Renters Insurance Cost
Imagine your apartment burns down, and you lose everything. How much money would it take to replace all your possessions? That includes your furniture, electronics, clothing, kitchen supplies, and jewelry. Most people would need somewhere between $10,000 and $20,000 to get back on their feet, but how many people have that kind of money sitting around? In fact, a recent study from the Federal Reserve found that 4 in 10 Americans could not afford an unexpected $400 expense, let alone a $10,000 disaster. That is where renters insurance comes in.
In this guide, we will provide information about renters insurance cost to help you make the best decision about your own policy.
We Cover in This Guide
- How much does renters insurance cost?
- What is renters insurance?
- Types of renters insurance
- What does renters insurance cover/not cover?
- Benefits and risks
- Tips for buying
How Much Does Renters Insurance Cost?
It is one of the cheapest forms of financial protection on the market today. Renters insurance cost varies but premium rates range from $15 to $30 per month. Providers will determine your exact price based on where you live and the value of your possessions. If you have lots of expensive jewels and artwork, and/or if you live in a high-crime or otherwise risky neighborhood, expect to pay more for coverage.
What is Renters Insurance?
Renters insurance covers the cost to replace your personal possessions if your property is damaged or you are robbed. You are also protected in case someone is injured in your apartment. Additionally, if you can not live in your residence for a certain amount of time, renters insurance pays for a hotel room.
The bottom line is that it is a must-have financial product. The premiums are so small compared to the amount of protection offered that it is really a no-brainer.
Types of Renters Insurance
Insurance companies offer cheaper policies with minimal coverage and slightly more expensive ones with greater benefits.
- Actual cash value policies are the cheapest option because they pay out the real value of your lost or stolen possessions less however much they have depreciated. For example, if you bought a new computer for $1,000 last year, that same computer may only be worth $750 today. An actual cash value option would pay out $750.
- Named perils policies cover only the specific incidents named in policy.
- Replacement cost policies are a bit more expensive because they pay the actual cost of replacing your belongings. They do not subtract anything for depreciation. In the above example, a replacement cost option would pay the full $1,000 to buy a new computer. Replacement cost make sense for most people because there is usually only a small difference in price between the two. An actual cost value would only make sense if you are on an incredibly strict budget with no room for a few extra dollars.
- All risks policies cover all risks except those specifically exempted.
What Does Renters Insurance Cover/Not Cover?
This type of policy provides for the replacement cost of your stuff in case of damage due to natural disasters, riots, vandalism, equipment or system breakdown, and theft.
It provides coverage in three specific ways:
- Personal possessions: If your apartment gets damaged or destroyed, the policy will pay for the replacement costs of all your belongings, like furniture, clothing, dishes, electronics and even jewelry. It also takes care of you if you get robbed, including if your stuff is not physically in your apartment. For example, if your phone gets stolen, you are covered.
- Liability: Policies also protect you against any personal liability in case someone gets injured inside your apartment. For example, if a visitor trips over your coffee table and decides to file a lawsuit, you will be covered.
- Additional living expenses: Imagine your apartment burns down and you have to get temporary shelter elsewhere. It can pay for the additional expenses associated with living out of a hotel room while you get your life back together.
While renters insurance covers most risks you may face, there are certain exceptions. They can include:
- Volcanoes and windstorms are covered under most policies, but floods, earthquakes, and sinkholes are not. If you are concerned about any of these exempted scenarios, you should add additional coverage.
- Most rental insurance policies exclude damage caused by rodents, bugs, and other vermin.
- Extremely expensive items are unlikely to be fully covered under common renters insurance plans.
- While renters insurance covers items inside your car, you need auto insurance to cover damage to your vehicle itself.
Benefits and Risks
- Protect your Assets: With proper coverage, you can be assured that you can replace your possessions if they are damaged or stolen.
- Cover Legal Expenses: In the unlikely event that someone is injured on your property, renters insurance will cover the legal costs and damages if you are found responsible.
- Peace of Mind: With renters insurance, you can feel safe inviting people over or taking the trips you want without fear that you will be ruined if something happens.
Tips for Buying
When considering renters insurance cost, you should take the following steps.
- Work with an Independent Agent: An independent agent will help you navigate the complexities of renters insurance insurance by assessing your needs and directing you to the best broker.
- Speak with your Auto Insurance Provider: Most insurance companies offer discounts by bundling auto and renters insurance policies.
- Compare Quotes: Premium rates often vary considerably between providers. Consider quotes from at least three different insurance companies before you sign a contract.
Does my landlord’s policy cover my property?
No. This is a common myth that prevents lots of tenants from buying the product. Most landlords only insure their buildings, not your personal property.
Can I share renters insurance with my roommate?
No. It only protects the possessions of the policy owner. Roommates and non-married significant others simply are not protected and will need their own separate products.
Will renters insurance cover things like my phone or computer?
Yes, if they are damaged or destroyed by a covered risk, like a fire or burglary. Check your policy for specific information on what is covered.
Renters insurance is an inexpensive policy that you will be very thankful for if you ever face a sudden disaster. Coming up with the money to replace your possessions will be the last thing on your mind. By understanding renters insurance cost and determining your needs, you can know that your policy covers potential risks and feel secure that you are protected.
Depending on your coverage choices, limit, deductible, location, and property, premium rates range from $15 to $30 per month.