If you own your home, your homeowners' insurance protects your home and your possessions in the event of an emergency, but if you rent your residence, you need renters insurance to protect your belongings. The average cost of renters insurance depends on the value of your possessions and the kind of insurance you choose.
Identification
Renters insurance is a form of insurance. Simply put, you pay a monthly or annual premium to your insurance company, and in return, it will cover an agreed-upon portion of the costs of replacing or repairing your belongings if your home is damaged or otherwise compromised. According to the Independent Insurance Agents & Brokers of America (IIABA), the average cost for renters insurance in the United States is $12 per month as of January 2010.
Significance
The IIABA estimate of $12 per month is based on property coverage of $30,000 and liability coverage (which protects your family if someone is injured at your home) of $100,000. Renters insurance can cost as little as $10 per month, depending on your coverage, and of course can also cost more.
Considerations
The cost of your renters insurance varies depending on several factors. The lower your deductible--the amount of money you pay out of pocket before your insurance takes over--the higher your monthly premiums will be. The higher the cost of replacing your possessions would be, the higher your monthly premium is likely to be. Some parts of the country have higher renters insurance costs than others; for instance, areas with high crime statistics may have higher renters insurance costs than places with low crime.
Types
There are two basic types of renters insurance, according to an online discussion with the Insurance Information Institute presented by the U.S. Small Business Association, and which type you choose affects the cost of your renters insurance. If you choose cash value insurance, your monthly payments will probably be lower, but your insurance will only reimburse you for the actual value of your belongings, not the price it would cost to replace them. Replacement cost, on the other hand, offers protection at the cost it would take to buy new versions of your current possessions, but it usually comes with higher monthly premiums.
Warning
In a survey, the IIABA found 64.6 percent of people renting their homes--roughly two-thirds of all renters--did not have renters insurance to protect their belongings. A landlord's insurance protects the property, but it doesn't offer coverage for a renter's possessions.
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