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10 Controllable Factors That Affect Renters Insurance Cost

By Jarrod Heil

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The average cost of renters insurance is determined by a combination of multiple factors — many that you can actually control.

Let’s get into the nitty-gritty of a renters insurance policy and go through each controllable factor that can raise or lower your monthly premiums.

1. Personal Property

If you have more personal belongings that need to be insured, it’ll cost you more money each month to do so. That’s because insurance companies are assuming more risk for more belongings.

If you’re only insuring $10,000 in personal belongings, an insurance company will only have to pay you $10,000 if everything is destroyed.

On the other hand, if they have to pay out $50,000, they will offset the increased risk by charging you more money in monthly premiums.
 
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2. Liability

Liability coverage works similar to personal property coverage. If you have $100,000 in liability coverage, an insurance company will only pay a maximum amount of $100,000 if you file a claim. If the damages exceed that amount, you’re responsible for paying the rest.

If you have $500,000 in liability coverage, insurance may have to pay up to $500,000 for each claim. It offsets the increased risk of paying out more money by increasing your renters insurance cost.

 
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3. Additional Living Expenses

Additional living expenses is another key controllable factor affecting your renters insurance cost. This is the amount of money an insurance company will pay toward unexpected costs in the event that a covered peril forces you to temporarily move out of your rental property.

If you set your policy at a $2,000 maximum, your insurance company will only provide up to that amount for relocation fees, food, gas and related expenses.

If you set it at $20,000, there’s a chance your insurance company will have to pay that amount. Again, they’ll offset the increased risk of a higher payout by increasing your cost of renters insurance.
 
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4. Deductible

The deductible on your policy determines how much you must first pay before the insurance company kicks in and pays the remaining amount. The higher your deductible, the cheaper your cost of renters insurance.

That’s because you’ll have to pay more and the insurance company will pay less per claim.

Deductibles typically start at $500 and go up to $1,500. If you have a $500 deductible and suffer $20,000 in losses, you must pay $500 and your insurance company will pay the remaining $19,500. If you have a $1,000 deductible and you suffer $2,000 in losses, you must pay $1,000 and your insurance company will pay the remaining $1,000.

 
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5. Actual Cash Value vs Replacement Cost

These are the only two kinds of coverage you can choose from that pay to repair or replace your personal belongings if they’re damaged, destroyed or stolen due to a covered peril. Actual cash value takes into account depreciation due to aging and general wear and tear.

Replacement cost simply pays you the exact amount you bought an item for, even if it’s 10 years old. Since replacement cost pays out more than actual cash value for each item, it increases the cost of renters insurance.
 
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6. Dogs

Owning a dog could significantly increase your renters insurance premium because they are deemed to carry a higher risk.

That’s because dog bites are one of the leading causes of home insurance claims and force companies to pay out hundreds of millions of dollars each year. There are certain breeds deemed to be riskier than others.
 
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7. Location

Where your rental home is located plays a part in the price of your monthly premium, too. If you live in an area with a high crime rate, you’ll pay more in premiums due to an increased risk of theft.

If you live in a state or area that’s prone to natural disasters, you’ll see an uptick in your premiums compared to locations that don’t see much natural disaster activity.
 
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8. Residence Type

Are you renting a single family house, apartment, duplex, mobile home or something else? Each residence type comes with its unique risk factors, which all have an impact on your monthly premium. theft is more common in houses.

Mobile homes are more susceptible to storm damage. Living in an apartment affects your risk factor because your upstairs or next door neighbors could accidentally start a fire or cause water to seep its way into your home and damage your possessions. Each factors into the price of your policy.

 
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9. Home Discounts

There are many safety features that can be added to your home to reduce the amount of your monthly premiums. Smoke detectors prevent extra damage from a fire spreading. A monitored security system and reinforced door locks deter thieves from breaking in and stealing your stuff.

Impact-resistant windows keep your belongings safer during a harsh windstorm. All of these things can play a key factor in reducing your monthly premiums.
 
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10. Bundling

If you bundle a renters and auto insurance policy with the same company, you could save yourself a little bit of money each month. In addition, if you stay with the same company for a certain number of years, they may be more inclined to provide a discount for being a loyal customer.
 
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How Much Is Renters Insurance?

The average cost of renters insurance in the United States is about $10 to $30 per month or $120 to $360 per year, depending on the combination of factors from above. That’s the equivalent of buying two to six cups of coffee on your way to work each month.

Do you need to buy the coffee? Probably not. You could brew your own for much less. Do you need to buy renters insurance?

Probably so.

It’s certainly a smarter investment than the coffee because it offers protection for your personal belongings, liability coverage for unforeseen incidents and reimbursements for many living expenses incurred if you’re unexpectedly forced to move out of your rental home due to a covered peril. Get a free quote today!

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