Renters Need Insurance, Too. These Are the Cheapest Options for Good Coverage

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Homeowners often buy insurance for peace of mind — in case, say, their house or apartment catches on fire, a pipe bursts, or another random disaster strikes. 

If you rent, it can be easy to write insurance off as something you don’t need. You may already have enough bills to pay, or feel that the responsibility falls on the landlord. According to the Insurance Information Institute, more than 60% of renters don’t have renters insurance.

But many experts we’ve spoken to say it’s worth it. If the cost of renters insurance is concerning, know that there are very affordable options available. We sifted through more than a dozen insurance companies and looked at key features to pick the most affordable ones in 2021.

Our Picks for the Cheapest Renters Insurance Companies

Company Overview

State Farm

State Farm offers renters insurance coverage everywhere in the U.S. But it’s not just State Farm’s availability that makes it a good option for renters insurance; this company also offers the lowest average rate of all the companies on this list. On top of that, it offers discounts for bundling and for certain protective devices in the home.

State Farm’s standard renters insurance policy includes personal property, liability and loss of use, as well as medical expenses and property damage to other guests. If the basic policy isn’t enough, State Farms has many coverage add-on options such as pet medical insurance and  identity theft insurance.

Average annual premium: $264

Types of Renters Insurance Coverage:

  • Personal property coverage
  • Personal liability coverage
  • Loss of use coverage
  • Medical payments coverage

State Farm Renters Insurance Discounts:

  • Multi-policy discount
  • Home alert protection discount

Travelers

Travelers is a great choice for renters because it’s available nationwide, has low rates, and a strong financial standing. It offers standard renters protections for your items and liability, all over the country, as well as the option to apply up to 10% of your personal property coverage to improvements and alterations. If you have to move out because of a covered loss, Travelers will cover several of your living expenses such as hotels, meals, and laundry services. It also offers a discount if you go an extended amount of time without making a claim.

Average annual premium: $396

Types of Renters Insurance Coverage:

  • Personal property coverage
  • Personal liability coverage
  • Housing improvements
  • Medical payments coverage

Travelers Renters Insurance Discounts:

  • Multi-policy discount
  • Loss-free discount
  • Protective device discounts

Pro Tip

Check with your auto insurance company to see if they offer renters insurance coverage. Your insurer might offer discounts for bundling your renters insurance with your other insurance policies, anywhere from 10% to 25% off your premiums, depending on the company.

Honorable Mentions for the Cheapest Renters Insurance Companies

Erie Insurance

Erie Insurance has a stellar reputation among consumers and the insurance industry, scoring exceptionally high in J.D. Power’s most recent homeowners insurance survey. It’s not only known for offering good discounts on bundles and covering additional living expenses in the event of a covered loss, but also offers coverage for more specific needs, such as identity recovery and high-ticket personal items.

Erie is only available in 12 states in the U.S., but it’s still an excellent choice if you live in one of them..  It’s sold in the District of Columbia, Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin through 12,000 independent agents. 

Average annual premium: $444

Types of Renters Insurance Coverage:

  • Personal property coverage
  • Loss of use coverage
  • Personal liability coverage
  • Medical payments coverage

Erie Renters Insurance Discounts:

  • Multi-policy discount
  • Protective device discounts 

USAA 

USAA stands out as an insurance company for several factors: affordable rates, excellent customer satisfaction, and an easy-to-navigate claims service. It offers a more robust basic renters insurance policy than many of its competitors, but only for military members, veterans, and their families. 

USAA’s basic renters policy covers personal property, personal liability, medical payments, additional living expenses, and flood insurance. Flood insurance is typically purchased separately, so it’s notable that part of a standard renters insurance policy with USAA. You also don’t have to pay extra for earthquake coverage. If you’re a military member who’s deployed or moves abroad, your personal belongings are still covered.

Average annual premium: $384

Types of Renters Insurance Coverage:

  • Personal property coverage
  • Personal liability coverage
  • Medical payments coverage
  • Flood insurance

USAA Renters Insurance Discounts:

  • Discount for living on base or post
  • Multi-policy discount 
  • Loss-free discount
  • Home alert protection discount 

Lemonade 

Lemonade offers renters insurance with low rates and easy-to-use technology in 28 states. It’s a relatively new insurance company that uses AI and online tools, completely eliminating physical locations; its services are available  only online. Lemonade’s renters insurance starts as low as $5 per month for basic coverage, making it easily accessible and affordable. Around 70% of Lemonade’s customers said the price influenced their decision to pick it as their renters insurance company, according to J.D. Power. In 2020, it ranked highest for renters insurance in J.D. Power’s insurance study, marking the first time an insurtech brand ranks highest in the survey.

Types of Renters Insurance Coverage:

  • Personal property coverage
  • Personal liability coverage
  • Loss of use coverage
  • Medical payments coverage

Lemonade Renters Insurance Discounts:

  • Multi-policy discount
  • Protective device discounts

Cheapest Renters Insurance Companies of 2021 Summary

Insurance CompanyAverage Annual PremiumJ.D. Power Customer Satisfaction Score, 2020A.M. Best Rating, 2020States Available
State Farm$264836A++50
Travelers$396807A++50
Erie Insurance (Honorable Mention)$444865A+12
USAA (Honorable Mention)$384888A++50
Lemonade (Honorable Mention)N/A866N/A28

How Much Does Renters Insurance Cost?

The average renters policy costs below $45 a month, or roughly $509 per year, according to the latest Bankrate data. Keep in mind the cost of renters insurance will vary based on the company, location, and many other factors. For example, For example, Bankrate data shows that Oklahoma renters pay an average of $1,040 a year, whereas New York renters pay only $348 a year.

“There’s a significant difference between renters and homeowners insurance. Depending on how much coverage you buy, [renters insurance] is usually anywhere from $100 to $250 in most markets,” says Ken Gregg, CEO of Orion180, an insurance provider that specializes in homeowner insurance in the Southeast. “It’s pretty cheap.”

How Much Renters Insurance Coverage Do I Need?

Renters insurance coverage exists to cover the cost of replacing your belongings in the event something bad happens to them, like an accident or damage. 

You’ll need to choose the right amount of coverage to avoid coming short if something happens. The best way to decide on a policy amount is to draft an inventory of your possessions and calculate their worth, says Gregg. Most renters insurance policies also include liability coverage, which covers you if someone is injured or their property damaged while staying at your place.

“You’re primarily insuring what’s inside the home instead of the physical structure,” says Gregg. “It’s there to bring you back and make you whole again if something happens.”

When researching companies, you’ll want to ask them if the policy is based on actual cash value replacement cost or real replacement cost. Real replacement cost pays today’s prices to replace the same items, whereas actual cash value takes depreciation into account.

When shopping for coverage, get a good understanding of what is and isn’t covered. Some companies may not include coverage for certain types of damage or only up to a certain amount. For example, standard renters insurance doesn’t typically cover pest infestation or jewelry worth over $1,500. 

Methodology

To determine our picks for the cheapest renters insurance companies, we started with a list of 25 of the largest home insurance companies by premiums collected, based on data from the National Association of Insurance Commissioners. From there, we applied a series of filters to narrow the field across key categories like cost, availability, and customer satisfaction. 

For starters, all our top picks must be universally available to all consumers in at least 40 states. To gauge affordability, we looked at Bankrate’s average annual premium across these carriers and eliminated any with an average yearly cost of more than $450. (Bankrate, like NextAdvisor, is owned by Red Ventures.) Next, we looked at J.D. Power’s 2020 U.S. Home Insurance Customer Satisfaction Study, and ruled out any companies that scored below 800 on a 1,000-point scale (the industry average was 842).

Finally, we looked at each insurance company’s A.M. Best rating, which evaluates a company’s financial standing. Financial solidity  matters for insurance companies because their customers depend on them to pay their claims if they’re in an accident or experience an insured loss. In other words, an insurance company that has the wherewithal to stay in business is more dependable in the long term. We ruled out any company that doesn’t have A.M. Best’s rating of A+ or higher. We also eliminated any companies that are involved in any active fraud investigations.