Renter's Insurance: Who's Covered?

In the United States, renter's insurance is not a legal requirement, but landlords can and often do make it mandatory for tenants. While the exact number of renters with insurance is unclear, some sources estimate that around 55% of renters in the US have insurance, which equates to roughly 61 million people. However, other sources state that only 57% of renters have insurance, which would be around 25 million households. The average cost of renter's insurance is between $12 and $21 per month, so it is odd that more people don't have coverage.

Renters insurance costs: $15.58 per month on average

The cost of renters insurance varies depending on several factors, including location, coverage amount, and the insurance company. On average, renters insurance costs $15.58 per month or $187 per year. However, the cost can range from as low as $8 per month in states like Wyoming and Alaska to as high as $21 per month in states like Louisiana and Mississippi.

The cost of renters insurance is influenced by factors such as the amount of coverage, claims history, location, credit score, and environmental risks. Additionally, the insurance company and the discounts they offer can also impact the cost.

When determining the amount of coverage needed, it is essential to consider the value of personal belongings and the desired level of liability coverage. Most insurers offer at least $100,000 in liability coverage, but higher coverage amounts are available. It is recommended to create an inventory of possessions and estimate their total value to decide on the appropriate coverage amount.

Renters insurance typically includes four types of coverage: personal property, personal liability, medical payments, and loss of use. It is important to note that renters insurance does not cover damage repairs due to floods, earthquakes, mold, pest infestation, maintenance issues, or wear and tear.

While renters insurance is not legally required, it is a valuable investment to protect against unexpected costs associated with property damage, liability, and additional living expenses in the event of a covered disaster.

Renters insurance uptake: 55% of US renters have it

Renters insurance is designed to protect tenants' personal items in the event that they are stolen or destroyed by natural catastrophes, like floods or hurricanes. It also covers damage to a visitor in the rental, known as liability protection.

According to research by SafeHome.org, 55% of US renters, or approximately 61 million people, have renters insurance. This number is expected to rise to over 65 million within the next year. Of those with insurance, 75% are required by their landlords to have this coverage. The research also found that slightly more female renters than male renters had coverage, and renters in their 20s were more likely than any other age group to have insurance.

The uptake of renters insurance may be influenced by factors such as income, age, and housing type. For example, the SafeHome.org research found that about one in four people living in public housing had renters insurance, compared to nearly 60% of people in privately owned housing. This may be due to the higher costs associated with renters insurance, which can be challenging for those with limited incomes.

Additionally, the average cost of renters insurance is relatively affordable, with some sources citing an average of around $15.58 per month, while others state it can be as low as $12 per month or up to $18 per month. This cost varies depending on policy coverage limits, deductible amounts, the chosen company, and location.

While renters insurance is not mandated by law, it is a valuable form of protection for tenants and their belongings. However, it is important to note that it does not cover all items in a rental property and has certain limitations, such as not covering property damage caused by pests or damages from terrorism or nuclear war.

Landlord requirements: 75% of insured renters' landlords require it

Landlord requirements are a significant factor in renters' decisions to purchase insurance. According to a SafeHome.org report, 75% of insured renters are required by their landlords to obtain renter's coverage. This requirement benefits both parties. For landlords, it reduces liability, avoids payment for damages and accommodations, appeases insurance providers, covers the deductible, and weeds out potentially unreliable tenants.

Renters insurance provides landlords with an extra layer of protection. Their standard insurance policies typically only cover the structure of the property, not the tenants' belongings. In the event of damage or loss, renters insurance spares landlords the cost of replacing tenants' personal property. This benefit is particularly relevant in cases of fire, flood, or other natural disasters, as well as theft or vandalism.

Additionally, renters insurance helps landlords avoid liability claims from tenants. If a tenant's belongings are stolen, for example, they might sue their landlord for failing to protect their property. However, if the tenant has renters insurance, they are more likely to turn to their insurance company for compensation, thus reducing the likelihood of a lawsuit against the landlord.

From the tenant's perspective, renters insurance is a valuable form of protection for their belongings and finances. It covers the cost of replacing or repairing their possessions if they are lost, stolen, or damaged. This coverage typically extends beyond the rental property, safeguarding items stored in cars, storage units, or elsewhere. Renters insurance also provides liability coverage if a guest is injured while on the rental property.

While renters insurance is not legally required in most places, landlords have the right to include it as a clause in lease agreements. This requirement is becoming increasingly common, with more and more landlords recognizing its benefits. As a result, tenants often find themselves purchasing renters insurance as a condition of their lease.

In summary, the landlord requirement plays a pivotal role in influencing renters' insurance decisions. By mandating coverage, landlords not only protect themselves but also ensure that their tenants have the financial protection they need in the event of property damage, loss, or liability issues.

Insurance company: State Farm is the most popular

Renting a home is a big investment, and it's important to protect yourself and your property with the right insurance coverage. While renters' insurance is not a legal requirement, many landlords do ask for proof of renters' insurance before signing a lease.

State Farm is the most popular renters' insurance company in the United States, with an 18.63% market share. This is significantly higher than the next most popular company, Geico, followed by Progressive and Lemonade. State Farm has been the #1 provider of home insurance since 1964 and offers a range of coverage options for renters, including personal property coverage, liability coverage, and additional living expenses if your home becomes uninhabitable due to a covered loss.

State Farm's renters' insurance covers a wide range of incidents, including accidents related to fire, smoke, covered water damage, wind, theft, and vandalism. It also covers your personal property both inside and outside your home, such as in a storage unit or your car. You can also add identity theft coverage to your policy, which includes monitoring alerts and professional support.

The average cost of renters' insurance with State Farm is around $15 per month, or $187 per year, which is a competitive rate compared to other insurance companies. This rate can also be lowered by bundling your renters' and auto policies, and State Farm offers various discounts and savings options to help keep costs down.

State Farm's popularity as a renters' insurance provider can be attributed to its comprehensive coverage, affordable pricing, and additional benefits, such as inflation coverage, which ensures your protection levels remain the same year after year. Their strong market presence and positive reputation also contribute to their position as the leading renters' insurance company in the United States.

Roommates: It's usually best to have separate policies

While it's possible to add a roommate to your renter's insurance, it's generally recommended that each roommate has their own policy. This is because sharing a policy can lead to several potential issues and may cost you more in the long run. Here are some reasons why it's usually best for roommates to have separate renter's insurance policies:

Higher Rates

If your roommate has bad credit or a history of insurance claims, the insurance company may consider them a higher risk to insure, resulting in higher rates for both of you.

Not Enough Coverage

If the combined value of your and your roommate's belongings exceeds the policy's personal property limit, you may not have sufficient coverage for all your possessions. This could lead to issues if you need to file a claim.

Late Payments

If your roommate is responsible for paying the insurance bill and forgets to do so, it could result in late payments, affecting your insurance record and credit history.

Damage to Insurance Record

If your roommate files a claim, the incident will be added to your insurance record, which could lead to higher rates or difficulty renewing your coverage in the future.

Fluid Roommate Situations

Roommate situations can be unpredictable, with people moving in and out. If your roommate leaves before the end of the policy term, you'll need to reapply for insurance or update your existing policy.

Fair Division of Costs

If one roommate has more expensive belongings than the other, it may be unfair to split the insurance costs evenly.

Limited Benefits

Most insurance policies have limits on certain items, such as electronics. If multiple people are sharing a policy and multiple claims are made, the benefits may not be sufficient to cover all the losses.

Difficulty in Filing Claims

When roommates share insurance, there may be added complications when filing claims. Discussions and disagreements may arise among roommates regarding the value of items and the claim amount.

Landlord Requirements

While some landlords require tenants to have renter's insurance, they are primarily interested in ensuring each tenant has sufficient liability coverage. Most landlords do not specify whether this should be through individual or combined policies.

Customization

When you have your own renter's insurance policy, you can customize the coverage to meet your specific needs, which may differ from those of your roommates.

Portability

Having your own renter's insurance policy ensures that you're covered even if your roommate moves out or your living situation changes.

Affordability

Renter's insurance is relatively inexpensive, with an average cost of around $15 to $18 per month. Splitting the cost with a roommate may only save you a small amount, and it's often not worth the potential risks and complications of sharing a policy.

Frequently asked questions