Many renters don't realize that the insurance purchased by a landlord doesn't actually cover their possessions. If there's a natural disaster, like a fire, your landlord's insurance will only take into account the value of the building – not your possessions. Take a look around your home – how much would it cost to replace these items if them were damaged? Even if you have no extremely expensive items, your furniture, clothing, and other items are worth a substantial amount of money when added up.
Yet, many renters don't purchase an insurance plan, even if they understand the potential consequences. Why? The number one reason people don't purchase renters insurance might be something you're struggling with yourself – the cost. If you're trying to save up for a down payment on a place of your own, working on paying off debt, or otherwise putting money toward your monthly bills, renters insurance might seem like an unneeded cost. Would you purchase it if you could find an awesome deal, though? Here are some tips for cutting the price of renters insurance, making it affordable no matter what your budget:
- Install "safety items" in your home.
Smoke detectors, burglar alarms, fire extinguishers, and deadbolts are just some of the safety items that significantly lower your renters insurance. Talk to your landlord about installing some of these items if your apartment or house doesn't already have them. Some, like smoke detectors, are necessary for the rental property to be legal in most areas, but even those that aren't can be beneficial to your landlord as well, as they can also help lower their insurance policy on the building.
- Choose "actual cash value" coverage.
With renters insurance, policies have one of two different types of coverage – actual cash value or replacement cost. Actual cash value takes into account the depreciation of the items that were damaged, lost, or destroyed, so your television from ten years ago won't be worth as much as it cost when it was new. Replacement cost policies, on the other hand, pay the total amount it will take you to replace your items with new items. Although actual cash value policies make it harder for you to get back on your feet after a disaster, they can still put a significant dent in your losses, and for now, your monthly premiums will be much lower.
- Increase your deductible.
If you have money in a savings account set aside for emergencies, consider increasing the deductible on your renters insurance policy. Like with car insurance, the deductible is the amount you have to pay before the insurance kicks in. The higher your deductible is, the lower your monthly premiums will be. Just make sure you can afford the higher deductible in the event of an emergency!
- Buy your renters and auto insurance together.
Most insurance companies offer a discount if you purchase multiple policies. Renters insurance is commonly sold by companies that also offer auto insurance, but you may not get the discount if you don't buy the policies at the same time – you have to actually request it. Don't be afraid to speak up and ask for the discount.
Did you know that even without these tips, renter's insurance is fairly inexpensive? Many renters think that these policies are as expensive as homeowners insurance, but because you aren't insuring the building itself (that's your landlord's responsibility), you'll likely only pay a few hundred dollars a year, even for a really great policy. Before you say that you can't afford it, call some companies for renters insurance quotes – you may be pleasantly surprised to find that peace of mind fits easily into your budget.
Allison works with RentersInsurance.org, where you can go to learn more about when and how to purchase renters insurance.
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