How Much Renters Insurance Do I Need?

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Your new gaming station, your top-of-the-line smartphone, that gorgeous pair of red designer pumps — if you’re like most Americans, there are probably a lot of things in your condominium or apartment that you’d be devastated to lose or have stolen. Renters insurance can help protect your things in the event that you’re the victim of a fire, break-in or if your property is lost.

Estimations from Allstate Insurance say that the average renter has around $30,000 of value in his or her possessions, so it can be surprisingly beneficial to protect yourself. How much renters insurance do you really need, and what considerations should you make before you sign up for a policy?

4 Factors to Consider: How Much Renters Insurance Do I Need?

  1. Not all policies provide equal protection
  2. Your high-value items may require additional protection
  3. Document everything you own before you enroll
  4. You may have more value hiding in your closet than you think

Overview: Renters Insurance

Renters insurance is a special type of insurance that covers only the interior of your property. Homeowners insurance packages typically protect against things like roof leaks or damage to your home’s siding caused by weather. Renters insurance packages typically do not include coverage for the exterior of the property, as this is considered to be the responsibility of the landlord.

Renters insurance usually covers losses from unforeseen events and can even help you cover the costs of a temporary place to live if your apartment or rented space becomes uninhabitable. Because renters insurance only covers the possessions inside the property and not the entirety of the property itself, it is usually much less expensive than homeowners insurance.

Research reveals that the annual cost of renters insurance in 2019 will be about $187, though the amount that you’ll actually pay will largely depend upon what state you live in. Depending on your building and where you live, your landlord may require you to maintain a certain level of renters insurance as a condition of your lease. Some leases may even require you to hold coinsuranceequal to a certain estimated percentage of the worth of your valuables.

There are three basic types of renters insurance policies:

1. Loss of use

Loss of use coverage provides financial assistance if your apartment becomes unlivable. Loss of use coverage can provide for a hotel stay, coverage for meals that you would normally cook at home if your kitchen is damaged. It can even immediately replace necessary personal items. However, it’s important to note that you must have an existing renters insurance policy package for loss of use coverage to kick in. For this reason, loss of use coverage is typically included as an add-on to other types of renters insurance.

2. Personal property

Personal property coverage helps to replace your items if they are lost or damaged. This type of insurance can include things like clothing, electronics and furniture up to your policy’s limit.

3. Personal liability

Personal liability insurance protects you in the event that you are found legally responsible for damage to another person’s property that occurs in your rental space or injuries resulting from your personal possessions. For example, if a friend trips and falls over a ball you left in your yard, breaks his or her ankle, and sues you for the cost of medical bills, personal liability insurance can help you avoid paying out-of-pocket costs for the damages.

What To Consider Before Choosing A Policy

  • Not all policies provide equal protection

You might assume that after you lose your item(s), your insurance will reimburse you for the costs of the new items as long as your insurance is up to date, you’ve met your deductible (if your policy has one), and the damage or theft is covered by your package. However, you may be in for an unpleasant surprise if you’ve chosen a package that provides fair market value reimbursement.

Fair market value policies only cover the average value of the items lost, which may make total replacements impossible if you lose something out of stock, the item is not made any longer or has depreciated in value. For example, if it cost you $500 to purchase a bed frame that’s out of stock, a fair market insurance package may only offer you $250 for a new bed frame, regardless of the fact that newer models are currently sold at $700.

The best renters’ insurance packages instead offer replacement value coverage, which will cover the actual costs of replacing your lost or stolen items with new versions. Replacement value policies will ensure that you’re actually compensated for the costs of a new item, which is important because many renters underestimate how much depreciation can affect their possessions.

Before you sign up for your package, check out Amazon, Target.com or another retailer’s website to estimate the costs of replacing the items covered by your policy — you might be surprised at how much the value of your items have changed since you bought them. 

  • Your high-value items may require additional protection

Renters insurance policies usually have coverage limitations on high-value items like jewelry, artwork, heirlooms and other valuables. When a high-value item goes missing or is destroyed, most policies limit the amount of money you can get for a reimbursement. For example, if you have a renters insurance policy that offers $50,000 worth of coverage, there may be a caveat in your contract that states that only $5,000 may be used as jewelry insurance. This is often the case even if you have purchased a policy that provides replacement value coverage.

If you have something priceless in your home that requires total protection, you’ll need a type of add-on coverage called a rider for each specific item. Renters usually purchase riders for things like jewels, musical instruments or collectibles. Insurance companies usually demand appraisal documents before they’ll provide coverage. Jewelry purchases usually come with proof of appraisal, but you’ll probably have to take older pieces of artwork, collections and other expensive items to an appraiser before you’re able to protect yourself.

Riders also expand the typical limits of coverage to cover losses in more unique circumstances. For example, if you are playing your electric guitar in a studio, leave the studio room to use the restroom and find that your guitar has gone missing when you return, a rider will usually provide a replacement even if this situation would not normally warrant a payout.

  • Document everything you own before you enroll

Your insurance company will probably require proof of your possessions before they will extend coverage. Before you enroll in a policy, photograph your possessions as proof for the insurance company. For very high-value items, you may want to include yourself in the photograph for an extra layer of protection. After everything has been documented, you’ll need to create an itemized list of things you’d like covered by your policy.

Most insurers include online spreadsheet tools to help you organize your photos, but you’ll also want to make sure that your photos and list are also backed up by third-party software like Google Drive or Apple’s iCloud. Don’t forget to scan and upload receipts and appraisal documentation for high-value items.

  • You may have more value hiding in your closet than you think

Clothing insurance isn’t just for men and women who wear designer brands from head to toe; it’s also a necessary protection for most everyday renters as well. Many renters underestimate the amount of money hanging in their closet and find themselves unable to replace the breadth of their clothing after a fire or break-in.

When you photograph your valuables, don’t forget to take a tour through your closet to document coats, suits, shoes and dresses. High-value articles of clothing like designer handbags or signed sports jerseys may also require a rider, so be sure to read through the specifics of your insurance policy.

The Best Renters Insurance

We picked the best affordable renters insurance companies, detailed below.

  • Discount for bundling
  • Access to vetted companies
  • Doesn’t directly offer home insurance
  • Mobile app doesn’t support home insurance

1. Progressive

Renters insurance policies from Progressive offer you comprehensive protection.

Under a Progressive policy, you get personal property coverage, liability coverage and also reimbursement for living expenses if your home or apartment is severely damaged.

Policies from Progressive are easy to understand and its website makes it clear what is and isn’t included with your coverage.

Additional policy options include water damage and personal injury protection. The average cost of renters insurance from Progressive is between $13 and $35 per month, which makes it an exceptionally affordable choice.

Progressive offers a great selection of policies available throughout the United States suitable for most renters’ budgets and needs. The insurance powerhouse also offers a wide range of discounts. Because Progressive offers over 30 insurance types, you’ll probably find some way to take advantage of its bundling discount.

You can also get a discount when you pay your policy in full, opt to receive documents via email or get a quote at least 3 days before you need it to go into effect. Progressive is our top choice for renters who don’t want to sacrifice quality for cost.

  • Easy application that you can complete using the app
  • Fast, hassle-free claims process
  • Supports charities
  • Not available in all states
  • Customer service is only available using the app or website

2. Lemonade

Lemonade is an innovative and engaging new insurance provider that offers some of the most affordable policies on the market. The company uses a new peer-to-peer insurance model.

It works like this: At the beginning of the month, everyone signed onto Lemonade pays a premium. Over the course of the month, Lemonade takes money out of the “pot” to cover insurance claims and administrative costs.

Lemonade also takes a small percentage of money out every month to hold in reserve in case the next month’s claims override the amount of money brought in by premiums.

At the end of the month, anything leftover is donated to charity. It’s a unique model that does away with the incentive most insurance companies have to pay out as little as possible in claims to maximize profits.

Renters can get insurance for as little as $5 a month, making Lemonade by far one of the cheapest ways for renters to protect themselves. Lemonade earned a Financial Stability Rating of A-Exceptional from Demotech Inc. Though Lemonade is currently only available in 19 states, the company’s model is rapidly expanding.

Lemonade’s sign up and claims process is exceptionally simple. You can get a quote from the app in as little as 90 seconds using an intuitive question-and-answer style format. Discounts are available for fire and burglar alarms. At the end of your signup, you receive a transparent policy summary that tells you exactly where your money goes.

Digital, socially responsible and exceptionally affordable, Lemonade is a top renters insurance choice if you’re tech-savvy.

3. Allstate

Allstate provides a standard bundling discount and discounts for adding a burglar alarm, signing up for automatic bill pay, staying claims-free and reaching retirement age.

If you already have an auto insurance policy from Allstate, you can get coverage for as little as $4 a month, which makes its auto bundling discount the best choice for renters. You can also adjust your deductible to pay even less per month.

Allstate’s policies are affordable and include many types of coverage that some competitors consider add-ons. For example, Allstate renters insurance plans include reimbursement for living expenses and guest medical insurance as standard coverage.

Add-ons from Allstate include flood protection, personal umbrella policies that boost your coverage in the event of a lawsuit and even identity theft protection.

Be Detailed With Your Renters Insurance

Just like home insurance policies are stingy about providing coverage for damage following a flood, renters insurance policies can have limitations on the events in which they will provide coverage. Many renters policies exclude pets and vehicles from their coverage, and some policies will exclude certain types of preventable damage like bed bug infestations.

Exclusions and coverage limitations are two of the reasons why it’s so important to thoroughly read every clause in your insurance policy before you sign so you can be sure that everything you think is protected is actually covered. There’s nothing worse than finding out that your policy doesn’t have enough coverage after a fire has decimated your apartment’s furniture or a thief has made off with your electronics. 

Life Coming at You Fast?

Toggle isn’t your everyday insurance company. In fact, it’s changed the renters insurance landscape. Case in point: You have complete control every step of the way. Toggle makes insurance easier to understand (and offers total flexibility!) and guess what? Toggle can even keep up with you and your crazy-busy, ever-changing life.