More Americans today are opting to rent rather than buy. And in case you didn't already know, your landlord or property management's insurance will not cover your personal items if your apartment is broken into or your personal possessions are damaged by fire, flooding or some other type of disaster.
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According to consumer insurance polls, such as one conducted by InsuranceQuotes.com and another by Nationwide, many renters think that renters insurance is too expensive or that they don't need it.
But renters insurance is actually affordably priced, and even if you do not own expensive items, it can help cover the cost of replacing household items or finding a temporary home if you are displaced from your rental. Renters insurance also includes liability and medical payment coverage.
On average, rental insurance costs about $40 per month or several hundred per year. You can also add additional coverage for a few dollars per month to cover things such as sewer backups or earthquakes.
Here’s more on choosing a service to meet your needs, along with detail on how we arrived at our ranking of renters insurance services.
State Farm offers good rates and great coverage for renters insurance
State Farm earns our Top Ten Reviews Gold Award for renters insurance. It offered insurance in each geographic area we tested, which not every company did. Its rates were almost consistently below average for similar coverage as far as property amount, liability and medical payouts, while its loss of use and electronics policies were above those of most property insurance companies.
While the online quote process was thorough, it did not let you purchase every endorsement you may need, and the agents, as with most large companies, can vary by quality. Therefore, while State Farm is the best rental insurance agency we reviewed, it's nonetheless wise to talk to a few local agents to find the best one for you.
We received price quotes for typical apartments in several locations across the United States, using a standard amount of coverage for property, liability and medical payout. In nearly every case, State Farm's prices were below the average premium for the insurance companies we reviewed. Even its highest premiums were still within the average for the area. Therefore, where price is a factor, State Farm is an excellent choice for renters insurance.
State Farm offers only a few discounts. You can get a cheaper premium if you have more than one policy with them or if you have burglar or smoke alarms. You can get a discount on home monitoring systems through this insurance agency as well.
As with every insurance agency we reviewed, State Farm has 24/7 claims service. It also offers a mobile app from which you can manage your account, find an agent, or make and track a claim.
AARP offers renters excellent value for money
AARP offers its members renters insurance through The Hartford, a national insurance agency. It earns the Top Ten Reviews Best Value award because it has excellent coverage at highly competitive prices. However, The Hartford does not provide this insurance in every location.
In order to take advantage of the discounts that make it so inexpensive, you must be a dues-paying member of AARP. To apply, you must be 50 years or older. The annual dues are inexpensive and come with other benefits. In addition, we found in most cases that even when adding dues to the insurance expense, the policies are still cheaper than the other insurances we reviewed.
We received quotes for a typical two-bedroom apartment in six areas across the United States. These areas had varying risk, from little risk to high-crime or high-claims areas. The Hartford was one of three insurance companies that did not provide insurance to the highest-risk areas. Therefore, if you live in a high-crime area or an area that experiences a lot of damaging storms, you may not be able to get insurance directly from The Hartford.
Where it does provide coverage, however, the prices are well worth checking. Overall, we found the premiums to be almost half the average premium for the 10 insurances we reviewed. Even including the AARP membership fee, this is far below average for comparable coverage.
If you are not yet 50, The Hartford can still provide you renters insurance, but through a different program. Therefore, if you are coming up on the big Five-Oh, you might want to price insurance and see if it's worth switching over after your birthday.
Like all the insurance companies we reviewed, AARP offers 24/7 claims service. It has a mobile app where you can manage your account and claims as well.
Best for Electronics Coverage
With no upper limit for item coverage, American Family is best for expensive electronics in your home
American Family provides renters insurance at excellent prices and with good coverage. It does not cover every city or state in the nation, however, and the website cannot give you a complete quote. Therefore, it's best to consider this insurance when you have a local agent you can talk to. Nonetheless, its comprehensive coverage at competitive prices earns it our recommendation.
AmFam's property insurance coverage was better than average for high-value items. It does not set a limit at all for electronics. Most companies have a per-item or total limit they reimburse you, selling you an endorsement to get extra coverage. Thus, if you have expensive computers, American Family is a good choice. It also has one of the highest limits for firearms, something to consider if you own guns.
Unlike most insurance companies, AmFam's loss-of-use payout varies by state. Loss of use covers extra expenses if your residence is unlivable. Most set a specific limit on how much it pays or how long it reimburses you. American Family, however, sets its maximum at 12 or 24 months, or sets a monetary limit. The limits are all within the norm, but be sure you understand how this works before signing the policy.
The Number One Cause for Rental Insurance Claims
It may surprise you, but a large percentage of claims are for theft, not a natural disaster or fire. Rental insurance is worth it for this reason alone. In the event your home is burglarized, renters insurance will pay to replace or repair the stolen or damaged items. Without it, you will have to pay to replace these items yourself, which could be financially devastating.
In addition to personal property, you can add coverage to protect you from credit or debit card theft and forged checks. And it is easy to add theft extension coverage to protect personal items stored away from your home, such as your vehicle, motorhome or boat. It is also simple to add personal injury liability to help if you're named in a libel, invasion of privacy or slander lawsuit.
What Does Renters Insurance Cover?
The biggest difference between homeowners and renters insurance is that rental insurance covers personal property and not the actual structure. Property owners insurance covers the actual structure and their liability but not your personal property or liability. Even if you only have a modest apartment with $10,000 worth of personal belongings and computers, paying a $500 deductible is slight compared to having to replace everything out of pocket.
Renters insurance policies will include a total payout limit as well as limits for specific items; a typical introductory policy may include limits on home computers, jewelry and furs, silverware and goldware, business personal property, and firearms. Some also limit payouts for items lost to theft or include a limit per item. You can adjust the limits on these types of items for a small premium increase if needed. You'll need to speak with your insurance agent about covering high-value items such as antiques, artwork, collectibles or musical instruments.
The average renters policy provides $100,000 in personal liability coverage, which is designed to protect you in the event you're sued for bodily injury or property damage sustained by others. Several also include a few thousand for medical payments coverage. You can work with your agent to adjust these limits if required.
How Much Coverage Do I Need?
Most of us have no idea how much it would cost to replace our personal property. Fortunately, most insurance companies offer estimation tools to help you estimate the coverage you require. For example, State Farm asks you whether you own economy or expensive items and the square footage of your apartment to help you pinpoint a dollar amount.
A safe range to start with is $20,000 to $30,000 in coverage for most renters. When estimating your own coverage, you'll want to think about not just the price you paid for an item but how much it would cost to replace it. Don't forget items that add up quickly such as sports equipment or appliances. Some estimate that most have about $3,000 worth of clothing, per person, and over $5,000 for those who own business suits or designer items. Keep in mind that you'll need to document your possessions in case you need to make a claim later.
You'll also want to carefully consider the two types of replacement coverages available:
Replacement Cost Coverage (RCC): This type of coverage considers deprecation and may pay out less than current market value. If your furniture and belongings are older or low-priced, this coverage might be sufficient.
Actual Cash Value (ACV): ACV coverage helps replace items at the current market value. This coverage costs more but is likely worth it if you have new or financed items.
How to Obtain a Rental Insurance Quote
Obtaining a quote is simple. Since you are not insuring the actual building, limited information is required. You'll be asked to supply personal information, including your social security number. The insurance company will also want to know what preventive items you have in place, such as any alarm systems, fire detection devices, deadbolts and fire extinguishers. You will also be asked about current or previous coverage and whether you have made any claims recently. Rates will likely be higher if you have filed a claim within the past three to five years.
In most cases, you can obtain a quote online. If local agents are available, the insurance company's website will connect you with a local agent to help you with questions or discuss additional coverage options.
How to Lower Your Rates
Most insurance companies will lower your rates if you have certain security or preventive measures in place. While many will incorporate discounts while creating your quote, you should ask in case something is missed. Most will add discounts if you have deadbolt doors, security cameras or onsite hired security. Fire safety devices, such as fire extinguishers, monitored fire alarms, and close proximity to nearby fire departments, may also reduce your rate. Also, most will offer discounts if you have never made a claim, carried coverage previously, or if you bundle the policy with another, such as auto or umbrella.
How We Compared Renters Insurance
We found the coverages available to be quite similar, but premiums varied depending on the area and by insurance company. We gathered quote rates for apartments located in low-risk and high-risk areas across the United States. As expected, higher-risk areas, such as Detroit and southern Texas, are more expensive than low-risk areas like Idaho and Kansas.
We also gathered information about introductory personal liability offerings and personal property limitations. For the most part, introductory coverage and limitations are similar across the board. Since coverages varied little, we compared customer service and our experiences with both local agents and national representatives to determine what the average prospective customer experience might be. We also rated how simple the quote process was to complete.
Of the companies in our lineup, you will find they offer similar coverage options, so we did not rate them by coverage types available. For example, most companies give you the option of adding additional coverages, such as sewer backup, earthquake, identity theft protection and more, which we explain in more detail below. You'll want to carefully review your quote to see which options are covered in the basic plan and which riders you might want to add.
Top Ten Reviews seeks, when possible, to evaluate all services in a manner that simulates as closely as possible the experiences of a typical consumer. In this case, we contacted the insurance companies as a prospective customer numerous times by email and telephone. The companies had no input or influence over our test methodology, nor was the methodology provided to them in more detail than is available through reading our reviews. Results of our evaluations were not provided to the companies in advance of publication.
Additional Insurance Plans or Riders to Consider
A standard renters insurance policy does not cover everything. You'll want to carefully review your policy so you know what additional coverages you may want to add. Other considerations include your geographical location and environmental risks such as forest fire, flooding, hurricanes and earthquakes.
Not all natural disasters are covered with a basic renters policy so you may need to piggyback additional riders onto your renters policy or add plans from participating agencies. Limitations on high-value items are another reason to carry additional insurance.
Many are surprised to learn that most standard renters policies do not cover flood damage. In fact, you may have to acquire flood insurance through the National Flood Insurance Program. Content-only policies are available for renters via this program. You'll want to discuss your options with your insurance agent.
If sewer lines get clogged and back up, your personal items can be damaged by nasty bio sludge. Backups can be caused by a number of reasons, but your insurance will not cover your personal items. Adding this rider costs a few extra dollars per month.
Loss of Use
If your home becomes filled with sewer sludge, flood water, or is damaged by a fire and you cannot live there, you'll need emergency housing. Loss of use coverage helps you if your residence is uninhabitable. This type of insurance may be able to help you locate temporary housing. Often payouts are limited to a certain amount of money and or time. Other policies do not limit by time and money but are on a case-by-case basis and are limited to what the company determines is adequate.
Your high-value items, like music equipment, antiques, artwork, expensive sports gear, and your wedding ring, may not be covered under your renters policy. You'll want to carefully review your policy to see if you need add additional coverage. Also, keep in mind that to insure more expensive items, such as jewelry, you'll need to complete an appraisal.
Identity Protection & Credit Card Coverage
This type of insurance can help you if someone has compromised your identity or used your credit cards fraudulently. In the event your identity is stolen, of course you'll want to contact your bank, credit card company and local law enforcement, but an added layer of financial protection can be helpful.
Your renters insurance may not protect you from natural disasters such as hurricanes, wind and earthquakes. If you live in a high-risk area, consider additional protection. It adds a few dollars per month and could prove well worth it if a natural disaster damages your personal belongings.
Your liability insurance may protect you should your animal hurt someone; however, it may not. If you rent and own a pet, your landlord may ask you specifically for pet protection. Insurance is also available for your pet's health care. This type of insurance can reimburse you should your pet need costly veterinary care.
Most renters policies limit how much can be paid out for business property. If you store business gear, laptops or other equipment on your property, you may want to consider increasing the payout limit. Also, if you have clients visiting your home, you'll want to check your policy to see if you're adequately covered in the event a customer falls or is somehow injured.
There are many types of riders or additional coverage you can add if needed. You'll want to talk to your agent to ensure you purchase the proper coverage.
How to Obtain Coverage in High-Risk Areas
While we anticipated higher premiums in high-risk areas, we learned that some insurance companies do not offer coverage in high-risk areas at all. High-risk areas are those that insurance companies determine have a higher claim rate, which includes areas with a high crime rate or a higher prevalence of natural disasters. Blighted metro areas are also often difficult to find coverage for.
As mentioned earlier, if you live in a flood zone, you may need to obtain insurance via the National Flood Insurance Program. Some insurance companies, such as American Family, Travelers, and AARP, might not cover high-risk areas but can steer you to an associated insurer. Or you can obtain coverage through a local or regional insurance company. We recommend that you contact at least three agencies to find the best coverage for your unique area. Also, when speaking with agents, be sure to provide correct, complete information and review your policy carefully to decrease the chance of coverage issues later.
Documenting Personal Property
You will benefit from documenting your personal property should you ever need to file a claim due to damage or theft. Details to collect include photos and video of your possessions as well as receipts, serial numbers, purchase dates, descriptions, and purchase costs. Specialized items, such as jewelry, art, or antiques, should also include appraisals. Valuable paper items, such as wills, deeds, stock certificates, and car titles, should be scanned and safely stored in the cloud using a private and secure data storage service.
Documentation should be stored outside of your home and in multiple locations if possible. Some insurance companies provide apps or online tools to help you organize your property information. Without documentation, you might have a difficult time processing a claim.
Our Verdict & Recommendations
We found State Farm and American Family to offer, on average, lower rates than other renters insurance companies. If you qualify, USAA and AARP are also affordable options. We recommend you obtain multiple quotes and carefully consider what additional coverages you may want to add. If you prefer working with a local agent, you will benefit from contracting numerous local agents to discover which one is the most helpful and knowledgeable.
The information covered in this review site is general in nature and may not apply to your unique situation. Descriptions of coverage options, or what might be paid out, are simplified. Whether a claim will be accepted and paid out depends on the details of your situation and the insurance company's specific exclusions, documentation requirements and provisions. Carefully read your policy to understand the specific terms of your coverage. Not all features apply to everyone and may not be available in all areas.