The Insurance Information Institute cites that the average cost of renters insurance across the United States is about $179 per year , according to their most recent data. That said, renters insurance premiums can vary widely based on where you live, your claims history, and your chosen coverage limits, among other factors.
Renters insurance policies offer similar coverage to homeowners insurance. The goal is to reimburse you for any losses that you suffer in an emergency. Imagine if you were renting a house and a leak flooded your clothing closet, destroying your entire wardrobe. Or if a burglar broke in while you were out and made off with your laptop and other electronics. These losses would be one level of pain. Not having insurance that could help you afford replacements would only add a whole other level to that!
It’s generally a good idea to purchase a renters insurance policy if you’re renting a home, regardless of whether it’s an apartment or a house. This holds true even if you are renting an apartment in a private home rather than an apartment complex. Your landlord may have homeowners insurance that is designed to reimburse them in the event of say, damage or a robbery. This however generally does not cover your assets in the event of a loss.
Average Cost of Homeowners Insurance by State
We’ve included the average annual renters insurance premiums for each state in the table below. This data is based on the latest figures from the Insurance Information Institute , a nonprofit organization that collects and shares data related to the insurance industry.
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Top 5 Most Expensive States for Renters Insurance
According to data from the Insurance Information Institute, the most expensive state for renters insurance in the nation is Mississippi. Renters in the Magnolia State pay an average of $252 per year for renter’s insurance. Let’s look at the top five:
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Mississippi and Alabama are expensive states in terms of renters insurance because of their proximity to the coast. Being right on the Gulf Coast means residents are often vulnerable since hurricanes may first make landfall in these areas. The risk of loss is higher than inland.
Oklahoma, Texas, and Louisiana all lie in the infamous “Tornado Alley,” which is a strip of states, bordered by the Dakotas to the north and Texas to the south, that is historically prone to fiercely damaging tornadoes. Combined, these factors have resulted in higher renters insurance premiums due to each location’s heightened susceptibility to wind and storm damage.
Top 5 Least Expensive States for Renters Insurance
North Dakota is the least expensive state for renters insurance in the United States, according to data gathered by the Insurance Information Institute. North Dakotans pay an average of $126 per year for renters insurance coverage.
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In general, renters policies are lower in areas that aren’t subject to extreme weather (like hurricanes and tornadoes) and that have low crime rates.
What Factors Determine Cost of Renters Insurance?
The cost of your renters insurance may be influenced by a multitude of factors, the most prominent being the following:
• Coverage limits
• Claims history
• Added coverage
Understanding these variables can go a long way towards reducing your costs and helping you choose the renters insurance policy that best suits your needs.
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This is one of the key factors impacting the costs that you can control. Most insurance companies will give you a choice between higher and lower limits on your renter’s insurance policy.
Coverage limits are the maximum amounts an insurer is willing to pay in the event of a covered claim. There are different kinds of coverage (more on that below), and the limits offered usually range from as low as $10,000 in personal property coverage (the items in your home that could be damaged or lost) to as high as $500,000 in liability coverage (this be tapped if someone got injured at your house). Generally speaking, the more insurance coverage you need, the higher your costs.
The deductible is the other major component of your renter’s insurance costs that you can influence. In the event you file a claim, the deductible is the amount you agree to first pay out of pocket before renters insurance will kick in.
Your deductible transfers risk from the insurer to you, when it comes to losses incurred in a covered claim. Consequently, insurers are willing to charge you a lower premium if you opt for a higher deductible, as this reduces how much they need to pay out. As you might guess, if you want a low deductible, so you would pay as little out of pocket as possible, your rates will be higher.
Depending on your insurance provider, your optional deductible will usually range anywhere from $0 to $2,000. In some instances, insurance providers will allow you to pick your deductible as a percentage of your total insurance limit, for example, if your policy limit is $10,000 and your deductible allotment is 10%, your deductible will effectively be $1,000 for each claim filed.
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Similar to your FICO score, insurance companies use what’s called a “CLUE” report (Comprehensive Loss Underwriting Exchange) to track your history when it comes to filing insurance claims. This report contains information regarding all insurance claims filed within the past 5 to 7 years, regardless of whether you move or change insurer.
Repeated claims with hefty payouts can be a red flag for insurers and result in a hike to your insurance premiums. Beware that even claims filed under other types of insurance policies, like homeowners insurance, can impact your renters insurance premium.
You know that saying about the three most important things in real estate are location, location, location? Well, in terms of renters insurance, location isn’t the only thing, but it’s a major variable in terms of how much you will pay. Are you renting a cabin in the woods, in a low-crime rural area? Or are you moving into an apartment in the middle of a major city, where robberies are common? Or are you perhaps planning on signing a lease for the sweetest beach shack, just steps from the shore? The location of your rental will impact how expensive your premium is. Behind the scenes, insurance actuaries rely on complex formulas to price your premium; these take many factors into account, including the risk of natural disasters, crime, and fire, among other factors.
Depending on how risky the insurer perceives your area to be, expect to be charged a higher premium if you live in an area that’s especially prone to crime or natural disasters.
While we all love our pet pals, it’s fairly commonplace for pet owners to be charged higher premiums if they live with a furry friend. Regardless of how sweet your pet may be, insurers deem pets a liability risk, particularly when it comes to things like bites, scratches, and damage to personal property. Your renters policy will potentially pay out if your critter bites a guest or even nips someone while you are walking it in the lobby of your apartment building.
In some instances, insurers may be unwilling to insure certain types of pets; these are typically certain breeds of dogs or exotic animals deemed “higher risk.” Check with your insurer to verify whether or not your pet is covered under your renters insurance policy.
Your policy will likely include standard coverage for personal property, liability, and loss of use (meaning expenses incurred if you can’t live in your usual dwelling) offered through your standard rental insurance policy. In addition, many insurers offer a suite of optional coverages, riders, and endorsements that you can tack onto your renter’s insurance policy to best suit your needs.
Naturally, added coverage comes with added cost, however as renters insurance is fairly affordable, it usually adds only a few dollars a month.
Depending on your personal assets, it may be worthwhile to consider some of these optional coverages. Some of the most common add-ons/endorsements/riders offered through insurers are as follows:
• Scheduled personal property: This ups the coverage limit for a specific named item or items that would fail to be fully covered under the policy limits of your standard renters insurance.
• Replacement cost: Typically, an insurance policy will reimburse you for the actual cash value of an item. So if your 5-year-old laptop is stolen or destroyed, you’d be paid the current value of it. With replacement cost coverage, the depreciation is eliminated from the calculation of your property’s value, resulting in a higher payout in a covered claim.
• At-home business: This covers damages to any business equipment you have at home that isn’t covered under a standard renters policy.
• Pet damage: This sometimes allows you to add coverage for property damage and liability caused by pets that isn’t covered under your standard renters policy. Exclusions may apply for specific breeds or types of pets.
• Earthquake coverage: This covers damage to your property caused by an earthquake, which isn’t typically covered under renter’s insurance.
• Identity theft: This covers costs incurred if you’re ever the victim of identity theft, as well as fees for expert assistance when it comes to restoring your identity and resolving any fraudulent activity.
What’s Covered by Renters Insurance
The majority of renters insurance policies provide the following standard coverages:
• Personal property: This covers any loss or damage to your possessions due to a covered event, such as fire or theft.
• Liability: This covers any property damage or bodily injury costs that you’re found liable for in the event of a covered claim.
• Loss of use: Also known as “additional living expenses”, this covers the costs of temporary housing in the event your rental is rendered unlivable due to a covered loss.
• Medical payments to others: This covers the medical costs of guests that are injured on your property. Unlike liability insurance, this does not require you to be legally liable for any injuries.
Most insurance providers will allow you to adjust the limits on these coverages to suit your needs. Keep in mind, this will likely impact your renters insurance costs; more coverage will probably mean higher premiums.
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Do You Need Renters Insurance?
Legally, you are not required to purchase renters insurance. However it’s advisable for most individuals to purchase renters insurance, as your landlord’s homeowners insurance policy will not cover any losses or damage to your personal property; nor will it typically cover any liability for bodily injury or property damage that occurs while the property is under lease.
Certain rental properties will require you to purchase and maintain an adequate renters insurance policy as part of your lease agreement. Make sure to check with your landlord to fully understand what your contract requires.
Recommended: Why Do Landlords Require Renters Insurance?
Are There Ways to Save on Renters Insurance?
There are a variety of ways you can save on your renters insurance costs, these include bundling your insurance policies under one insurer, increasing the size of your deductible, and generally staying safe and claim-free. Here’s a closer look:
• Bundle your insurance policies: Most insurance companies offer discounts for purchasing multiple policies through the same company. Purchasing renters insurance in tandem with other policies, like life or auto insurance, can result in cumulative discounts across all your insurance policies.
• Increase your deductible: Raising the amount of your deductible increases your share of the costs in the event of a covered claim and consequently can lower the cost of your premiums.
• Pay your entire premium at once: Some insurance companies offer a discount for paying your entire premium upfront as one annual payment rather than in monthly or quarterly installments. Check with your provider to see if they offer lump sum payment discounts.
Renters insurance is relatively inexpensive when compared to other types of coverage, like homeowners, auto, or health insurance. However, it can prove invaluable in the event of any emergency that occurs on your rental property.
It’s a good idea to purchase a renters insurance policy when renting a home. Remember that your landlord’s homeowners insurance policy typically only covers their interests and generally will not reimburse your costs in the event of any incidents. Imagine losing all your possessions, or even just all of your clothes, to a fire. Or having a burglar break in and steal your electronics. Renters insurance can help minimize the pain by helping pay for you to replace what you’ve lost. That kind of peace of mind is well worth the usually inexpensive premiums these policies charge.
Protect More Than Your Possessions: Sofi and Lemonade Offer Renters Insurance
SoFi’s teamed up with Lemonade to bring you renters insurance that’s affordable, instant, and easy to understand. Starting at just $5/month, you can protect the stuff you own at home — and everywhere else.
Check out the simple way to buy affordable, reliable renters insurance with SoFi, powered by Lemonade.
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