Renters are not usually required to carry property insurance, but they face the same potential for loss of possessions as any homeowner and should make sure they are protected in case disaster strikes. The cost for renter’s insurance is reasonable for the peace of mind it can bring, and there are ways to keep costs low.
Some of the major factors affecting the price of renter’s insurance include:
Value of your Possessions
The amount of coverage you need is determined by the amount of stuff you own. The more your possessions will cost to replace, the higher the price for insurance. This is why it is important to get an accurate estimate of the value of your possessions. You want to ensure you have adequate protection, but setting a too high a value is a waste of money.
Deductible
The deductible is the amount of money you need to pay out-of-pocket before your insurance policy kicks in. If you are willing to pay, and can afford, a higher deductible amount, then your monthly premiums will be lower. Just be sure that you are not setting your deductible so high that you cannot afford it should you incur a loss.
Location
Another major factor in determining the price of a renter’s insurance policy is the likelihood of a loss occurring. Homes in high crime areas are more likely to suffer a loss. As a result, insurance rates in these areas will be higher than in those with low crime rates.
Likewise, areas prone to natural disasters will have higher rates due to the increased potential for loss. Keep in mind certain natural disasters, like flood and earthquake, are often excluded from a basic policy and you will have to pay extra to be covered.
Discounts
Any building features which reduce the possibility of loss will usually qualify you for a discount on your renter’s insurance. For example:
* Sprinkler systems , fire extinguishers and smoke detectors: These reduce the possibility of a total loss due to fire, although the sprinklers can cause loss due to water damage.
* Burglar alarms and deadbolts: These reduce loss from burglary and theft.
Additional discounts often include:
* Multi-policy discount: Insurance companies reward loyalty and will often offer a discount if you carry both renter’s and auto insurance with them.
* Claims-free: If you do not file a claim in a given year, you may get a discount for the following year. This should not discourage you from filing a claim in the event of a real loss.
Your Lifestyle
How you live your life says something about the likelihood you will suffer a loss. Owning a dangerous breed of dog, for example, may cause your rates to increase because the dog may injure someone.
Similarly, a good credit rating suggests you are responsible and may qualify you for a lower rate.
Insurance rates are based on statistical risk, and the lower risk you present, the lower your renter’s insurance rates will be.