How Much Is Renters Insurance?

How Much Is Renters Insurance?

According to a recent survey, many young renters are unfamiliar with the cost of renters insurance. So, how much is renters insurance? People often see insurance as another bill to pay and don’t fully consider the ramifications of the risks of going without it. Unfortunately, this means that while 95 percent of homeowners have homeowners insurance, only 37 percent of renters have renters insurance. To the surprise of many renters, the annual cost is actually quite minimal.

Average Renter’s Insurance Costs

Considering the thousands of dollars in belongings that most renters own, the expense of renters insurance coverage is relatively small. Depending upon your state of residence, a typical policy costs between $180 and $300 per year.  That’s only about $20 per month in premium payments. With average monthly rent nationwide at approximately $1,300, this is a small expense.

Actually, the cost of a policy has remained stable, even decreased slightly, since 2003. The Insurance Information Institute created a chart of the annual premiums for homeowners and renters. In 2011, the cost of a renters insurance policy was $187 per year.

Year Homeowners (1) Percent change Renters (2) Percent change
2003 $668 12.6% $192 3.2%
2004 729 9.1 195 1.6
2005 764 4.8 193 -1.0
2006 804 5.2 189 -2.1
2007 822 2.2 182 -3.7
2008 830 1.0 182 (3)
2009 880 6.0 184 1.1
2010 909 3.3 185 0.5
2011 978 7.6 187 1.1


Your individual policy may vary slightly, but it depends upon a variety of factors.

Factors that Affect Cost of Renter’s Insurance

One of the greatest factors affecting the cost of a renters insurance policy is the state in which you live. You may assume that the costliest states to rent in would be those that have large cities and large rental communities, such as California and New York. However, the most expensive policies are (in order): Mississippi, Louisiana, and Oklahoma. The costs for insurance in these states ranges from $235 to $252. The lowest rental coverage can be found in South Dakota, North Dakota, and North Carolina where the costs are between $117 and $132.

Aside from the location of your rental unit, other factors impact the cost. The states that have higher insurance rates generally have higher incidents of theft and bad weather like tornadoes and flooding.

Of course, these are factors that are beyond your control. You can decide the other aspects that affect cost. This includes:

  • Amount of coverage
  • Type of coverage
  • The size of your premium and deductible
  • Amount of liability coverage

Liability coverage provides funds to cover medical bills if someone were to injure themselves while on your property. If that person intends to sue, your legal fees would also be supported. It is recommended that you carry at least a $300,000 limit in liability, if not more. Adding additional liability is not very expensive and can give you peace of mind.

Higher Deductible vs. Higher Premium

When shopping for a renters policy, there are two terms that insurance companies use when explaining costs: deductible and premium. A deductible is the amount you are required to pay out of pocket before your insurance begins to pay. For example, your policy may have a $1,000 deductible. So, if you have an apartment fire and you need to replace $6,000 worth of belongings, then your insurance will pay for $5,000 and you pay $1,000. The premium is the monthly or annual fee that you pay to have your renters insurance. As stated previously, this can average around $20 per month.

The higher your deductible, the lower the up-front premium costs will be. However, by having a higher deductible, you are also taking a greater risk. If an incident happens, you will have to pay a greater portion of the recovery costs.

Amount of Renter’s Insurance Coverage

The typical policy has $100,000 in liability coverage, although you can choose to increase this amount if required. Many insurance companies have bundling deals too, so if you have a car that needs to be insured, this will reduce your over all monthly costs.

Cost is one of the most important factors driving people to make decisions about their insurance needs. Research has shown that if you bundle your home and car insurance policies through a single company, you could save as much as 15 to 20 percent on your annual premiums.

You can always add to your renters insurance policy after it has begun. For example, if you get engaged and need to add a larger amount to the jewelry coverage, your insurance agent can help you with that.

To do so, you will need to add a rider or extension onto your existing renters policy. Your insurance will already include some protection for the property in your belongings, but this limited to a certain dollar amount pre-determined by the insurance company. The average amount of coverage is between $10,000 and $25,000. This may not be enough, especially if you also own expensive electronics, art, or other jewelry that needs to be included in your personal property coverage.

Advantages of Renter’s Insurance

If your belongings sustain damage as the result of a fire or theft, your insurance policy would help to cover the cost. There are two different types of policies to choose from in this matter: replacement cost and actual cash value. The replacement cost option pays enough money to replace the damage item. If you own a chair that is 10 years old, it is probably not worth much and would cost hundreds of dollars to replace. The replacement cost policy would help cover this amount. The actual cash value option pays you for the value of your damaged possessions based on what they are actually worth. While it won’t cover everything, the premiums are much lower.

In addition to helping to cover the cost of your belongings, a renters policy would also help to pay for your living expenses while you look for a new apartment or wait for your current place to be restored to a livable condition. This includes your hotel bill or temporary rental payments, meals, and other expenses incurred while waiting for your apartment to be repaired.

When considering the renters insurance best suited to your needs, keep in mind that a standard policy does not include coverage for floods. Also, expensive jewelry or fine art will also not be covered without a rider.

Speak to an Agent

Procrastination will prove costly if you delay protecting your property. If you have any additional questions about the cost of renters insurance, speak to your insurance agent today. They will have the knowledge and experience to recommend the best policy to suit your needs.

If you have any questions about how to budget, click here. For more on renter’s insurance, click here.

Jenna Christianson has a passion for research and writing. She has worked as a researcher for a variety of organizations ranging from genealogy to the transportation industry and everything in between. She is excited to be a part of the Enhanced Insurance team!

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