How much does renters insurance cost?

How much does renters insurance cost?

Are your belongings in your rental home or apartment insured? If not, you aren’t alone. A 2016 Insurance Information Institute poll found just 41% of renters in the U.S. had renters insurance. But this is not a time when it’s good to be in the majority, trust us.

If you’re part of one of the roughly 18 million individuals and families who make up this uninsured group, you’re at risk of losing some or all of your personal belongings in the event of a robbery, fire or natural disaster. Good-bye television. Good-bye electronics. So long, clothes, furniture, jewelry, shoes. Makeup. Appliances. Kitchen items. Obviously, a total loss of all your belongings can add up to tens-of-thousands of dollars very quickly. Still, many people wonder, “is renters insurance worth it?”

How much does renters insurance cost?

Here’s the thing: Renters insurance is pretty cheap. In fact, the average cost nationwide is about $300 a year, according to Loretta Worters of the Insurance Information Institute. Of course, your personal cost is going to depend on several factors, including how much personal property you have, what its value is ($50,000 worth of coverage will cost more than $20,000, of course), your location, and how good your credit is. But, that $300 average — which amounts to $25 a month — is all-in, including all coverage and fees associated with your policy.

Outside of coverage amount, the big choice when it comes to renters insurance involves opting for either an actual cash value policy or replacement cost value policy for your personal items. That means you can choose to be reimbursed for what your television cost you five years ago (actual cash value), or you can choose to have it replaced with a brand new unit (replacement cost value). Obviously, replacement cost will cost a bit more, but it can be worth it when something happens. PolicyGenius can provide some personalized renters insurance quotes if you’re unsure of how much coverage you need.

Renters insurance covers more than just your stuff

“Some people think it’s not worth it to get the coverage because they don't have a lot of expensive personal possessions,” Worters says. “But personal possessions are only a part of the coverage.”

Perhaps more important than your property coverage, most renters insurance policies also come with liability coverage, so if someone is injured in your home, your policy can help pay for their medical fees and any legal expenses you may incur should they sue you. While your landlord likely also has some liability coverage (more on your landlord in a minute), it may not be adequate in the event someone is injured, so having having your own liability coverage can insure you don’t end up paying out of pocket in the event of an accident.

Keep in mind that if you bundle your renters insurance with your car insurance, you could get a pretty good discount on both.

I don’t know the value of my stuff

If you’re worried about estimating just how much renters insurance you need, no worries. The Insurance Information Institute has a checklist to help you take stock of everything you own, plus a free home-inventory toolthat can help you assess everything you own. There are also some solid home inventory apps that can help digital natives.

You can't rely on your landlord's insurance

As we intimated earlier, your landlord’s homeowners insurance is not a substitute for coverage.

“People are often under the impression that [renters insurance] is expensive but also that their landlord's insurance will pay for their personal possessions,” explains Worters. “That is not the case.”

Your landlord’s insurance provides property insurance coverage for physical damage to the structure of the home, and it may cover any of the owner’s personal property they may leave on-site for you to use, like appliances or lawnmowers. But their insurance doesn’t cover any of your personal property.

“Then there is additional living expense,” Worters continued. “So, if there is a fire and you are homeless, your insurance would pay for hotel and food.”

Kind of nice knowing you won’t be homeless due to some faulty wiring, right? Of course, your landlord’s insurance won’t give you that kind of peace of mind.

Still don’t get how a policy works? No worries. We’ve got answers to 20 questions about renters insurance you’re too embarrassed to ask right here.

Image: YinYang