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How Much Does Renters Insurance Cost?

Alexa Goyette

Of the 43.7 million households that rent their homes, which totals about 37% of the total households in the U.S., a surprisingly low amount of people purchases renters insurance. In 2014, only 37% of renters had this type of insurance compared to the 95% of homeowners that have invested in a homeowners insurance policy.

Why is it that most renters don’t feel the need to insure their rental? Is it the impermanence? Could it have to do with the fact that millennials – with entry-level jobs and less financial flexibility – make up a significant number of renters in the United States? No matter the situation, renters should consider investing in a renters insurance policy to cover any expenses that result from damage, theft, or liability that their landlords will not cover.


What is renters insurance?

This policy covers your personal property in instances of loss or damage and protects you if someone experiences an injury in your home. The two basic types of coverage are covered by most renters insurance policies:

  • Personal property: This is the most common type of renters insurance policy. This coverage will repair or replace any personal property that is damaged or lost.

  • Liability: If another person experiences an injury or damage to his or her property in your home, this coverage will protect you against a lawsuit or claim. Oftentimes, these types of injuries are caused by something on your property that the other might consider a result of “negligence.” Anything that you should have received maintenance on, such as a broken floorboard, can result in litigation if someone is injured as a result.


Why would you need it?

A lot of renters don’t know that landlords cannot cover their tenants’ property if it is damaged or stolen. Whether this occurs in a fire, storm, or theft, these personal items need to fall under the tenant’s own policy to receive coverage. This misconception comes from many tenants’ confusion of the coverage that landlords do provide, which is for any harm done to the structure of the building.

Aside from coverage for your personal property, renters insurance can protect you in other ways with its personal liability component. If you experience a lawsuit due to alleged carelessness, this portion of your policy will provide you with an attorney. In addition, if you lose the case, your policy will pay the medical expenses for another person’s injury.


How much does it cost?

Renters insurance premiums average between $15 and $30 a month; the exact cost depends on multiple factors, including the tenant’s location, the worth of his or her personal property, and the size of the unit being rented. Like most types of insurance policies, renters insurance is not a one-size-fits-all deal; the best way to get a price estimation is by shopping around for different quotes until you come across the best deal.

The average cost of premiums for renters insurance depends on the state you live in. In 2014, Mississippi has the highest renters insurance, with an average premium of $262. On the other hand, North Dakota and South Dakota had the lowest premiums, on average costing less than half of Mississippi’s premiums. For the most part, the Midwest experienced the lowest premiums in 2014, while the South experienced the highest costs.


How much renters insurance do you need?

Nationwide suggests that the best way to determine how much renters insurance you need is to take a home inventory. A lot of renters overestimate the value of their personal property, so keeping an ongoing list is the best way to be sure you’re being as accurate as possible. To do this, walk through each room in your place and write down the values of each of your belongings, including estimated purchase dates. Taking photos of these items is a particularly helpful way to log them.


What are your coverage options as a renter?

There are two common types of renters insurance available. Decide which one is right for your home before you make the investment.

  • The Broad Form: This is the most popular form of renters insurance. This policy covers your personal property against damages ranging from fire, theft, smoke, vandalism, and water damage from any utilities within the property.

  • The Comprehensive Form: This coverage protects you against a broader range of events than the former coverage policy. While this policy has higher premiums, it might be worth it based on your geographical location. If you live in an area in which natural disasters – like hurricanes, tornadoes, or earthquakes – are common, this coverage might be a good investment. You might need to pay for extra coverage if you own certain expensive items, like fine jewelry or a valuable piece of art. Speaking with an insurance agent is the best way to determine if you should purchase additional coverage for these types of belongings.


Are there any other factors?

Yes. One component you need to decide when you’re shopping around for insurance rates is the coverage you want in the replacement of your personal items.

  • Actual cash-value coverage: This policy will cover a renter for the price of the property at the time of the claim, minus the deductible. Depreciation is taken into account in this coverage option. For instance, if you bought a laptop for $1500 in 2013, it would be worth significantly less than it used to be, as newer models have emerged since its release. You would get the modern-day worth of this laptop, minus your deductible, so you could use this money toward buying a replacement laptop. This policy usually has cheaper premiums than replacement cost coverage, but you won’t get as much reimbursement for your stolen or broken property.

  • Replacement cost coverage: Under this policy, if your laptop from 2013 is stolen, you will be reimbursed the full value of a new laptop. You would just need to buy the new model and submit your receipts to your insurance company. This policy costs more up-front but may be worth it in the long run, as you will receive more assistance to replace any damaged or stolen property.


Though a home, condo, or apartment that you’re renting doesn’t feel totally permanent – and therefore may not feel like a true investment – you may experience some extreme consequences if you don’t have renters insurance. Your landlord can only do so much; the rest of it is up to you. Looking at multiple quotes for renters insurance is a good way to stay on track financially while protecting yourself and your rental if anything goes awry.