Figuring out how much renters insurance you need is essential in 2022 so that you don't underinsure yourself and your family.
And the truth is that:
It's easy to buy the first policy you review without comparison shopping.
However, you need to do some research before you get covered.
In this post I will go over everything you need to know about renters insurance, how much you need and if it's required.
How Much Renters Insurance Do I Need?
Renters insurance sets limits on how much the company will cover during a claim. This limit depends on the type of plan you choose.
The higher the limit, the more covered claims. State Farm reports that the average policy covers up to $100,000 in damages.
Therefore, a policy with a liability limit of $100,000 would probably be a good starting place. Now, you may be asking, “How much is renters insurance for $100,000?”
The premium can vary widely depending on the value of your personal possessions, your neighborhood, and other factors about your background.
Progressive notes that their average renters insurance policy ranges between $13-25 per month. On the cheaper end of the spectrum, Liberty Mutual claims that you can get customizable renters insurance for as little as $5 per month.
However, according to Liberty Mutual’s coverage calculator, the deductible—the amount you owe before the insurance company pays for damages—for a $100,000 plan is relatively easy to calculate.
Persons between 23 and 30 living in a low-risk area with an income under $100,000 would pay a deductible for such a plan of $500.
Things to Consider When Calculating Your Needs
Most renters insurance policies cover disasters like fires and tornadoes, but they don’t often cover damage from floods or earthquakes. Where you live determines whether you’ll need to purchase additional insurance to cover those disasters.
The most important consideration is the monetary value of your personal possessions and the amount of personal liability you want to insure.
Will My Landlord Require Renters Insurance?
Naturally, you might start by asking, “How much renter’s insurance should a landlord require?”
However, some landlords do not require rental insurance for your rental apartment or home.
Mainly because there are no state laws to force a tenant to obtain renter’s insurance the same way they would with, say, car insurance.
However, most state laws allow the landlord to require renter’s insurance to help cover their liability.
Landlord’s insurance does not cover your personal items nor any damage you may inflict on the building as a tenant.
In many of these states, the landlord will mandate their tenants to buy renters insurance. You’ll just need to check the laws in your specific state.
But more often than not, your landlord will require renters insurance no matter the state you live in.
It’s also in your best interest to purchase renters insurance covering your personal possessions in case of damages caused by unexpected events like fires or theft.
Policies will also cover liability against injuries that occur on the property due to the tenant’s neglect.
So, will your landlord specify the type of renters insurance you should obtain?
Many landlords will just require you to provide proof of coverage upon moving in, though some will suggest specific renters insurance companies that they know and trust.
Some landlords will even ask that you add them as an interested party on your coverage.
Read the following sections to learn about the different kinds of renters insurance.
What Is the Average Cost of Renters Insurance?
The National Association of Insurance Commissioners (NAIC) conducted a study based on data from 2017—the latest data available—on the average costs of renters insurance.
The NAIC study found that the average cost of renters insurance in 2017 was $180 per year or $15 per month.
Of course, premium costs will vary depending on your location, the insurance company, and the value of your personal possessions.
According to State Farm, the average person possesses $35,000 in personal belongings.
The same study also lists average renters insurance by state. For example, the average annual renters insurance premium costs $235 annually in Alabama, whereas it only costs $173 in Missouri.
What Does Renters Insurance Cover?
Renters insurance encompasses two different components, property coverage and liability coverage.
The property coverage component insures against damages to or theft of your personal possessions that you own—not the building itself.
The personal liability component covers your liability and medical costs up to a certain amount for accidental damage or injuries that you or your guests sustain in your rental unit.
Most renters insurance policies also include a loss of use provision.
This provision will pay for your hotel and meal expenses if you are temporarily unable to reside in your dwelling due to an insured loss or peril, such as a fire.
While most renters insurance policies cover disasters like fires and tornadoes, they don’t often cover damage from flood or earthquakes.
How to Buy Renters Insurance Online
Figure Out How Much You Need
The first thing you need to do is figure out how much coverage you need. This should be fairly simple for you to do since you have read this article.
Essentially, figure out what you need to protect and get enough coverage to protect it.
Get Quotes
Once you know how much coverage you need it's time to do some comparison shopping and to get some quotes.
Your goal is to get instant quotes that don't require personal information. Once you have a few quotes it's time to read some reviews.
Read Online Reviews
At this point you should have one or two insurance companies that you want to go with for coverage.
Your next goal will be to find a few online reviews about each company to learn more about them and how their product works.
You should do this step 100% of the time because some products have added bonuses that you might not be aware of.
Apply Online
Once you find the price you like and the company you want to do business with, it's time to apply online.
This process is usually super simple and you can have your coverage start immediately.
Lowering the Cost of Your Renters Insurance
Some renters insurance plans allow you to pay a lower premium to maintain your insurance.
In return, you’ll have to pay a higher deductible, which is the out-of-pocket cost amount that you owe before your insurance policy pays for a claim.
You’ll have to weigh the risk in the tradeoff between lowering your premiums and paying a higher deductible if you suffer property damage or personal liability.
State Farm offers this example: if a fire causes $1500 worth of damage and your deductible is $500, your insurance company will pay the difference: $1000.
If money is tight, you may want to consider other ways to reduce your insurance premium costs, particularly if you’re flexible about your city or neighborhood.
Certain factors can cause your premium to increase:
Skipping extra coverage like floaters can also help offset your renters insurance costs.
Finally, consider bundling your renters insurance with another insurance policy, like car insurance, to save money.
Taking Action
Once you know how much renters insurance you need it's time to take action because going without coverage is honestly insane.
If you need renters insurance, we’ve done the hard work for you—check out the top three companies or get your free renters insurance quote today.