How to Lower the Cost of Your Renter’s Insurance
Renter’s insurance is already one of the most affordable type of insurance plans you can purchase.
Yet it has a relatively low usage rate with less than 40 percent of renters purchasing any form of enter’s insurance at all while 95 percent of homeowner’s purchase the equivalent insurance. Even with the low starting price of most rental insurance plans, there are several ways to make sure you save on a comprehensive plan.
Most renter’s insurance plans average less than $200 a year, depending on your basic coverage limit, liability coverage, additional living expenses coverage, residential location and more.
You can cut your monthly premium significantly by choosing a plan that calculates coverage based on the actual value of your possessions instead of the replacement value, for example, or choose to invest in security and safety equipment for your home that could shave a couple dollars off your monthly insurance bill. Keep in mind that some of these money-saving methods will decrease your total coverage amount or increase your out-of-pocket expenses in the cases of a covered disaster, so make sure you understand the tradeoff you are making between coverage and price when choosing a plan. Continue reading for thirteen different ways that you can make your renter’s insurance plan as affordable as possible.
Thirteen Ways to Lower the Cost of Your Renter’s Insurance Policy
If you are moving into a rental home, the benefits of getting a renter’s insurance policy are massive. So many less people purchase renter’s insurance policies compared to homeowner’s insurance policies not because they offer bad coverage options or cost too much, but because many people do not even know that renter’s insurance exists or that it can provide such comprehensive benefits. If you are on the fence about buying a renter’s insurance plan due to economic constraints, you will be happy to know that you can take any of the following actions to lower the cost of your renter’s insurance policy to as low as it can go:
- Choose the right type of plan: Not all renter’s insurance plans are created equal. In most case, you will need to choose between an actual cash value (ACV) plan and a replacement cost plan. Those of you looking to save a buck would be more interested in an ACV plan, which provides payouts to the policyholder for covered items and disasters at the current day value of the possession. Compared to a replacement cost plan, which provides policyholders with a payout high enough to purchase a new replacement for the insured lost item, ACV plans generally have lower annual premiums and often, lower deductibles due to the average payout amount being significantly less than under replacement cost plans.
- Choose a high deductible: Like many other types of insurance plans, renter’s insurance plans generally include a deductible ranging from $25 per claim to upwards of $500 per claim. Renter’s insurance plans with higher deductibles have lower annual and monthly premiums. If you could afford to pay a high deductible in the case of an emergency, you can opt for a low premium but high deductible plan that will help you save on your fixed costs. Keep in mind that any damage or loss that costs less than your full deductible amount will be your complete responsibility to repair or replace.
- Choose a low policy coverage amount: Most insurance companies offer policyholders several options for policy coverage amounts. In essence, the higher the coverage level, the higher your annual and monthly premiums. Many people choose a random amount of coverage that is recommended to them without ever taking the time to calculate the real value of the items they are insuring. Do some quick math to figure out a ballpark sum of what it might take to replace your possessions if everything were to somehow disappear and go no higher than that number for your coverage limit.
- Skip on the extras: Many renter’s insurance policies optionally include personal liability coverage and additional living expenses (ALE) coverage. Personal liability coverage will pay your legal fees (up to a limit) if you were to be sued for a covered reason while ALE coverage provides you with living expenses if you had to find temporary housing because your primary rental home was somehow made unlivable. You can choose a renter’s insurance policy that forgoes both or either forms of additional coverage to cut on the overall cost of your renter’s insurance plan.
- Bundle multiple insurance plans: If you or a household family member has any other type of insurance policy, consider getting a renter’s insurance plan from the same insurance provider. Many insurance providers offer discounts for bundling your insurance policies. If you are not sure if your insurance provider offers this sort of discount, contact a representative and ask for a discount personally. You could get a discount of over 20percent off your renter’s insurance policy.
- Pay an annual premium: Instead of paying a monthly premium, you can usually opt to pay an annual premium at the time of signing up for a small discount. In some cases, there is no discount for annual payment, but you are saved processing fees for monthly payments. You can usually get a refund for an unused portion of the year that was paid in advance if you have to cancel your protection plan for some reason.
- Choose to make automatic payments and use paperless billing: If you can’t afford to pay the annual premium in advance, you may also be able to save some money on the total cost of your renter’s insurance policy if you choose to make automatic monthly payments and to receive your statement though paperless e-billing. Those who can’t afford to pay for a year in advance can still get a discount by signing up for paperless billing or automatic payments.
- Identify which group savings for which you are eligible: Many insurance providers offer special discounts to several professional and social groups. Individuals who are part of a union or professional organization of nurses, dentists, doctors, teachers or other public employees, police officers, firefighters or another similarly qualifying group often qualify for some form of group discount from insurance providers. One popular insurance provider, Liberty Mutual, provides a group discount on renter’s insurance plans to members of more than 14,000 different special groups.
- Live in a safe area: The cost of your renter’s insurance policy will vary by location, from state to state and even neighborhood to neighborhood within a city. In the end, both local living costs and crime rates will significantly affect how your location affects the costs of your renter’s insurance policy. Higher costs of living mean higher value for your possessions and therefore higher payout amounts were disaster to strike. Even more, higher crime rates mean a higher likelihood that you will have to cash in on your insurance policy. Both instances result in a higher annual premium for your renter’s insurance policy. If you want to save, move to an area that is relatively save and not incredibly expensive.
- Install an up-to-date fire protection system: Installing or updating your fire safety system will earn you a discount with most renter’s insurance providers. Consider investing in a fire extinguisher, smoke detectors or sprinkler system if your rental property does not already have one. You may be able to split the costs with your landlord, since these same measures might earn her a discount on her homeowner’s insurance premiums as well.
- Get a home security system: Along the same lines as a fire protection system, you can usually earn a discount from renter’s insurance providers by installing a home security system. Theft and vandalism are covered in renter’s insurance policies, so any measures you take to lower the likelihood of your belongings being stolen or vandalized can merit a lower cost policy. If you live in a particularly high-crime area or in a building with very low security standards, taking the precaution to get a home security system may be able to significantly lower your renter’s insurance premiums.
- Quit smoking: Unbelievably, smoking cigarettes will increase not only your health insurance premiums but also even your renter’s insurance cost. Policyholders who smoke are seen as higher risk policyholders because of the potential for fires caused by smoking along with other types of damage to individuals or items. If you quit smoking and let your renter’s insurance provider know about the change, you may be able to get a discount on your overall policy price.
- Go into retirement: While this is no good reason to go into retirement on its own, an added benefit of being retired is getting a significant discount on renter’s insurance policies. Insurance providers see senior citizens without full-time employment as a low risk group because they generally spend more time at home, essentially “watching over” their possessions from common disasters that might only occur when the house is empty for most of the day. Discounts can be as high as 25percent for qualifying retirees from some insurance providers.