Moving into a new apartment can be stressful and expensive, and as a result, many tenants neglect to purchase renters insurance. But having renters insurance can be a lifesaver if your apartment gets damaged or destroyed. Renters insurance protects your personal possessions in the event of certain perils, such as fire, explosions or water damage, as well as theft and vandalism. Most renters insurance plans also cover tenants against liability from accidental injury to guests.
Most tenants assume that their landlord’s insurance will cover damage to their personal belongings, because they own the entire building. However, landlords have their own type of insurance that generally only covers the physical property, and personal property used to maintain the building –– not your personal belongings inside. Landlord insurance does include liability coverage, in the event that a tenant was injured on the property and the landlord was found to be at fault.
How much is renters insurance per month?
With any plan, renters insurance is among the cheapest insurance available. According to the Insurance Information Institute(III), the average cost of renters insurance in the United States is the following:
| Monthly | Yearly |
|---|---|
| $16 per month | $188 per year |
States with the highest yearly renters insurance premiums are the following:
| State | Yearly Cost |
|---|---|
| Mississippi | $262 |
| Louisiana | $249 |
| Alabama | $242 |
| Wisconsin | $132 |
| Minnesota | $144 |
| North Dakota | $114 |
Some insurance providers allow tenants to choose when they pay their renters insurance premium—monthly, quarterly or yearly. In many cases, providers will offer a small discount on the premium if the entire sum is paid in full for the year. If you choose to pay monthly, you might be required to pay a small processing fee on top of your monthly premium rate. Remember that the higher your deductible is, the lower your premium will be, regardless of your payment schedule.
Factors that influence the average cost of renters insurance
Deductible
If your possessions were damaged or destroyed, your deductible is the amount of money you would have to pay to replace them before insurance coverage takes over. The higher your deductible, the less you’ll pay each month for your premium. On the other hand, you’ll pay more each month if you opt for a lower deductible.
Type of building
The type of building also determines your renters insurance premium. For example, apartment dwellers usually pay less for renters insurance, whereas people renting single family homes or duplexes tend to pay more each month.
Types of renters insurance policies
When selecting a renters insurance policy, there are two main choices—cash value and replacement cost value. Let’s take a look at both policies, and what each covers.
Cash Value (CV)
With a CV policy, the insurance company will pay you what your belongings are worth today if they get damaged or destroyed in a qualifying event. The CV policy factors in depreciation, so you won’t get back the full cost of what you paid for your belongings in the first place. However, this policy has the lowest premiums.
Replacement cost value (RCV)
Under a RCV policy, the insurance company will pay you to replace damaged items with new ones that are of similar type and value. RCV does not include depreciation, so you’ll receive the same (or nearly the same) amount of money as you paid for an item originally. Because depreciation is not considered, you’re premium will be higher for a RCV policy.
Before choosing a renters insurance policy, start by creating a home inventory of your personal possessions. If you have a lot of items with a high monetary value, a RCV policy will be the best option. On the other hand, if you don’t have many belongings, you can probably opt for a CV policy and save money.
Factors that influence the average cost of renters insurance
If you’re thinking about purchasing renters insurance, it’s important to note that there are some factors that can influence the cost of your monthly premiums, beyond choosing a CV or RCV policy.
Location
The location of your home or apartment will impact how much you pay per month for insurance. If you live in an area that is more prone to extreme and potentially damaging weather events, expect to pay slightly more.
Deductible
If your possessions were damaged or destroyed, your deductible is the amount of money you would have to pay to replace them before insurance coverage takes over. The higher your deductible, the less you’ll pay each month for your premium. On the other hand, you’ll pay more each month if you opt for a lower deductible.
Types of building
The type of building also determines your renters insurance premium. For example, apartment dwellers usually pay less for renters insurance, whereas people renting single family homes or duplexes tend to pay more each month.
Frequently asked questions about renters insurance
Is renters insurance required?
Renters insurance is not required by law, but some landlords require tenants to have renters insurance before they start living in their property. If your landlord does require renters insurance, check your lease agreement for a provision that states how much coverage you need to have.
Is renters insurance worth it?
Renters insurance is one of the best investments you can make when living in a rental property. In the event that your personal possessions are damaged, destroyed, or stolen, having renters insurance saves you from paying to replace all of your items out of pocket. Renters insurance also protects you against liability for accidental damage or if someone gets injured inside your home or apartment.
How can I save money on renters insurance?
There are many ways to get discounts on renters insurance. Ask about raising your deductible, which will lower your monthly or annual premium. According to the III, a $1,000 deductible can reduce premiums by as much as 25%. Most insurance companies will provide a discount if you bundle your policies, so think about getting renters insurance from the same provider that you use for your life or car insurance. When setting up your payment schedule, opt to pay your premium for the year in full, which can save you money in the long run.
Am I covered if my roommate has insurance?
No. This is one of the most common misconceptions tenants have about renters insurance. Your personal belongings are not covered by your roommate’s renters insurance policy. In some states, it is legal to have multiple roommates on the same renters insurance policy, but it’s generally not advised. Sharing renters insurance tends to complicate claims, and when there’s a payout from the claim, roommates need to agree on how the money will be divided.
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