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Where you live can impact which providers are available and how much coverage will cost. Requesting quotes with your ZIP code is the best way to compare providers in your area.
Comparing Renters Insurance Quotes
Just like your rent, the cost of your renters insurance can vary widely depending on the company that sells it. Why is that? Because every company evaluates price a little differently. Even though they consider many of the same factors (which we’ll explain below), each insurer uses a different formula to decide how “risky” those factors make you. Simply put: The more risk you pose, the more you’ll pay for your insurance.
Since each insurance company uses its own underwriting formula to set rates, it’s important to look at a few different quotes before you buy if you want to get the best rate. Checking estimates tailored to you is the only way to know for sure which company can offer you the best deal on your renters insurance.
Factors That Affect Renters Insurance Rates
Insurance companies consider a wide variety of factors when they’re setting renters insurance rates. The five listed below generally have the biggest effect on your premium.
Your address plays a huge role in your renters insurance rate. To understand why, it helps to understand what “risk” means to an insurance company.
In short, your risk level is the likelihood you’re going to end up filing a claim at some point. If that likelihood is high, your insurer will charge higher premiums, because there’s a better chance they’ll have to cut you a check in the future.
Circling back around, it’s easy to see how your address could affect your risk level. Apartment dwellers in high-crime areas are more likely to file claims for theft; people renting apartments in northern states might file for damages caused by frozen pipes; those in California might face damages from wildfires, and so on.
Insurance companies even consider location at a micro-level. For instance, an apartment near a fire station might have cheaper insurance rates than one a few blocks away, because response times will be faster in the event of an emergency.
Your Insurance History
What else looks “risky” to a renters insurance company? People with a claims history, for one. Unfortunately, data shows people who have filed claims in the past are more likely to do so in the future. And that doesn’t just include renters insurance.
Companies will actually look at your seven-year insurance report to see if you’ve filed any claims before; be they renters, homeowners, or auto. Normally claims will count against you if they occurred within the last three years.
There’s not a lot you can do to change the fact that you’ve filed a claim — but it helps to know they’re taken into account if your quotes are coming back higher than expected.
Your Credit Score
In the same vein as your claims history, insurance providers will look at your credit score when you apply for renters insurance (or any other line of insurance, for that matter). Studies have shown people with higher credit scores are less likely to file insurance claims — and vice versa — and insurers set rates accordingly.
If you know you’re going to be moving apartments within the next few months, it’s worth getting your credit into shape so you qualify for lower insurance rates. Pay utilities on time, keep up with student loan payments if you have them, and get that credit card balance down to zero if you’re able to.
This rule applies to every type of insurance, but: The more coverage you buy, the more your policy costs. If you opt for higher levels of protection on your renters insurance — meaning you’d get a bigger payout in a worst-case scenario — your premiums are bound to be higher.
That said, upping coverage levels tends to be less expensive than many people expect. And since renters insurance is so affordable (often less than $20 per month), it’s worth pricing out different coverage levels to make sure you’re getting strong protection within your budget.
You might have heard that a higher deductible gets you cheaper rates on your car insurance. Well, the same goes for renters. Any time you select a bigger deductible (say, jumping from $500 to $1,000), you’re taking a bit of risk off your insurer’s shoulders. They wouldn’t have to pay quite as much on claims you file, and they’ll reward you with lower rates for it.
Just remember that you must pay your deductible in full before the insurance company will chip in on any claim. Would paying $1,000 out of pocket be a big hit to your bank account after an incident? If so, it’s likely not worth putting yourself at financial risk just to save a few bucks each month on your renters insurance.