What affects the price of renter’s insurance?

The price of renter’s insurance varies depending on several factors.  These factors are  1. Which coverage you buy,  2. How much coverage you buy,  and 3. How much deductible you choose.

– Which Coverage You Buy

Coverage is the protection provided against loss.  The most common coverage is for personal property, that is, your personal belongings inside the home.  The homeowner will buy insurance that protects the building, but the renter must insure his own personal belongings against loss, such as fire, windstorm, theft, ice or snow, explosion, and several other incidents.  Some items, such as jewelry or a coin collection, should be “scheduled” – listed individually with an actual value.  These items are scheduled because they are more valuable than what the coverage pays. 

Other coverage can protect against loss of use, which is payments made for losses when you can’t live in the home, additional living expenses, which covers spending more than what is normally spent for food, shelter, and other expenses while the home is repaired or to move to a different home;  personal liability provides payment for the renter’s legal liability for damages due to property or bodily injury, such as if your dog bites a neighbor while walking him; and medical payments to others cover the medical expenses of others on the property, with permission, who become accidentally injured.

– How Much Coverage to Buy

The amount of coverage you buy will affect how much your premium will cost.  For example, covering personal property for $10,000 will have a lower premium than covering personal property for $30,000.  How much coverage you buy will depend on the value of your personal property and how much you can reasonably expect to pay to replace your belongings.  When determining how much coverage is needed, an important consideration is whether to buy Actual Cash Value (ACV) or Replacement Cost (RC).  The actual cash value of an older 19” television will be far less than the replacement cost.  The benefits of replacement cost generally far outweigh the slight increase in premium.

– How Much Deductible to Choose

The deductible is the amount of money that the insured is responsible for if there is a loss.  This is the amount paid out-of-pocket by the renter.  Generally, a higher deductible will lower the premium.  In other words, a policy with a $500 deductible will have a higher premium than a policy with a $2,000 deductible.  The deductible you choose will be determined by how much you are willing to pay out-of-pocket if a loss is incurred.  Generally, people choose to have a higher deductible and save a little more money now.

Several factors will combine to affect the price of renter’s insurance.  Choosing coverage wisely to meet replacement needs and a deductible that helps save on the premium will give the renter the greatest peace of mind when insuring personal property.