paying for one more insurance premium might push your budget further than you like. Consider these cost-saving tips to reduce the cost of renters insurance and protect your belongings in case of catastrophe.
