Updated June 3, 2019

Average Cost of Renters Insurance Will Shock You

Read more about Why Renting is Better

Renters insurance costs an average of $16 per month, but almost 60% of renters don't carry it. Even for those on a tight budget, this coverage may be something you can't afford to skip.

Renters Insurance Statistics

How much renters insurance cost may surprise you:
  • The average cost of renters insurance is $16 per month, or $190 a year.
  • Mississippi has the highest average renters insurance: $275 per year.
  • North Dakota has the lowest average renters insurance: $113 per year.
  • 41% of tenants have renters insurance.
  • Millennials, Gen X tenants are more likely to have insurance than Boomers.
  • 25% of low-income tenants have renters insurance.
  • 69% of high-income tenants have renters insurance.

Like homeowners, renters often misunderstand what's protected by their policy and are caught off guard in the event of property damage. So what does - and doesn't renters insurance cover? Read on for everything you need to know.

Average Cost of Renters Insurance

© Paragon Apartments (CC BY 2.0) via Flickr

What is the average cost of renters insurance?
The average renter throughout the United States pays $190 per year for renters insurance. That comes out to around $16 per month.

Renting a house vs. an apartment
Renters insurance doesn't differentiate between houses and apartments. Because renters in a house may have more personal belongings and space, their rates tend to be on the higher end of the average.

Which state has the highest cost of renters insurance?
Mississippi pays the highest cost for renters insurance in the U.S., at $275 per year on average. That's just about 44% higher than the national average rate of $190 per year.

States with Highest Average Renters Insurance (annual)

  1. Mississippi: $275
  2. Louisiana: $252
  3. Oklahoma: $247
  4. Alabama: $245
  5. Texas: $241

Which state has the lowest cost of renters insurance?
Residents in this state pay around $113 per year, or roughly $9.50 per month. This is about 40% less than the national average.

States with Lowest Average Renters Insurance (annual)

  1. North Dakota: $113
  2. South Dakota: $114
  3. Wisconsin: $132
  4. Utah, Nebraska, Iowa (tied for 4th lowest): $141
  5. Minnesota: $142

Why do some states pay more/less?
Differences in price from state-to-state are mostly due to natural and weather-related disasters. High-damage floods and hurricanes occur somewhat frequently in the Southeastern United States, so their rates are higher than states outside that region.

Which Factors Influence Price?

Renters insurance is essentially a protection policy for your belongings that you pay into each month. You get to decide the level of coverage you want and what your deductible will be. Read on to see how these and other factors influence the price you pay for renters insurance.

Location & Claims History
Renters insurance rates will vary based on the location of your residence. The biggest changes in price are based on state. If you anticipate moving to another city within the same state, your rates may change only slightly due to factors like elevated crime rates or extreme weather patterns.

One thing you have a bit more control over is your claims history. If insurance providers see that you have a history of filing claims, they may deem you "high risk" and assume that you are more likely to file claims in the future.

"High risk" tenants may face increased rates or could even be refused coverage by some companies. If you need to file a claim, be sure to talk to your insurance provider to understand how it may affect your rates.

Do pets cause your rates to increase?
Depending on the breed and where you live, you may need a separate policy or rider to protect against possible damage caused by a pet. Many pets are included in the standard policy, but every municipality is different.

Coverage
Coverage level is the biggest factor in determining the price of your renters insurance. You coverage consists of two main parts: the personal property limit and the personal liability limit. What's the difference? We've got you covered.

  • Personal property limit covers a set amount of personal belongings in the event of property damage or theft. $15,000-$30,000 in coverage for personal property is pretty typical, but insurance providers can offer much more.

  • Personal liability limit covers a set amount of medical and legal costs in the event of an on-site injury. Insurance providers typically offer a personal liability limit of around $100,000, but you can get a limit of far more.

Personal property limit has a larger effect on the price of your renters insurance than personal liability limit. If you're really worried about injuries in your apartment, you can raise your personal liability coverage without significant changes to your month rates.

  • Additional coverages: Your policy may also include protections should your rental become uninhabitable. This is sometimes called loss-of-use coverage or additional living expense coverage. When shopping for insurance, speak with providers to see how these additional coverages will affect your rates.

Item Valuation
Those with renters insurance will also decide how their personal belongings are valued. If your item is damaged or stolen, insurance providers can either pay you the actual cash value of your item or the replacement cost value. How are they different? We'll explain.

  • Actual Cash Value pays what your item is currently worth, meaning it factors in depreciation caused by wear and tear.

  • Replacement Cost Value pays what it would cost to get your item replaced without factoring in depreciation. If your item is no longer on the market, you'd get enough payout for a newer item with similar features.

Should I get actual cost or replacement cost coverage?
Replacement cost valuation will be slightly more expensive, but if you own a lot of older items, actual cost valuation may not cover enough to replace the item on today's market.

Deductible
The last major factor in determining what you pay for renters insurance is the deductible. After you file a claim, the deductible is how much you pay out-of-pocket before your insurance provider covers the rest.

A typical deductible for renters insurance is $500-$1,000, though some providers have higher or lower limits. Think about how much you'd be comfortable paying out-of-pocket at any given time to help you decide what your deductible should be.

How Much Renters Insurance Do I Need?

No law requires you to have renters insurance, but many landlords will require it in order to protect themselves. Now that you know how renters insurance rates are determined, read on to figure out how to pick the best coverage for you.

Figuring Out Your Coverage
How much coverage you need depends on what you own and what you want to protect. In most cases, the typical $30,000 for personal property and $100,000 for personal liability should be sufficient for your needs.

If you have a lot of high-value items, special collectibles, or work equipment, you may want to look into adding additional protection with a rider. We'll explain insurance riders a little further down.

What Isn't Covered by Renters Insurance
Most renters insurance policies do not cover natural disasters, such as earthquakes or flooding. They also don't cover damage caused by pests or rodents.

Talk to your insurance provider about what specific events don't quality for coverage, and take a close look at your item sublimits. If you find that many of your costly items won't be covered, then you may want to consider insurance riders.

Is jewelry covered by renters insurance?
In your policy, you'll likely see sublimits for certain items, especially jewelry. Review these limits because the jewelry you own may not be covered and you want to look into getting a rider to cover it.

Insurance Riders
Also called "endorsements" or "floaters", riders are basically "add-ons" to your insurance policy. Your renters insurance doesn't cover everything, so you may want to extra protection to cover high-value items.

Be prepared to show proof of ownership for expensive items. Keep receipts, whether physical or digital, in a safe place. If you have any costly jewelry, you may want to get it professionally appraised.

Those living in areas prone to earthquakes o other natural disasters may want to look into special riders for disaster protection, as well.

Renters Insurance FAQs

How do I file a renters insurance claim?
Record all damages, take photos, and if necessary, contact authorities. Call your insurance company about the incident; they'll provide necessary forms and request the documentation they need from you.

In some cases, insurance providers will send a claims adjuster to inspect the damage. Keeping a home inventory checklist and photos of your items will help speed the process along.

Does your landlord's policy you from loss?
Your landlord likely has insurance, but their policy voers the apartment structure. If you want coverage for your personal belongings, you'll want your own renters insurance policy.

What is the cause of most renters insurance claims?
Burglary and theft are the most common causes of renters insurance claims. Fires are also a common claim among tenants.

How many renters don't have renters insurance?
Only 41% of renters have renters insurance vs. 95% of homeowners who carry insurance. Mortgage providers often require borrowers to have proper insurance in place, which may explain the difference.

Why do some people opt out of renters insurance?
Of the almost 60% of renters who don't have insurance, expense was the top reason. Many renters also mistakenly assume that their landlord's policy protects their own personal belongings.

How much is renters insurance for college students?
If you're under the age of 26 and your parents have homeowners insurance, their policy may cover your belongings. However, off-premises personal belongings (such as those kept at a college dorm) may not have the same coverage.

Many insurance policies offer 10% of the full coverage for off-premises belongings. If your parents have $150,000 in personal belongings coverage, only $15,000 would apply to the items in your dorm. If you live off-campus, though, you'll need renters insurance like any other renter.

Bottom Line

Renters insurance might seem like another pesky expense, but it's often well worth it. Protecting yourself against severe losses can make the $190 well worth the sacrifice.

More from CreditDonkey:


Why Renting is Better


Buying Your First Home


How Much to Buy a House

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