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By Paul Schrodt
Updated: May 4, 2020 2:53 PM ET | Originally published: March 25, 2020

Renters should always be prepared to upend their lives. That’s how renting works, especially when you’re on a month-to-month lease in your home.

But this upheaval doesn’t always come from an unexpected move to the other side of town. A fire, a break-in, or a malfunctioning appliance that floods your basement could destroy your valued belongings.

When this happens your landlord’s insurance will not replace your things. You’d need your own renters insurance policy for that.

Yes, renters coverage creates yet another monthly bill, but its benefits are hard to ignore.

5 Best Renters Insurance Companies

Here are the 5 top providers of the best renters insurance for 2020:

  1. Lemonade Insurance: Best Online Renters Insurance
  2. Progressive: Best Full Service Insurance Provider
  3. Amica: Best for Customer Service
  4. State Farm: Best for Local Agents
  5. Liberty Mutual: Best for Customizing Coverage

Lemonade Insurance

Finding the best renters coverage has become easier in our digital age. More modern online players like Jetty, Lemonade, and Goodcover allow consumers to streamline the process of finding and signing up for renters insurance.

SoFi certified financial planner Brian Walsh endorses Lemonade for its “insurance powered by artificial intelligence and behavioral economics.” The platform, available in 23 states, “uses bots instead of brokers and algorithms instead of paperwork to make insurance instant, simple, and easy to use. Lemonade specializes in homeowners insurance and renters insurance.

Check Availability in Your State & View Rates:

Lemonade has also designed insurance as a social good rather than a necessary evil. Lemonade takes a flat fee from paid premiums, uses the rest to pay customer claims, and then gives what’s left to charities. And, policyholders have some input into which charities benefit.

Progressive

Progressive has grown into a large, full-service insurance provider. Shoppers can customize their renters coverage, opting for policies with limits as low as $15,000 and as high as $500,000.

This insurer has customer service staff available 24/7, and you can file claims online. You can also customize your coverage online, too. As of now, you can’t manage your renters policy through Progressive’s mobile app, though.

You could manage your auto insurance policy through the app. You could also get a multi-policy discount if you already have Progressive’s car insurance coverage.

Renters insurance policyholders can get discounts for living in a gated community or paying your annual premiums in one installment. Unlike most companies, Progressive does not discount your premiums for living in a building with a sprinkler system.

Amica

Amica leads the way in customer service, and you don’t have to take our word for it. Amica’s own customers rated Amica the best at paying claims according to a 2020 J.D. Power study.

Premiums will be a little higher than Lemonade’s or Progressive’s, and Amica doesn’t have the flexibility in coverage other companies provide.

But you will get a straightforward, easy-to-understand policy that tells you exactly where you stand with what’s covered and what’s not.

State Farm

State Farm is a huge company with agents all over the country. If you’re the kind of shopper who likes to discuss coverage in person, you can most likely find an agent near you.

In fact, talking to an agent may be your best bet if you’d like to buy State Farm coverage. The company’s online content remains vague. State Farm does have 24/7 customer service and an app for filing claims. And the company has experience throughout the nation with personal property coverage.

Customer satisfaction varies from local agent to local agent, so go meet the agent in your neighborhood before buying a policy.

Liberty Mutual

Liberty Mutual claims to specialize in customized insurance so you won’t have to pay for coverage you don’t need.

In reality, Liberty Mutual’s customizations are typical for a large, national insurer, but the company’s web site does a good job letting customers see customizations in one place. You can also get a comprehensive look at Liberty Mutual’s discounts while shopping.

So you could save money on premiums with this company — and saving money makes many customers happier.

But, the company’s customers seem less happy after they’ve filed a claim. The National Association of Insurance Commissioners reports a high complaint ratio among Liberty Mutual’s existing customers.

Other Companies to Consider

  • Allstate: With offices nationwide and a wide variety of insurance products including renters insurance coverage, Allstate can help you save through bundling different types of coverage.
  • USAA: Military members and veterans can join USAA which provides quality coverage options for car insurance, renters insurance, and homeowners insurance. (USAA is also a leading mortgage lender.)
  • Erie Insurance: This company provides renters policies in only 12 states. But if you live in Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia or West Virginia (or Washington, D.C.) you can buy a policy. The company excels with financial strength and customer service.

Who Needs Renters Insurance?

“I say this as a renter who has renters insurance: Virtually every renter should have a renters insurance policy,” said Allison Kade, the editorial director at Fabric, a site, and app geared toward connecting parents with life insurance policies.

“Dollar for dollar, the cost given the benefit just feels extremely worthwhile,” Kade said. “It tends to be relatively inexpensive—my policies have typically hovered somewhere between $100 and $200 a year.”

That’s an average cost of $8 to $16 a month for coverage to replace about $30,000 worth of belongings if needed. Kade said her policies also paid for loss of use which means insurance can provide temporary accommodations if your apartment becomes uninhabitable. And, of course, the personal liability coverage built into a renters policy could be a game-changer after an accident.

“The cost of a few hundred bucks compared to tens of thousands of dollars if something were to happen to my place just feels very worth it to me,” she said.

Is Renters Insurance Worth It?

Other experts concur. Walsh, SoFi’s certified financial planner, is acutely aware of the scenarios for which renters insurance was devised.

Many policies include medical payments in case someone gets injured and you want to pay the doctor’s bill. Coverage options can also include identity theft protection built into your insurance premium.

“It’s worth having because, as with anything in life, things happen,” Walsh said. “You might leave the water on and flood your bathroom or forget to lock the door rushing when you’re late for work. For these everyday happenings alone, it’s worth it to have renters insurance, even if it just creates peace of mind.”

Everyone has his or her own needs and challenges. If you’re especially low on cash, you may decide against paying yet more money to an insurance company. But “the safety net of being insured is almost always worth it,” Walsh said.

If you’re on the fence about renters insurance, you may want to think about insurance, in general, to help you decide.

“Deciding if renters insurance is worth it is all about evaluating the parts of your available policies and determining what’s right for you,” said Lauren Silbert, vice president, and general manager of The Balance.

To help you decide, Silbert suggests inspecting:

  • The dollar amount of coverage (is it enough?)
  • Your potential deductible (can you afford it?)
  • The difference between actual cash value and replacement cost (do you have a lot of new stuff or older items?)
  • Where you live (is your area prone to vandalism or other property crimes?).

Anyone considering renters coverage should know exactly what kind of coverage they’re buying.

“If you would be devastated that personal property was damaged or stolen or want to make sure you’re protected against any liabilities, like someone hurting themselves in your apartment, then renters insurance is probably a good idea,” Silbert said.

Renters insurance can pay a claim not just to replace your burned-up books, but also in case a visitor gets injured in your home and needs medical attention. This personal liability protection can be valuable especially if you have children or pets.

How Much Should Renters Insurance Cost?

As with most kinds of insurance, renters premiums vary from location to location. Nationally, coverage averages about $200 a year, which balances out to about $16 a month. Coverage in your ZIP code could be a little higher or a little lower so you should get some insurance quotes to find your market range.

Location isn’t the only factor affecting insurance rates. While you can’t always control your location, you can exert some control over some of the other factors:

  • Amount of valuables coverage
  • Actual value vs. replacement value coverage
  • Personal liability levels
  • Your deductible
  • Optional add-ons

Let’s look at each of these factors individually to see how your decisions can impact the cost and the performance of your policy.

Amount of Coverage You Buy

It’s common sense: Buying more insurance coverage tends to cost more money. A policy with $100,000 in coverage should cost more than a policy with only $15,000 in coverage.

But you shouldn’t buy less coverage than you need just to save money. Doing this could cost you a lot if you lost valuable property or experienced property damage and your policy didn’t have enough coverage to replace it.

You should, however, avoid buying more coverage than you need. If you own only $20,000 in insurable property, a policy with $50,000 in coverage would be excessive. (If you ever decide to buy a home remember this philosophy when you get home insurance.)

Be careful of coverage caps per item, too. If your policy caps electronics at $10,000 and you have $20,000 worth of specialized computer equipment in your home office, you’ll need more specialized coverage.

Actual Value vs. Replacement Value

Insuring against the actual cash value of your property can save you money on premiums each month. But this kind of coverage limits your policy’s ability to perform.

With actual value coverage, your policy would replace your stuff based on what it’s worth right now — not what you paid for it.

Let’s say someone breaks in and steals your 7-year-old iMac which you paid $1,800 to buy when it was new. A computer that age may now be worth only $300 so your actual value coverage would pay you $300.

Replacement value coverage could pay you enough to replace your 7-year-old computer with a brand new computer. Replacement value coverage costs more, but you’ll also get more for your money.

Liability Coverage Protects You

Your renters policy should also include additional coverage such as personal liability. This coverage protects you in case someone gets injured on your property. This may seem unlikely, but you never know what might happen on any given day.

If your children had a friend over and the friend fell down the steps and broke his leg, you could be held responsible for the resulting medical bills. Or what if the delivery driver slipped on your icy front steps and your lease agreement stated you were responsible for keeping the steps clear?

These things don’t happen every day, but they do happen. Without enough liability protection, you could be held financially responsible. Worst-case scenario, a judge could order you to sell your other assets to pay up if your liability insurance couldn’t shield you from this.

Where to Set Your Deductible

Before your coverage will pay on a claim, you’ll have to meet your deductible. A higher deductible means you’ll pay more money to unlock your coverage in a given year. With a lower deductible, you’ll have less out-of-pocket responsibility.

Setting a higher deductible will decrease your premiums. If you’re budget conscious, raising your deductible will seem sensible enough. Don’t set the bar too high. Unless you can afford to pay your deductible you may never benefit from your coverage.

If you do set a high deductible, try to keep that amount of money set aside in a savings account. That way you’d have it if needed.

Discounts

Everybody loves getting discounts. Insurers talk about discounts a lot so they can attract customers. But discounts make a lot of sense for insurers as well as policyholders — especially discounts based on improvements to your home.

Many insurance products offer a discount if you have a home security system or a fire suppression system or even just enough smoke detectors. Others have gated-community discounts and new-roof discounts.

Almost all large insurers have bundled policy discounts — when you have more than one policy with the same company. Bundling makes the most sense when you have three policies with the same company.

And you can save a little by opting for electronic billing or for paying your annual premiums upfront.

On average, you could save a few percentage points each year through discounts. So don’t jump at coverage just because you qualify for a discount or two. Instead, pick the best coverage for your home and then see what kind of discounts you can mix in to save a little off the top.

Add-On Coverages

A standard renters policy won’t have the power to replace high value, rare, or collectible items. Memorabilia, rare books, jewelry, art, specialized photography equipment — you get the idea.

Often, the personal belongings most easily stolen or damaged items cost the most to replace. If you have these kinds of items in your home, be sure to check with your renters insurer or agent in advance to find out how well they’re covered.

Often, you’ll need to add-on special coverage to compensate for these kinds of items. You don’t want to wait until after your property gets damaged or destroyed to find out whether your policy will pay for a water backup that causes water damage to your personal belongings.

Of course, adding on extra line items in your coverage will add to your premiums.

When Will Renters Coverage Not Pay a Claim?

Each company has its own rules, and each policy has its own limits and exclusions. Be sure to find out in advance how your policy will perform.

Almost all policies have certain common-sense exclusions, such as:

  • Negligence: If you cause the damage to your property, don’t expect your renters policy to pay.
  • Earthquakes: Standard policies won’t cover damage from earthquakes but you could add-on special coverage if you’re concerned about this.
  • Floods: Renters insurance tends to exclude damage from floods. You can buy a separate flood insurance policy through the federal government if you need it.
  • Pet Damage: When pets damage your property, chances are your renters policy won’t pay.
  • Illegal Activity: If your property gets damaged or destroyed because you were using it to commit a crime, your renters policy won’t help you.
  • Improper Use: If you’ve turned your home into a coffee shop, or if you have extra roommates you didn’t report, your claim could be denied.

Should I Get Coverage With My Roommate?

You share the utility bill and the cable bill. And you share the rent, of course. So why not split the cost of renters insurance with your roommates?

You could do this in some states and with some insurance policies, but it has drawbacks: If you moved, you’d need to get a new policy. If you got a new roommate, you’d need to revise the coverage. Plus, after a break-in or accident, you’d have to negotiate how you’d split the claim money. That could get messy.

So we recommend having your very own coverage.

How Do I Find the Best Renters Insurance Company?

If you’re already a customer of an insurance company you can save money by getting renters insurance with the same company — assuming, of course, you like the company.

Any insurance company — whether you like it or not — deserves a good vetting. Kade, the executive with Fabric we interviewed, said customers who are curious about insurance companies should check their A.M. Best ratings.

A.M. Best grades insurance companies on their financial stability.

Kade says your coverage should hold up “as long as the insurer is credible, has good ratings, and the policy covers what you need at a price you can afford.”

“Those are my metrics,” she said. Your prized valuables may agree.

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