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How to shop for renters insurance
Just because you’re renting doesn’t mean you don’t need to worry about insurance. If an unexpected event like a fire, burglary, or accident happens, will your personal property be protected? If you’re held liable when a guest is hurt on your property, will you have to pay damages out of pocket?
Unless you have the right renters insurance, and the right amount of coverage, unforeseen events could prove catastrophic. No doubt this is why more and more renters are turning to renters insurance to get the protection they need. Whereas only 41% carried it in 2016, 57% were carrying it by 2020.
So, how can you find the right policy and best value on the renters insurance you need? The following questions should help.
What do I need to know about renters insurance?
How does renters insurance work?
Renters insurance comes to the rescue when a covered loss occurs. Each policy will have a list of covered perils, that is, covered causes of loss or damage.
Renters insurance is designed to cover damages or losses due to occurrences beyond the policyholder’s control, such as a fire, windstorm, lightning storm, or explosion. Damage from negligence or normal wear-and-tear usually isn’t covered.
If a covered loss happens, you will report it to your insurance provider. The company will then review your claim and investigate your loss. If everything checks out, the insurance will pay your claim amount minus your deductible. For example, if you have a $500 deductible and file a $10,000 claim, you will receive $9,500.
For liability claims, you will follow the same process of contacting your insurance company and filing a claim. There is usually no deductible, however.
Once you settle your claim, you can get back to normal life.
What types of coverage does renters insurance provide?
Look at the coverage provided by each insurer you consider. Common types of coverage include:
- Personal property: Helps to replace your personal property if it is damaged or lost in a covered incident, such as a burglary or fire. Note that unique or expensive items like furs, jewelry, or collectibles may require a dedicated add-on policy. Some possessions may be covered by some policies even when moved outside the home.
- Personal liability: Covers legal costs if someone is hurt in your home or you accidentally injure someone and are sued.
- Guest medical protection: Coverage for medical payments if a guest is injured on your property. Sometimes called “no-fault medical coverage.” A helpful addition to liability coverage because it will allow people hurt on your property to submit their medical bills to your insurance without going to court.
- Additional living expenses: Coverage of living costs if you can’t stay in your home due to a covered accident. A few examples are restaurant meals, hotel bills, and temporary rentals.
- Identity theft insurance: Insurance to cover the losses and damages caused if someone steals your identity.
- Property damage to others: Coverage if you accidentally damage or break someone else’s property.
- Add-on coverage: Providers may also offer riders to expand your coverage for such items as expensive watches, jewelry, furs, and other valuables.
It’s important to identify which coverage types you need and then check whether potential insurers offer them. A great way to save is to tailor a policy to only include the coverage types you require. Some insurers and policies may allow greater customization than others.
What types of events are covered under renters insurance?
So what instances does renters insurance commonly cover?
According to the Insurance Information Institute, the covered causes of loss for property damage include:
- Fire
- Lightning
- Wind
- Hail
- Water damage
- Freezing
- Theft
- Vandalism
- Malicious mischief
Further, the covered causes of loss for liability coverage include:
- Bodily injury
- Property damage
- Medical payments
- Credit card fraud
Earthquakes and floods are typically not covered and require a separate dedicated policy.
Are you in the military? Learn about USAA’s renters insurance.
Can I get some things covered that normally are not?
Check whether the policies you are comparing provide the coverage you need. For example, policies often don’t cover damage caused by floods, earthquakes, and drain backup. If you believe you should have coverage for these perils, you may be able to purchase a rider that includes such coverage. Just make sure to include the same riders on every policy that you compare.
What are the costs of renters insurance?
There are two costs to consider when shopping for renters insurance: the deductible and the premium.
Renters insurance premiums
The premium is an annual amount due that is usually split up into monthly payments. The average cost varies by state, ranging from $115 to $244.
It also can vary depending on such factors as:
- The location of your home
- Your claims history
- The claim history at your address
- Safety features in your home
- The amount of coverage you select (policy limits)
- Your deductible amount
- Your credit score
Note that raising your personal property coverage limit generally has more of an effect on your insurance premium than raising your liability coverage limit.
Renters insurance deductibles
A deductible is the share of money you will have to pay out of pocket when you file a claim. Your deductible may be a dollar amount (say $500) or a percentage of your policy limit (such as 2%). Renters insurance companies usually let you choose the deductible amount from a few options.
The higher your deductible, the lower your premium will be. However, when you file a claim, the company will subtract the deductible from your settlement. So, it’s important to weigh the risks and benefits of different deductibles and premiums.
How should you compare renters insurance companies?
Many renters insurance companies exist. To narrow down your options, start with those that have a solid reputation and positive customer reviews.
SuperMoney has curated a list of the leading renters insurance providers. This list features reviews from past customers. In a glance, you can see the providers and whether they are recommended or not.
But consumer reviews will only get you so far. The following sections cover some other questions you should consider when comparing renters insurance companies.
Which renters insurance companies serve your state?
The next step is to find out which of the reputable renters insurance companies serve your state. Not all insurers are nationwide, so one of the first things to check is a company’s service area.
What is the financial strength rating of the renters insurance company you are considering?
Another important factor to consider is an insurer’s financial strength rating. This rating shows how likely it is that an insurer will meet its financial obligations, such as paying out a claim when you file one.
Financial strength ratings are typically based on factors such as the company’s financial holdings, how much it pays out in claims, and how much it makes in premiums.
Check the financial strength ratings of companies you are considering. You want to make sure you can trust them to pay your claims. When available, SuperMoney has combined the rating of multiple agencies to provide an average financial rating for each insurance company. We have included them in the listings below to make it easy.
Does the renters insurance company offer any discounts?
Renters insurance is usually pretty affordable, but it never hurts to save. Some insurers offer discounts. Usually, you can save money if you add renters coverage to another insurance policy, such as auto coverage. And there may be additional discounts for having an alarm system, home monitoring system, smoke detectors, and the like. So, when vetting a company, ask what discounts are available.
What are the coverage limits?
Always check the limits of the renters insurance offered. Does it provide sufficient coverage for your needs? For instance, renters insurance with a low liability coverage limit will be cheaper, but it probably won’t be enough to cover the cost of repairing the property if you are responsible for a fire.
You don’t want to have too much coverage, either. If you carry more coverage than you need, you’re spending more than you have to. Estimate the cost of the property and your valuables to determine the level of coverage you need. (Note: In addition to helping you choose the right amount of coverage, a complete inventory of your property will make things much easier if you have to file a claim.)
Coverage limits affect the cost of insurance, so make sure you use the same limits every time you ask for a quote.
What are the deductibles?
Many providers of renters insurance offer policies with deductibles starting at $500 or $1,000. Other companies set deductibles as a percentage of the total cost. For example, if your policy has a 20% deductible and you file a $2,000 claim, you will have to pay a $400 deductible.
When it comes to deductibles, it is often best to go as high as you can afford. Usually, the higher the deductible, the lower your premium will be. This is because your insurance company will be paying less if you make a claim. You may be able to negotiate a lower premium if you’re willing to increase the standard deductible.
How much are the premiums?
Renters insurance premiums are based on many factors, such as where you live, your credit history, your coverage limits, and your deductibles. Remember to use the same insurance type, coverage limits, and deductibles when asking for quotes.
How is property valued during a claim?
An important factor with personal property insurance is how the insurer calculates the value of your belongings. There are two common approaches: actual cash value (ACV) and replacement cost value (RCV).
Actual cash value
Insurance companies ofter prefer ACV. It pays the actual cash value of the insured item at the time it is lost. One way this can be determined is to take the cost originally paid, or the cost if you were to buy a new one, then subtract depreciation. For example, if your three-year-old laptop is stolen, the insurance company could deduct three years’ depreciation from what the item costs new. That new, reduced amount is how much they would reimburse you for it.
Basically, you get compensated for what you could get for that item if you sold it used (before it was damaged), aka its “market value.” This can leave you with less than you need to replace your lost property.
On the positive side, ACV reimbursement usually means lower premiums.
Replacement cost value
RCV pays you the full amount it will cost to replace the item with a new one, or with the nearest equivalent available. Replacement cost value more greatly benefits policyholders who have to make claims. They can replace lost items with new ones rather than just receiving the amount of money those items were worth at the time of loss.
When comparing insurers, be sure to compare this factor. It greatly affects the value, and likely the cost, of the policy.
ACV, RCV, and the right to repair
When you file a claim using the replacement value, you will first receive a settlement for the ACV. After replacing the item(s) and submitting your receipts, you will receive the final settlement for the difference between what you paid and the ACV.
Note that insurance companies may reserve the right to repair your damaged items rather than replacing them if they determine it is possible to restore them to their prior condition. (Compare how auto insurance companies may choose to repair your motor vehicle rather than declare it a “total loss” after an accident.)
What do renters insurance reviews say about the company?
When you need to file a claim due to an unforeseen event, it’s usually a stressful time. You’ll want a renters insurance company that understands this and works to ease your stress rather than aggravate it. This makes convenience and quality service important. Look for a company with multiple contact channels, a 24/7 emergency line, easy online account management, and a helpful attitude when it matters most. You can learn more about the customer experience a company offers by reading real customer reviews below.
Renters insurance FAQ
What is the standard coverage for renters insurance?
Standard policies include $100,000 of liability coverage and $30,000 of property or contents coverage, according to the Independent Insurance Agents and Brokers of America, Inc.
Can a landlord require you to have renters insurance?
Yes, landlords can require tenants to carry and maintain renters insurance as part of the lease agreement. In fact, more and more landlords are doing so.
What does renters insurance cover?
The specific details of renters insurance can vary from one policy to the next. In general, though, it covers a renter’s belongings against disasters, damage from neighbors, theft, and vandalism.
Additionally, it covers additional living expenses and provides liability protection for the renter and for the renter’s family and pets.
Will renters insurance cover my dog?
The personal liability section of a renters insurance policy does typically cover a renter’s dog and other pets. However, some companies restrict the breeds they will insure.
For example, Esurance analyzes stats on which breeds present a higher financial risk and won’t insure those it deems too high a risk, such as pit bulls. On the other hand, State Farm follows the philosophy that “it’s the bite, not the breed,” so they will not ask what breed of dog you have.
If you have a dog, you’ll want to assess pet-friendliness when shopping for renters insurance.
Who needs renters insurance?
Renters insurance is a good idea for just about anyone who is renting. Many people don’t think they have much to lose until something happens and they need to replace all of their belongings.
According to Esurance, the average renter has $20,000 worth of personal property. Do you have enough in savings to replace your belongings if something happens to them? Even if you do, do you really want to risk having to use your savings for that?
Compared to many other expenses, renters insurance is fairly affordable. It is worth the investment in most cases.
Learn about costly mistakes you should avoid when getting renters insurance.
Find the right renters insurance company for you
Ready to protect your belongings and household to gain peace of mind while renting? Use the above information to help you assess renters insurance companies and find the best fit for your needs.
We’ve made it easy for you by listing leading companies along with real-customer reviews, financial ratings, and coverage types. Want to learn more? Simply click on a company to read an in-depth review.
