Deductible For Renters Insurance - One of the main decisions you'll make when choosing your renter's insurance policy is choosing the right deductible. A deductible is the amount of money you'll pay out of pocket when you file a claim under your renter's insurance policy.
A higher renters insurance deductible will lower the price of regular payments to your insurer, but will force you to pay a larger portion of your claims.
Deductible For Renters Insurance
Choosing the right deductible for your renter's insurance requires a balance between what you're willing to pay in premiums and what you'll be required to pay if you file a claim.
How Much Is Renters Insurance And What Does It Cover?
Renters insurance generally covers damage to or theft of your personal property, personal liability costs and living expenses associated with being temporarily out of your home. If you've bought another type of insurance policy before - whether it's health insurance or auto insurance, for example - you've probably found an insurance discount.
A renter's insurance deductible basically works the same way: it's the portion of money you'll have to pay out of pocket when you file a claim with your insurance company. In the case of renters insurance, the deductible usually only applies to damage or theft of your personal property.
For example, suppose a fire in your residence results in significant damage to your personal belongings and you file a claim for $10,000. If your renter's policy has a $1,000 deductible, you will pay $1,000 of the claim and your insurance company will pay the remaining $9,000, assuming the cause of the fire is covered by your policy. This discount will apply each time you submit a claim. If another fire broke out in your home, this time resulting in $5,000 in damages, you would again pay $1,000, while the renter's insurance company would pay the remaining $4,000.
The size of your deductible is a choice you make when you purchase a renter's insurance policy. A lower deductible means your claims will cost less out of pocket.
Rentspree Partners With Sure
Typically, renters insurance deductibles will be $500 or $1,000, but insurance companies often offer a variety of options. For example, State Farm offers renters insurance discounts of up to $2,000, while Lemonade Insurance Co. offers a specialty renter's insurance policy with a $0 deductible. Discounts may also be offered as a percentage of your policy's property coverage. For example, if your total personal property coverage is $10,000, a policy fee deductible set at a rate of 10% means you will have a $1,000 deductible.
The main consideration you need to make when choosing your deductible is the trade-off between the benefits of a lower deductible versus the higher premium you'll pay for it. The policy premium is the price you pay for insurance coverage and is inversely related to the deductible. The lower the deductible, the higher your premium - because your insurer will pay more if you file a claim.
Basically, by paying more premiums, you reduce the uncertain costs associated with being able to file a claim.
For example, let's say you get a quote for a renter's insurance policy with $25,000 in personal property coverage for an annual premium of $240, including a $500 deductible (Plan A). However, your insurance agent tells you that for an annual premium of $276 you can buy the same policy but with a $250 deductible (Plan B). Plan B will cost you $250 less each time you file a claim, so you'll pay an extra $36 per year to save $250 per claim.
Mistakes People Make With Renters Insurance And How To Avoid Them
However, if you never make a claim, your deductible will only matter to the extent that it affects the cost of your premium. In other words, if you pay higher premiums for a lower deductible but don't use the deductible, you won't get the benefits of your more expensive policy.
The table below estimates your cost for the first year of these two hypothetical policies, assuming you file zero claims or a $1,000 claim:
As you can see, making a single $1,000 claim would result in over $200 in savings on the most expensive premium plan, Plan B. Your net savings would increase with each claim you make, given the difference from $250 in rebates. On the other hand, if no claims are made, the total cost of Plan A is cheaper.
You should be aware, however, that the premiums you pay to your renter's insurer are not static. Making multiple claims, or even a single claim, can cause your insurer to label you as a high-risk customer and, as a result, raise your premium. Renters insurers generally give their customers more leeway for events beyond their control, such as weather, but other catastrophes or "perils" can affect premiums.
What Is Renters Insurance? A Comprehensive Guide To Coverage
Let's say you chose the plan with a cheaper premium in the previous example, choosing a $500 deductible to save $36 a year. In a stroke of bad luck, you have two separate plumbing incidents in one year and make separate claims to cover water damage from each event. If your insurer raises your $240 premium by 15% in response to these claims, you'll end up paying the same premium, $276, as the most expensive plan, but with a higher deductible.
Regardless of which discount you choose, multiple claims have the potential to increase your premiums, but it's important to remember that the premiums you pay can vary. On the other hand, there are often rewards from your insurer for being a lower-risk customer: if you go a few years without making a renter's insurance claim, you may be eligible for a discount on your policy premium.
For this reason, we recommend that you do not make small claims that you can pay out of pocket. If a fire in your apartment results in only $600 in damage and you have a $500 deductible, it may be worth paying the full $600 in replacement and repairs to avoid future premium increases. Claiming renters insurance may save you $100s in the short term, but it hurts you in premium costs down the road, especially if other unexpected events cause you to file even more claims.
Your best deductible choice will be based on your risk preferences, but as a general rule, increasing your renter's insurance deductible will result in cheaper premiums.
What Is Renter's Insurance And What Does It Cover?
Under this policy, doubling your deductible from $250 to $500 lowers your annual premium by $36 or 13%. Doubling to $1,000 lowers the annual premium by an additional $12, or 5% less than the cost of the $500 deductible policy. This is just one example and your renter's insurance costs may actually be less depending on the coverage, insurer, location and property insured.
For renters insurance policies, the savings you get from a higher deductible may be minimal, and we recommend choosing a lower deductible plan when possible, given the potential cost of filing a claim. Overall, the decision you make will be up to you, but be sure to consider the trade-off between short-term and long-term costs, given the potential for unexpected events and subsequent claims.
Rates are based on an Allstate policy with $25,000 personal property damage or theft and $100,000 personal liability.
To get an insurance quote over the phone, call: (855) 596-3655 | Agents available 24 hours a day, 7 days a week! Advertiser Disclosure: This article contains references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to these products or services.
What Is Renters Insurance And What Does It Cover?
Disclosure: We review our surveys, ratings and reviews using strict editorial integrity. In full transparency, this site may receive compensation from listing partners through affiliate partnerships, although this does not affect our rankings. Learn more about how we make money by visiting our contact with advertisers.
I never used renters insurance before moving west to the bay area. In my opinion, my several years of renting never saw me own assets worth more than you would get if you trashed them.
However, times change and so do the demands of homeowners. Having been with my wife for almost half a decade, we have purposefully purchased several more valuable possessions that we would like to improve the quality of our lives. Some of them have even reached the level of needing to be replaced if an unfortunate loss event occurs.
Granted, I wouldn't be powerless to lose them, but I'd certainly like to be able to recoup whatever losses we have in our material possessions. It's like I always say, "I don't necessarily want to go to prom, but I'd appreciate an invitation."
Does Renters Insurance Cover Theft?
When we moved into our current apartment, our new landlord required us to obtain renter's insurance and name him as an interested party. I admit I didn't understand the deal at the time, but after a quick read online I discovered this is a very common requirement for apartment complexes.
When
What is a deductible for renters insurance, what is a good deductible for renters insurance, renters insurance tax deductible, usaa renters insurance deductible, is renters insurance tax deductible, what is a deductible renters insurance, lemonade renters insurance deductible, renters insurance deductible meaning, low deductible renters insurance, what is a deductible in renters insurance, geico renters insurance deductible, what is deductible in renters insurance
0 Comments