A renter’s insurance policy repays the renter in the event of a loss. The insurance company calculates the risk of providing insurance to the renter and assesses a rate for the policy. Theft of property, loss resulting from a fire or damage to property can all be covered under a renter’s insurance policy. A renter’s insurance policy can cover an apartment, condo, rental house, co-op, dormitory and roommate situations. Liability coverage can also be provided through a renter’s insurance policy.

Average Insurance Costs

Renter’s insurance rates also vary from state to state. Further, the cost of renter’s insurance depends on the insurance company selected. According to Independent Insurance Agents & Brokers of America (IIAB), the average cost for renter’s insurance is about $12 per month for $30,000 worth of property coverage and $100,000 of liability coverage. Installing protective devices (i.e., smoke detectors, burglar alarms, fire extinguishers, fire detectors) in your home can lower a renter’s insurance premium as well.

Coverage Types

Renter’s insurance is generally less expensive than homeowner’s insurance because only the renter’s property is insured, not the structure itself. There are two types of coverage available under a renter’s insurance policy. Actual cash value pays the renter only what items are worth at the time of the damage or loss. Replacement value pays the renter the amount of money it takes to replace the items lost. Replacement cost coverage runs about 15 percent more than actual cash value.

Amount of Coverage

The cost of the renter’s insurance will rely heavily on the value of the insured items. A renter can choose to insure only certain items and leave others uninsured. Even if the renter has $45,000 worth of possessions, he does not have to use that value as the policy coverage amount. He may instead decide to insure them for only $20,000 or $30,000, which would hold down the cost of the policy.

Insurance Premiums

Renter’s insurance premiums are based on several factors such as the type of dwelling you live in, the type of coverage you select, the value of the items insured and the amount of the policy deductible. An insurance deductible is the part of the coverage that the insured is responsible for in the event of a loss. Deductibles can range from $500 to $2,000. Selecting a lower deductible raises the renter’s insurance premium. Similarly, a high deductible lowers the premium.

Liability

Many people mistakenly think that a landlord is responsible for restoring damaged possessions or property stolen from a rental. The landlord’s policy covers his building and liability for events that happen outside the rental dwelling(s). The tenant is totally responsible for everything that happens inside his rental home. This means that if someone is injured inside the rental or sues the renter, only the renter is liable.

by Trinise L. Castro