If you rent a home or apartment, you may have heard of renters’ insurance, which protects your belongings in the event they are stolen or damaged under certain circumstances. Here’s everything you need to know about renters’ insurance.
Every homeowner knows that they need insurance in case their home catches fire or is damaged or destroyed in a natural disaster. If the owner of the home lives there, their furniture and other personal possessions are also insured by the homeowner’s policy.
Not everyone knows that people who rent need insurance, too. The owner of the property that you rent is responsible for maintaining insurance coverage on the structure itself. Insuring your possessions is up to you. Even if there is damage to your property as a result of damage to the structure, you will not be covered unless you have a renters’ insurance policy.
Here’s an example. Suppose you are renting an apartment in a wood-framed building that used to be a single family home but has since been divided up into three apartments. Your unit takes up most of the top floor. One night, during a terrible rain and wind storm, a large tree falls on the roof of the house, leaving a hole in the roof. Rainwater comes in through the hole, damaging your furniture, soaking your mattress, and destroying your extensive collection of 1980s disco vinyl records.
Your landlord is responsible for the damage to the roof, and their commercial insurance should cover the cost to replace or repair the roof. But the damage to your property can only be claimed on a renters’ insurance policy that has been purchased by you.
Renters’ insurance covers your personal possessions. This can include furniture, rugs, artwork, collectibles, and so forth. It will cover these items from smoke and fire, lightning, explosion, windstorm, and water damage other than flooding. It also covers damage or loss from vandalism or theft.
Renter insurance will cover your liability if someone else is injured, at your home or anywhere else, by you, a member of your family who lives with you, or your pet. It will also pay for substitute lodging if you are unable to live in your home while repairs are being done.
In the case of the tree-damaged roof, the tenants who live downstairs may not have had any property damage from the incident, but they may not be able to live in their apartment while the repairs are being completed to the roof. Their renters’ insurance policy would cover their additional living expenses (the amount over and above their regular rent) if they have to move to a hotel for a few weeks while the work is being done.
When you purchase your renters’ insurance policy, you have a choice as to the way you will be compensated if you have a loss. You can insure your property for its actual cash value or its replacement value. If you insure for actual cash value or ACV, the insurance company will pay you to replace your property after subtracting for depreciation. So, if your one-year-old bedroom set costs $1200 to replace, the insurance company might pay you $1,000, since they assume it lost $200 in value in the year you had it. If your bedroom set is ten years old and would cost $1200 to replace, you might get $500 for it.
Your other option is to insure your possessions for their replacement cost. This means that if your bedroom set would cost $1200 to replace, you’ll get $1200 regardless of whether you bought your original set last year or ten years ago. The cost of a replacement cost policy is usually slightly higher than that of a policy that pays actual cash value.
Whether you insure for ACV or replacement cost, the insurance company will subtract your deductible from the amount they pay. If you have a claim for a $1,200 loss and your policy has a $500 deductible, you’d get a check for $700 from the insurance company to compensate you for your loss. And all claims are subject to the limits of the policy.
There are some things that renters’ insurance doesn’t cover. Of course, it doesn’t cover the structure of your home – that’s covered by your landlord’s policy. But it also doesn’t cover certain kinds of damage like flooding. It will cover water damage if the damage is caused by rainwater that gets into your home because of wind or another natural disaster, like the fallen tree mentioned earlier. It will also cover water damage caused by, for example, your upstairs neighbor’s bathtub overflowing into your apartment and damaging your furniture.
If you have a home-based business, your renters’ insurance may not cover equipment or tools that you use in your business, even if they are in your home. You would need a business owner’s policy to cover these tools that you use in your business.
Homeowners’ insurance covers the structure of the home including any outbuildings, as well as personal property. Renters’ insurance covers the renters’ property, plus the renter’s liability for bodily injury or property damage to a third party.
Suppose there was a fire in the apartment that you rent. Your landlord’s homeowners’ or commercial policy would cover the damage to the structure. Your renters’ insurance policy would cover your personal property that was damaged or destroyed by the fire.
A floater provides additional coverage for specific items, like that 1980s disco vinyl record collection. The typical renters’ policy has limits on things like artwork, furs, jewelry, silver, and collectibles. A floater will cover you up to the actual value of the items. A floater may also cover your possessions for other things like accidental loss.
It’s important to be specific about the items that you have that you want to cover with a floater. If You have a claim and the insurance company cannot determine that the item you are claiming was damaged is the same one that was named on your floater, they may deny your claim.
Most carriers offer discounts on renters’ insurance for things that make it less likely you will suffer a loss. For example, your rate may go down if you have working smoke detectors in your apartment, have a security system, and have deadbolt locks on your doors. You can also get a discount for having good credit, and for being over 55 years old. Your insurance carrier may reward your loyalty by giving you a discount if you have stayed with them for several years, or if you have other policies with them, like automobile or business.
Renters’ insurance isn’t very expensive, but there’s no need to pay more than you have to. Here are some ways to save money and get a cheap renters’ policy.
Compare quotes from different carriers. Some carriers will price different geographical areas in different ways, and they may price the coverage for that 1980s disco vinyl album collection differently as well.
Select the highest deductible you can afford to get cheap renters insurance quotes. The deductible is the amount you have to pay before the insurance kicks in. If the insurance company has to pay all but $250 of any loss, they will charge you more than they will if they have to pay all but $1,000 of any loss. You’ll pay less every year with a larger deductible.
Ask your insurance carrier about the cheapest way to pay. Some companies will charge you less if you pay the entire annual premium at once. Others will give you a discount for making monthly payments that are automatically deducted from your checking account.
Buy all of your policies from the same carrier. Buying auto and renters’ insurance from the same company is a no-brainer, but you could also save on boat or RV insurance, a business policy, or an umbrella policy if you need those. The more policies you buy from the same company, the more you will save.
If you belong to a union, professional organization, or other affinity group, you may be eligible for a discount that the organization has negotiated for its members. Ask your human resources department at work or your insurance agent.
The cost of renters’ insurance, like most things, varies depending on your situation. If you have a lot of valuable possessions, you will pay more than someone who has more modest property. The average renters’ insurance policy in 2017 is $189 per year. It can vary quite a bit by state. The average cost ranges from about 1% to 3% of annual rent, varying by state. Alabamans pay about 2.95% of their annual rent, while renters in Maryland pay just 1.12%.
By understanding what your renters’ insurance does and does not cover, and how to save money when choosing a policy, you will get the best renters’ insurance quotes and can rest assured that your property is protected.
| Insurance Range | Annual cost($) |
|---|---|
| $13,999 and Under | $141 |
| $14,000 to $19,999 | $145 |
| $20,000 to $25,999 | $163 |
| $26,000 to $31,999 | $178 |
| $32,000 to $37,999 | $178 |
| $38,000 to $43,999 | $205 |
| $44,000 to $49,999 | $209 |
| $50,000 to $74,999 | $247 |
| $75,000 to $99,999 | $315 |
| $100,000 and Over | $458 |
| State | Renters average cost($) | Median rent($) | Insurance as percentage of annual rent |
|---|---|---|---|
| Alabama | 245 | 691 | 2.95% |
| Alaska | 168 | 1,065 | 1.31% |
| Arizona | 192 | 891 | 1.80% |
| Arkansas | 212 | 649 | 2.72% |
| California | 203 | 1,209 | 1.40% |
| Colorado | 168 | 915 | 1.53% |
| Connecticut | 200 | 1,044 | 1.60% |
| Delaware | 152 | 985 | 1.29% |
| District of Columbia | 158 | 1,200 | 1.10% |
| Florida | 208 | 987 | 1.76% |
| Georgia | 226 | 849 | 2.22% |
| Hawaii | 215 | 1,354 | 1.32% |
| Idaho | 155 | 720 | 1.79% |
| Illinois | 172 | 877 | 1.63% |
| Indiana | 183 | 719 | 2.12% |
| Iowa | 147 | 655 | 1.87% |
| Kansas | 176 | 715 | 2.05% |
| Kentucky | 170 | 638 | 2.22% |
| Louisiana | 246 | 762 | 2.69% |
| Maine | 147 | 750 | 1.63% |
| Maryland | 158 | 1,172 | 1.12% |
| Massachusetts | 198 | 1,056 | 1.56% |
| Michigan | 204 | 755 | 2.25% |
| Minnesota | 147 | 802 | 1.53% |
| Mississippi | 250 | 688 | 3.03% |
| Missouri | 179 | 712 | 2.10% |
| Montana | 143 | 667 | 1.79% |
| Nebraska | 149 | 687 | 1.81% |
| Nevada | 191 | 1,001 | 1.59% |
| New Hampshire | 149 | 972 | 1.28% |
| New Jersey | 163 | 1,154 | 1.18% |
| New Mexico | 186 | 736 | 2.11% |
| New York | 209 | 1,061 | 1.64% |
| North Carolina | 146 | 759 | 1.60% |
| North Dakota | 113 | 610 | 1.54% |
| Ohio | 188 | 710 | 2.21% |
| Oklahoma | 245 | 679 | 3.01% |
| Oregon | 163 | 854 | 1.59% |
| Pennsylvania | 157 | 794 | 1.65% |
| Rhode Island | 178 | 908 | 1.63% |
| South Carolina | 195 | 749 | 2.17% |
| South Dakota | 120 | 617 | 1.62% |
| Tennessee | 213 | 726 | 2.44% |
| Texas | 247 | 834 | 2.47% |
| Utah | 146 | 839 | 1.45% |
| Vermont | 153 | 864 | 1.48% |
| Virginia | 156 | 1,060 | 1.23% |
| Washington | 165 | 951 | 1.45% |
| West Virginia | 179 | 594 | 2.51% |
| Wisconsin | 130 | 749 | 1.45% |
| Wyoming | 156 | 733 | 1.77% |