How to Save Money on Your Renters Insurance

Many people are surprised to learn that their landlord’s insurance does not cover their personal possessions if there is a fire, flood, or other natural disaster. If you want coverage, you need to purchase renter’s insurance. Renters insurance is already fairly inexpensive, since you’re not insuring the building itself, but if you’re worried about the cost, you can use these three steps to save money.

Step One: Switch to “actual cash value.”

Many insurance policies give you coverage for replacement costs. If your possessions are damaged or stolen, your insurance will cover the entire cost to replace these items. However, by switching to “actual cash value” instead, you’ll receive the depreciated value if you place a claim. Since the company will pay out less, your policy will be less expensive – but keep in mind that it means covering more of the cost yourself.

Step Two: Boost your deductible.

Your policy’s deductible is the amount you have to pay yourself before the insurance policy starts paying out. This is similar to an auto insurance deductible. The higher your deductible, the lower your annual cost for insurance will be, but again, keep in mind that it means covering more of the cost yourself. Make sure you can afford whatever deductible you choose.

Step Three: Install “safety items.”

If your home is safer, the insurance company is less likely to receive a claim for you. You’ll receive a discount since you’re a lower risk. Safety items include things you can add to your home, such as fire extinguishers, as well as items your landlord has to install, like burglar alarms and deadbolts. If you talk to your landlord about it, he or she will often agree to install these items, since it typically means that their insurance rates will go down as well. Many states require that landlords install certain safety items (like fire alarms) anyway, so often it is simply a matter of telling your insurance company that you have these items.

The best way to save money on your renters insurance? Shop around. Many people can find policies for less than $100 annually simply by comparing rates.