6 things you need to know about renters insurance

6 things you need to know about renters insurance
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Renters insurance is a roughly $15 a month policy that all renters need to protect personal property against damage or loss, and to insure themselves in case someone is injured while on their rental property.

But despite the obvious affordability, few people buy renters insurance. A recent Rent.com survey found that out of 1,000 renters asked, only 40% of them had this coverage.

If you’re renting and don’t have renter’s insurance, here’s why you should…

Read more: This is what $1,500 a month in rent gets you in America’s biggest cities

The average cost of a policy is less than $200 annually

It’s actually $187, according to the National Association of Insurance Commissioners.

According to the latest figures available from the NAIC, a renters insurance policy is cheapest on average in North Dakota ($115), South Dakota ($118), Wisconsin ($130), North Carolina ($134) and Montana ($145).

On the other hand, you’ll pay the most for a policy on average in Mississippi ($244), Louisiana ($242), Alabama ($239), Oklahoma ($234) and Texas ($228).


See a complete breakdown of average policy rates by state.

Here’s what it will cover and what it won’t cover

According to Insure.com, covered perils include damage from fire or lightning; windstorm or hail; explosions; riot or civil commotion; damage caused by aircraft or vehicles; smoke; vandalism or malicious mischief; theft; volcanic eruption; falling objects; weight of ice, snow or sleet; and a number of issues related to damage from HVAC systems, plumbing systems, fire sprinklers and appliances.

It will not cover damage from flooding; war; nuclear hazard; neglect of property, intentional destruction of property; or governmental seizure of property.

Your landlord does not have your back!

Too many renters think their landlord has insurance, so they’re already protected. Not true!

Your landlord’s insurance does not cover your personal property. Nor does it cover you from liability for damage you may inadvertently cause to their building, such as a kitchen fire because of a clogged grease filter or a plumbing problem that could have been easily avoided. So you need to get your own protection!

Renters insurance does not cover roommates

Many renters live with roommates to lower the cost of housing. You can elect to add a roommate to your policy, but that’s highly unadvisable. Any claims a roommate makes on the policy will reflect on you as the policy holder and go on your C.L.U.E. report, not theirs.

Insurers use the C.L.U.E. report to get a read on an individual’s risk and to price insurance policies of all kinds accordingly. The more negative info on it, the higher your rates will be.


Read more: Your C.L.U.E. report: What it is and how to check it for free!

One insurer has most of the market share

Clark has long recommended getting quotes for renters insurance from the same insurance carrier that writes your auto insurance policy. (By the way, be sure to check out our list of the best auto insurance carriers.)

The following chart compiled by ValuePenguin.com shows that State Farm does the bulk of the business in our country. Ratings are courtesy AMBest.com and SPRatings.com.

Insurance Company Premiums Written % of Market AM Best S&P
State Farm Mutual Automobile Insurance $16,299,379 20.70% A++ AA
Allstate Corp. 7,166,931 9.1 A+ AA-
Farmers Insurance Group of Companies (3) 4,823,694 6.1 A A+
Liberty Mutual 4,628,086 5.9 A A-
USAA Insurance Group 3,856,394 4.9 A++ AA+
Travelers Companies Inc. 3,450,478 4.4 A+ AA
Nationwide Mutual Group 2,945,058 3.7 A+ A+
Chubb Corp. 1,877,340 2.4 A++ AA
Citizens Property Insurance Corp. 1,637,389 2.1 NA NA
American Family Mutual 1,584,681 2 A A+

Sources: National Multifamily Housing CouncilNAICI.I.I.U.S. Consumer Product Safety Commission

Renters insurance is a hot topic in the sharing economy

NAIC recommends you have renters insurance if you’re booking on a home-sharing site like VRBO.com, HomeAway.com or Airbnb.com.

‘Confirm your own homeowners, renters or personal liability insurance policies offer protection for potential damages to the rental property,’ the organization recommends. ‘If not, make adjustments as needed.’

On the flipside, the NAIC recommends to Airbnb owners that they only rent to guests who can show proof of renters insurance!


Read more: Top 20 most expensive ZIP codes for renters

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