The Policygenius Renters Index: Which city has the smartest renters?

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The Policygenius Renters Index: Which city has the smartest renters?

Renters have a lot of information to process when they're looking for somewhere to live, including the price of rent, the availability of apartments, whether the place allows pets, whether they'll be on the hook for bills, how far transit is and so on.

We were curious about which renters were the savviest when it comes to making some of the big financial decisions surrounding their living situation. To find out, we came up with the Policygenius Renters Index to see which city has the smartest renters.

The PG Renters Index

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About the index

The Policygenius Renters Index is made up of three numbers, combined and weighted equally:

Price-rent ratio: This is a comparison of the costs of renting vs. buying. The higher the number, the more cost-effective it is to lease rather than buy a home, and the better a city scored on the index.

The percentage of people with renters insurance: We used the Census Bureau's American Housing Survey to figure out how many households in certain metropolitan areas have renters insurance. Cities who have a higher proportion of people protecting their stuff from harm score higher in our index than those who don't. (If you're wondering why some cities aren't there, we only looked at cities covered in the American Housing Survey in 2015 or 2013. The survey is the only source we could find for public city-by-city renters insurance coverage data.)

The percentage of renters vs. owners: We also factored in how many people in each area rent vs. own to give a city credit for the wisdom of its crowd.

We combined these numbers to make the Policygenius Renters Index. The results show it's a smart decision to rent on the West Coast. The San Francisco and Los Angeles metro areas topped our list.

Click or one or more cities to see how they scored.

Yes, San Francisco has the smartest renters

The California cities have the highest price-rent ratios in our study. So while San Francisco renters might not feel like they're getting a great deal, the reason they score so high is because it's even more expensive to buy real estate in the Bay Area.

Here's a closer look at the five cities with the smartest renters:

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At the other end of the spectrum is Rochester, New York. Rochester had the lowest price-rent ratio of the cities we looked at, meaning it's much smarter to buy a home there rather than rent. Miami also received a low score because only about 13.5% of renters there get renters insurance.

Here are the five cities whose renters should probably wise up:

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Miami wasn't alone. Every Florida city we looked at scored low on the renters index, particularly because so few people there get renters insurance. In fact, three out of the five cities with the lowest rental insurance coverage rates were in Florida: Miami, Tampa Bay and Orlando. Jacksonville wasn't far behind in 11th.

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One reason could be that many Florida renters don't stick around for long, said Lynne McChristian, a Florida consultant for the Insurance Information Institute.

"People are attracted to Florida by the sunshine, low taxes and promise of opportunity — and they can change their minds once they realize the sunshine brings excessive heat and humidity and the opportunity didn't meet their expectations," McChristian said.

In addition, most Florida landlords don't require renters to buy renters insurance. However, the same is true in Denver, where nearly 59.6% of renters have insurance.

We found little correlation between the number of renters and renters insurance coverage. Big cities with lots of renters like New York and Los Angeles tend to be poorly covered by insurance, perhaps because, like Florida, people tend to move in and out often.

Here are the cities whose renters are most likely to have renters insurance:

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Even in Denver, almost 40% of renters don't have coverage for their possessions. That may be because people don't understand renters insurance.

"Many people have misconceptions about renters insurance, such as thinking it is too expensive (when it is not), believing their possessions are not worth such protection (which is a serious miscalculation) and thinking their landlord is responsible for providing insurance (not true)," said McChristian.

Renters insurance in Florida costs an average of $19 a month, according to Census data. That's higher than the national average of $17, but not by much, and is a relatively small part of overall housing costs in the state, which average about $1,000 a month. (We can help you find affordable renters insurance here.)

What you should know about renters insurance

Many people think that because renters insurance isn't required, it's not necessary, McChristian said. But coverage could be useful, even to devil-may-care Floridians.

"Renters need to know at least these two things about renters insurance: Their possessions are covered anywhere, not just where they are inside the residence, and that renters insurance typically provides additional living expenses," she said. "That means if a hurricane hits your apartment, a real threat for any Floridian, you have coverage to live somewhere else while your rental is being repaired or rebuilt."

While renters can't control how high rent is or how many apartments are available, they can at least make sure their stuff is covered in case something happens to it.

Why pay a high price to live in a big city? We talked to residents of the most expensive metros in the U.S. — Los Angeles, New York City and San Francisco — about the pros and the cons. Read their stories here.

Data sources: Zillow for price-rent ratios and the Census for rental data and rental insurance coverage data.

Graphics: Holden Lee

Image: SolisImages