If you're renting a space, you may think that you have less to worry about when it comes to home maintenance compared to homeowners. However, as a renter, your personal property and even you yourself can still be at risk for theft, damage, or even injury from visitors. That's why it's always a smart choice to invest in renters insurance.
Unfortunately, it seems that these days, renters insurance premiums are on the rise. The Zebra has taken a closer look at the reasons behind this increase, the areas where renters insurance is becoming less affordable, and some additional coverage options to consider. They've also come up with some helpful strategies to keep those premiums under control.
So why exactly are renters insurance costs going up? According to the latest data from the Insurance Information Institute, the average cost of renters insurance in the United States is around $171 per year. While this is only a slight increase from previous years, it's worth noting that rates have actually decreased by 9% since 2013.
However, the average monthly premium for renters insurance, according to Gitnux, is currently $15, with Mississippi being the state with the highest average rates at around $252 per year. Furthermore, a 2024 report from the Federal Reserve Bank of Philadelphia found that there were more rental insurance policyholders experiencing year-over-year premium increases than those who reported decreases.
So what's causing this spike in renters insurance costs? It seems that a combination of factors are at play, including inflation, higher crime rates, increased coverage limits, and an increase in severe weather claims. In fact, the average property damage loss per renters insurance claim is estimated at a whopping $10,000. Lightning and fire claims are the most expensive, with an average cost of over $11,000 per claim, while theft accounts for nearly one-fifth of all renters insurance claims, according to Gitnux.
Maya-Rae Woods, an account manager with All Solutions Insurance Agency LLC, explains that factors such as higher crime rates, liability claims, and medical expenses all contribute to the rise in rates. Additionally, inflation and the increasing cost of household goods, such as electronics and furniture, have led insurers to adjust their coverage options and raise overall premiums. Dennis Shirshikov, a professor of finance and economics at City University of New York/Queens College, also points to higher construction costs, increased material prices, and a rise in theft claims in densely populated areas as contributing factors to the increase in renters insurance costs.
But it's not just these factors that are driving up the cost of renters insurance. According to Beth Swanson, an insurance analyst for TheZebra.com, renters insurance prices are going up for many of the same reasons why everything else in the economy feels more expensive. However, she notes that the good news is that renters insurance premiums have generally increased at a slower rate compared to homeowners or auto insurance, as renters policies typically start from a lower baseline cost.
Despite the increasing cost of renters insurance, The Zebra reports that only 55% of renters currently have a policy, which is significantly lower than the 95% of homeowners who have insurance. This means that there are still many renters who are leaving themselves and their belongings vulnerable to potential theft, damage, or other risks.
One major factor contributing to the rise in renters insurance costs is the impact of climate change. In 2024, 66.8% of renters insurance claims were attributed to natural disasters or weather events, according to the Federal Reserve Bank of Philadelphia. Rami Sneineh, vice president at Insurance Navy Brokers, explains that the increasing frequency and severity of hurricanes, floods, wildfires, and intense storms have elevated the expected payout of claims and increased exposure for insurers. As a result, many insurance companies have tightened their underwriting standards, increased premiums in high-risk areas, narrowed their coverage options, or requested higher rates from insurance regulators.
The impact of climate change has also made it unprofitable for some insurance carriers to operate in certain areas, resulting in a monopoly for one or two insurers in a particular county. This can leave renters with no choice but to pay higher premiums, as Maya-Rae Woods points out. And when it comes to the most expensive states for renters insurance, it's no surprise that those located in regions prone to extreme weather events top the list.
According to SoFi, the states with the highest annual renters insurance rates are Mississippi, Louisiana, Alabama, Oklahoma, Arkansas, Georgia, Texas, Tennessee, Alaska, and South Carolina. Michael Silverman, president and CEO of Silver Lining Insurance Agency, explains that the cost of renters insurance is similar to that of real estate, with location being a major factor in determining premiums. Cities and coastal areas, in particular, tend to have higher rates due to a higher risk of claims caused by crime or natural disasters.
But even within the same city, the cost of renters insurance can vary significantly based on ZIP code. Insurers consider factors such as historical loss data, population density, crime rates, and even the proximity to fire response services when determining premiums. This means that renters living just a few blocks away from each other could be paying vastly different rates for their insurance.
In conclusion, while renters insurance costs may be on the rise, there are still ways to keep those premiums affordable. By understanding the factors that contribute to the increase in rates and taking steps to mitigate the risks, renters can protect themselves and their belongings without breaking the bank. And with the increasing frequency and severity of climate-related events, having renters insurance is becoming more important than ever before.
If you're leasing a space, you may feel like you have less to worry about when it comes to home maintenance compared to homeowners. But don't let that sense of security lull you into a false sense of protection. As a renter, you and your personal belongings are just as vulnerable to theft, damage, and even visitor injuries. That's why it's important to consider purchasing renters insurance.
Unfortunately, in recent years, renters insurance premiums have been on the rise. The Zebra, a leading insurance comparison site, has delved into the reasons behind this trend, the areas where renters insurance is most expensive, and some additional coverage options to consider. But don't worry, they've also provided some helpful strategies to keep those premiums affordable.
So why exactly are renters insurance costs increasing? According to the Insurance Information Institute, the average annual cost of renters insurance in the US is now around $171. While this may only be a slight increase from the previous year, it's worth noting that rates have actually decreased by 9% since 2013.
However, the average monthly premium is still around $15, with Mississippi having the highest average renters insurance rates at approximately $252 per year, according to the insurance comparison site, Gitnux. Additionally, a 2024 report by the Federal Reserve Bank of Philadelphia found that more rental insurance policyholders have experienced increases in premiums rather than decreases.
There are a few factors contributing to these rising costs. Inflation, increased crime rates, higher coverage limits, and severe weather claims all play a role. To put it into perspective, the average property damage loss per renters insurance claim is estimated at $10,000. Not to mention, lightning and fire claims are the most expensive, averaging over $11,000 per claim. And did you know that theft makes up almost 1 out of 5 renters insurance claims?
Maya-Rae Woods, an account manager with All Solutions Insurance Agency LLC, sheds some light on the situation. "Higher local crime rates, liability claims, and medical expenses all contribute to higher rates, as does inflation and personal property values," she explains. "The cost of household goods, from electronics to furniture, has increased, leading insurers to adjust the contents coverage and raise overall premiums."
Dennis Shirshikov, a professor of finance and economics at City University of New York/Queens College, also adds to the discussion by pointing out other factors such as higher construction labor costs, steeper replacement material prices, increases in theft claims in densely populated urban areas, and elevated liability payouts. He also mentions that insurers have adjusted premiums to offset the cost of reinsurance, which has increased due to recent catastrophic events.
But it's not all bad news. According to Beth Swanson, an insurance analyst for TheZebra.com, the good news is that the increases in renters insurance premiums have been smaller compared to homeowners or auto insurance. This is because renters policies start from a lower baseline cost.
Even with this information, it's surprising to learn that only 55% of renters currently have a renters insurance policy, which equates to around 61 million people. This is in stark contrast to the 95% of homeowners who have insurance for their properties, according to The Zebra.
One major factor contributing to the rise in renters insurance costs is the changing climate and its associated risks. Among those who filed renters insurance claims in 2024, 66.8% attributed their claims to natural disasters or weather events, as reported by the Federal Reserve Bank of Philadelphia.
Rami Sneineh, vice president at Insurance Navy Brokers, explains, "The increasing frequency and severity of hurricanes, floods, wildfires, and intense storms elevate the payout of expected claims and increase exposure. As a result, many insurers have tightened underwriting, increased premiums in exposed ZIP codes, narrowed coverages, or requested increased rates among insurance regulators."
These amplified climate risks have made it unprofitable for carriers to operate in certain areas, leaving renters to pay higher premiums. "This results in one or two insurers with a monopoly over an entire county at times, leaving renters to pay higher premiums," Woods adds.
So where exactly is renters insurance most expensive? According to SoFi, here's a quick breakdown based on their latest findings:
- Mississippi: $262 per year
- Louisiana: $243
- Alabama: $219
- Oklahoma: $216
- Arkansas: $205
- Georgia: $205
- Texas: $199
- Tennessee: $187
- Alaska: $186
- South Carolina: $186
Michael Silverman, president/CEO of Silver Lining Insurance Agency, explains that the cost of renters insurance is similar to real estate and can vary based on location. "Cities are traditionally more expensive for insurance due to higher crime rates and claims exposure. Coastal locations are also higher in premiums, or at times, not available due to potential claims caused by various storms," he says.
The Southern states tend to have some of the most expensive renters insurance rates in the country, with Mississippi, Louisiana, and Georgia being the main culprits. And in Detroit, renters are unfortunately paying three times more, or 260% higher than the national average. "Not only does Detroit deal with multiple climate hazards, but also a significant number of fire incidents and elevated crime rates," Woods notes.
It's worth mentioning that even within the same city, there can be a substantial difference in premiums based on ZIP code. This is because insurers take into account historical loss data, population density, crime patterns, and even proximity to fire response services when calculating premiums.
So while renters insurance costs may be on the rise, it's important to understand the reasons behind it and take steps to protect yourself and your belongings. Consider purchasing renters insurance, explore additional coverage options, and be mindful of your location when looking for an affordable policy.
