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COST OF APARTMENT RENTERS INSURANCE

The typical cost of apartment renters insurance is a source of mystery to many renters. Some believe this type of coverage is too expensive to afford. Others simply have no idea what it might cost or how to go about finding out. The truth is that there is solid data to show that renters insurance is actually quite affordable. But with that much said, one cannot exactly predict the cost of a policy based on averages, because each situation is different and the premium for a policy might vary according to various factors. Still, there are studies that have been done to look at the average cost of renters plans.

Average Cost for Basic Coverage

The Independent Insurance Agents & Brokers of America (IIABA) have statistical information pertaining to the average cost of rental insurance plans. According to the IIABA, the average cost of a renters insurance policy in the United States is about $12 per month. This average is based on a policy with $30,000 in personal property and $100,000 in personal liability coverage [1]. Both these monetary limits are fairly common default limits in renters insurance plans. In most renters plans, the default property protection limit is anywhere between $20,000 and $30,000. And $100,000 is a very common default for personal liability coverage.

So this $12 number can be regarded as somewhat accurate based on this assessment of the default values in use in the IIABA study. Even so, coming up with a figure represented as an average or typical cost of apartment renters insurance is only somewhat useful. There are limits to what we can do with this number or how much we can trust it to apply in any given circumstance. Every rental situation is different, as all renters are different. There are areas of the country where costs are higher or lower. And there is no saying that any particular renter will definitely opt for a default policy. Even so, this number gives us a starting point, and at least provides a basic sense of the affordability of renters insurance.

Average Cost Varies By State

The $12 number can only be regarded as a starting point or a baseline value in a pursuit of an average cost for a rental insurance policy for many different reasons. For one thing, not all people rent apartments. You might rent a townhouse or loft, or some other type of home. Many people rent a house because they want that feel of home but cannot afford to buy one just yet. Again, the type of home being rented might cause a variance in pricing.

So too will the state in which the renter resides. The average cost of renting varies tremendously by state, from under $10 a month in North Dakota to almost $22 a month in the state of Texas [2]. The state you live in will have a large bearing on the price you pay for a policy. There are multiple reasons for this.

First of all, different states are populated differently. A state like North Dakota is sparsely populated, while Texas has millions of residents living in tightly populated metropolitan areas. The people who live in large cities are likely to pay more for a renters insurance policy because they are more likely to have to file a claim. Statistically, an insurance provider spends more money on average dealing with claims in these areas than they do in rural or suburban areas. There are more people, more crimes, and more opportunities for claim events to occur.

Second, different states have different rules for renters insurance. Texas is a particularly pertinent example. A Texas renters policy will be much more extensive and inclusive than a North Dakota plan. So the price difference in average premiums between these two states is justified by differences we can easily detect by just an armchair investigation of the two. This is a lesson in cost. The insurance industry is ruled by statistics, and if there is a noticeable anomaly in an average price of coverage anywhere, there will always be a good, sound reason behind it: a reason rooted in statistics.

Average Cost Varies By Coverage

Like the difference between insuring a house and a condo, there is also an obvious price difference between a default policy with $30,000 in property coverage and a renters insurance plan with two or three times that much property coverage. The average cost of a renters insurance plan varies by level of coverage. If you opt for a standard default policy, chances are you can pretty closely predict the amount of money you will have to spend for that policy before ever getting a quote. But when you start adding special coverage or raising limits, things get trickier to predict. Renters who choose to alter their plans usually have a good reason for doing so. It might be that their condominium is stocked with thousands of dollars worth of artwork or heirlooms requiring separate insurance protection.

Or it might be that they are trying to get the cost down by increasing the deductibles on their renters insurance plan. This is an effective method of saving on the premium, by the way. Increasing your deductible on a standard default policy can yield a high percentage savings right off the top. The reason for this is simple: it prevents covered renters from making small claims. Renters insurance providers so not have to pay out on these claims, nor do they have to waste administrative time and money dealing with them in any way. When you choose to increase your deductible, the decision equates to self insuring on the low end of your policy coverage limit. You are surrendering your right to make small claims. On top of that, you are choosing to pay more out of pocket for larger renters insurance claims as well. There are fine savings to be had by raising deductibles, but drawbacks as well. The whole picture should be kept in mind.

Rental insurance will, of course, also vary in cost based on the insured. The specific characteristics of the consumer play a part in the pricing of a policy. A poor college student with nothing more than a bed and a computer desk will tend to draw low prices for a renters policy, since his insurance needs are limited in the property sense. A senior citizen living on her own might also be relatively cheap to insure, unless her insurance needs include extensive protection for valuables or she owns a great deal of personal property all by herself.

By contrast, a large family would probably cost more than the average for a renters policy, because there are several people to include in the liability policy and probably quite a bit of personal property to cover as well. But even so, a large family can still usually get a decent price on a plan because these policies are so affordable overall and even the high end of prices is not all that high. The typical cost of apartment renters insurance is hard to pin down, but it is cheap.

[1] http://www.livestrong.com/article/72770-average-cost-renters-insurance Retrieved 2010-02-21.
[2] http://www.insure.com/articles/homeinsurance/average-home-premiums.html Retrieved 2010-02-21.