How to Lower Renters Insurance Premiums in 5 Steps

Not every renters insurance policy is a one-size-fits-all solution, so you can’t expect a run-of-the-mill policy to be the right fit for you. You need to customize your coverage amounts to suit your needs. When you tweak the amounts by reducing or increasing your coverage, you fit the specified levels that both you and your belongings need, resulting in the perfect amount of coverage at a reasonable price.

Renters insurance only costs about $15 per month — depending on where you live and a few other factors. So, while you may not need to customize your coverage amounts, you may as well because having the right coverage is the most important thing about having renters insurance.

Your coverage amounts reflect the amount your insurance company will pay if you need to file a claim for damage to your belongings, a liability issue or additional living expenses because you were forced to temporarily move out of your rental property.

First, you must pay your deductible, then your insurer will meet your maximums for covered perils. Let’s take a look at the coverages included in renters insurance and what they mean to you.

Since renters don’t own the property they live in, personal property coverage is arguably the most important part of a policy. Personal property coverage helps to pay for your personal belongings — such as furniture, clothes, electronics and many other personal items — if they’re damaged or destroyed by a covered peril.

So if a natural disaster crumbled part of your home or a house fire broke out and burned your belongings to a crisp, you’d file a claim with your insurer and, if the claim was caused by a covered peril, your insurer would reimburse you to replace your belongings.

It’s important to document your belongings by keeping a contents list. This allows you to easily tally up how much your personal belongings are worth and prove to your insurer that you actually owned those items. Without a contents list that includes pictures or receipts, it may be tough to prove you actually owned that $2,000 surround-sound home theater system that was swept away by a hurricane.

Also, people’s belongings tend to be more valuable than they think. For instance, if you own 50 shirts that may have cost you an average of $40 each when they were purchased, that’s $2,000 worth of just shirts. Add up the rest of your wardrobe, your computer and all the knick-knacks in your closet you’ve been meaning to organize, and the total value of your possessions adds up quickly.

So if you have $20,000 in personal belongings, you need to have at least $20,000 worth of personal property coverage to replace all your belongings if they were destroyed. It doesn’t make much sense to overpay for $30,000 worth of coverage, and it certainly doesn’t make sense to be underinsured with $10,000 worth of coverage. Also, if you make a big purchase, you should always review your policy to make sure you still have enough coverage.

Additionally, there are two forms of personal property coverage: actual cash value and replacement cost coverage. An actual cash value policy takes depreciation of your belongings into account, lowering the amount of money you can be paid for each item due to its age and condition. Replacement cost coverage simply reimburses you what you paid for the item — no matter if you bought it five days ago or five years ago.

If you bought all the belongings in your home four years ago for $15,000, they’ve depreciated in the eyes of retail stores and your insurance company. So, with actual cash value coverage, you may only be paid $10,000 for all your items if you opt for actual cash value coverage. With replacement cost coverage, your insurer would reimburse you the full $15,000.

Since you get paid more with replacement cost coverage, it’ll also cost you more in premiums. So opting for actual cash value is an easy way to lower your renters insurance, but you’ll have to decide if the risk of a lower pay out is worth it.

The second part of your policy is liability coverage. It helps to pay for medical bills if someone is injured on your rental property and you’re found liable, if your dog bites someone on or off your property, if you cause property damage to another person’s property and legal expenses if one of those incidents results in a lawsuit filed against you.

Standard renters insurance policies come with $100,000 worth of liability coverage. Some insurers allow you to reduce that amount, but many won’t. However, there are some times when you may need to increase your liability coverage.

For instance, dog owners are recommended to opt for $250,000 to $500,000 in coverage because damages from dog bites are one of the most expensive liability claims. Also, renters with attractive nuisances on their property, such as pools and hot tubs, may want to invest in separate umbrella insurance. Umbrella insurance extends your liability coverage to $1 million per claim, so it can help if someone is seriously injured or drowns in your pool.

The final piece of renters insurance is loss of use coverage. It’s designed to help pay for additional living expenses if your rental property is damaged by a covered peril and you must temporarily move out while it’s being repaired or rebuilt.

While personal property and liability coverage comes standard on renters policies, renters are allowed to choose whether they want loss of use coverage or not. It can help pay for temporary housing like a hotel stay or rental property of equivalent value if you’re temporarily forced out of your home. It can also pay for extra gas money for longer commutes and a storage unit to house all the undamaged belongings you can’t bring with you.

Since you’re locked into a lease with your landlord, they may require you to keep paying rent on the property even if you can’t live there. But landlord insurance can cover loss of rental income in these situations, so check with your landlord to see if you’d be off the hook. If you are, forgoing this coverage can lower your monthly renters insurance premium. 

By adjusting the deductible, you’re simply adjusting the amount of money you’d need to pay up front for each claim. Deductibles typically begin at $250 and go up to about $2,000 per claim. As you increase your deductible to a higher amount, you’ll see your monthly premium decrease.

However, it also means you’ll have to pay more money out of your own pocket if you need to file a claim. Insurance companies reduce premiums for higher deductibles because it means they’d be paying less toward each claim filed.

If you have a $500 deductible and your home suffers covered water damage that destroys $3,000 worth of your personal belongings, you’ll have to pay the insurance company $500 before it kicks in and pays the remaining $2,500.

A lower deductible means you’ll save more money if you file a claim. Although, if you never file a claim during the length of time you have renters insurance, you’ll pay more money in premiums along the way.

Home security measures, such as centrally monitored security and fire alarm systems, can help to lower your renters insurance premiums. A security system helps deter thieves from breaking in and stealing your belongings and a fire alarm system can notify the fire department quicker to prevent more extensive damage to your belongings.

Each instance helps to reduce the probability that you’ll file a claim. And since the chances of you filing a claim are slimmer, your insurer is taking on less risk, which will likely result in them reducing your premiums.

Depending on your insurance carrier, you may be able to bundle your renters insurance with your auto insurance policy. Since renters insurance isn’t very expensive to begin with, bundling will likely reduce your auto insurance premiums by more per month. But, hey, saving money is saving money.

Perhaps the easiest and quickest way to lower your renters insurance is by shopping around for a better price. At Clovered, we’ve partnered with some of the top insurance companies in the country, and we’ve developed a proprietary online quoting tool that makes comparing quotes from those companies a breeze.

All you need to do is answer a few questions about your living situation, we’ll run some risk data in the background, and we’ll find you a perfect policy in minutes that fits both your needs and your budget.