What is a Deductible for Renters’ Insurance and When Does it Apply?

What is a Deductible for Renters’ Insurance and When Does it Apply?

Unfortunately, if you are renting an apartment, your landlord’s insurance will likely only shoulder the costs of repairs in the event of a fire, flood, earthquake, or another disaster.

Taking out a separate renters’ insurance shields you from the financial cost of theft or damage to your personal property. One of the considerations when choosing which type of renters’ insurance suits you is how much the renters’ insurance deductible will be.

This article discusses what a deductible for renters’ insurance is, when it applies, and how a renters’ insurance deductible affects your premiums.

Renters’ Insurance Deductible Explained

What is a deductible in renters’ insurance? A deductible is a specific amount of money that you agree to pay out of pocket when you file a renters’ insurance claim for whatever reason.

Let’s assume your rented property has been damaged by a fire. If your insurance provider calculated an insured loss of $10,000, and your policy specifies a $1,000 deductible, the insurer will issue a claims check worth $9,000.

Unlike insurance for owned homes, which presents a deductible in percentage form, renters’ deductibles are usually specified in dollar amounts. You can decide whether or not you want to apply a deductible clause to the Declarations page of your renters’ insurance policy and how much you want to allocate as deductible before signing an agreement with your insurance provider.

Average Renters’ Insurance Deductible

The amount of your deductible is your choice, though most insurance agencies offer between $500 and $2,000. Your provider will present you with a range of options. Generally speaking, the higher your deductible, the lower you will likely pay for your premiums.

How the Deductible Affects Premiums

renters insurance deductible explained

Renters’ insurance premiums depend on how many personal assets you need to have insured. According to NerdWallet, the average cost of renters’ insurance in the U.S. is $168 per year or around $14 per month. This computation is based on a policy that has a $30,000 personal property coverage, $100,000 liability coverage, and $500 deductible.

Adding a renters’ deductible insurance to your plan affects premium rates because they are inversely correlated. The lower the deductible amount you choose, the higher your premium will be. This means that the insurance provider will pay more should you make a claim in the future. Essentially, paying more in premiums shields you from the uncertain costs, which can go well beyond the price of your entire policy.

On the other hand, if you don’t make a claim (and let’s hope you never have to), then you don’t get to use your deductible at all. You also won’t receive the benefits of paying for a more expensive renters’ insurance plan.

When a Renters’ Insurance Deductible is Useful

Adding a renters’ insurance deductible to your plan is beneficial if the cost of the assets that have been stolen or damaged is high. If you’re paying $25 per month for a policy that has a $500 deductible, and your insured loss is declared at $10,000, then you stand to receive more in claims. In addition, the peace of mind you enjoy from knowing that your personal belongings are covered should something happen is priceless.

Insurance experts caution against filing for multiple claims, however, as this could increase the price of your premiums when the insurance provider starts classifying you as “high risk.” For example, suppose you’ve had three incidents in a year and have filed for as many claims, and your renter’s deductible was set at just $500, your insurance provider could see this as a red flag and charge you higher premiums in the future. With that said, if the cost of the damage is just around $600, it might make better sense to just pay for it yourself and avoid being flagged.

Need Reliable and Affordable Renters’ Insurance? Insura Can Help

When it comes to deciding on which type of renters’ insurance you need and how much to set for your renters’ deductible, it’s best to consult a trusted provider with a proven track record of helping renters and property owners get the most protection for the best price.

We understand the financial and sentimental value attached to personal assets. Our friendly agents at Insura can help you find the most suitable policy according to your specifications and budget. Contact our team now so we can create a customized plan for you.

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