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A Guide to Renter’s Insurance: How Much Do You Need?

Circumstances impact how much renter’s insurance any one person needs, but all renters need a policy of some kind.

Posted: 2nd September 2020 by Finance Monthly
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Many landlords require their tenants to have renter’s insurance policies and will request proof of them before you sign your lease. Not all of them will require it, however. If there’s one thing to take from this article, it should be that all renters should have a policy in case something happens.

Renter’s insurance does more than protect property: it offers protection for costly circumstances that you may not be able to foresee. Renter’s insurance should be part of any savvy renter’s game plan. Knowing what renter’s insurance policies cover can help anyone decide how much they need, even though there’s no-set-in stone answer. Everyone’s situation is different, so their need for this insurance is different too.

What Is Covered by Renter’s Insurance?

If you’re wondering, “How much renter’s insurance do I need?” you need to know why people need these policies in the first place. The main reason people opt for renter’s insurance is to protect their property. Personal belongings outside and inside your apartment are covered by renter’s insurance, but that’s not all.

In the event that you have to leave your rental home or apartment for a while, renter’s insurance policies also cover your living expenses while you’re staying in another place. These circumstances may not be foreseeable and could include an infestation, a fire, or other damage. Living expenses can become untenable in these situations without renter’s insurance.

How Much Renter’s Insurance Should You Get?

The first step to figuring out how much renter’s insurance you need is to calculate the value of your personal possessions and compare it to your budget. At that point, you can compare the quotes of several insurance companies to the value that you calculate in your personal property.

From a policy as low as the average renter’s insurance plans, which cost around $15 per month, you can get tens of thousands of dollars of personal liability coverage and property coverage.

The first step to figuring out how much renter’s insurance you need is to calculate the value of your personal possessions and compare it to your budget.

What Types of Coverage are there?

There are three types of coverage included in renter’s insurance policies. To what extent a policy includes each type determines its value. These coverage types include personal property, loss-of-use, and personal liability coverage. Ask yourself: how much of each type does a typical policy contain? This is important to know so you can spot plans that are expensive for their coverage amounts and those that are a true value.

The average renter’s insurance policy offers around $30,000 in personal property coverage, 40% of the personal property’s value in loss-of-use coverage, and $100,000 in personal liability coverage.

Deductibles are another important factor when choosing a policy. If you don’t already know, a deductible refers to the amount of damage you have to pay for yourself before an insurance policy kicks in. These exist in healthcare policies and it’s no different for renter’s insurance.

An average or acceptable deductible for these policies would be around $500. These policies are considered the best value for those that want renter’s insurance for coverage but aren’t necessarily worried about a specific accident. Those that want a lower deductible should expect to pay a much higher per month premium.

The disadvantage of cheaper policies is that the deductible is much higher, which is fine until you have to pay it. There’s also not much of a drop in the price per month for losing 50% or more of your coverage amount. A few dollars less a month will lower your coverage amounts considerably. This is why policies priced at or near the competitive average are often the most desirable.


The Takeaway

Renter’s insurance policies involve three different types of coverage, including personal property coverage, personal liability coverage, and loss-of-use coverage. Knowing how much renter’s insurance you need depends on the value of your belongings compared to the needs of your situation.

Since the value of renter’s insurance policies decreases drastically with only a small reduction in the cost per month, average renter’s insurance policies are often the most desirable. Use this information to conduct more research into available companies to find the right renter’s insurance policy for you.

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