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Should You Have A $100 or $500 Renters Insurance Deductible?

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 | February 7, 2019
Renters insurance deductible

While renters make up the majority of the American population, only one-third of U.S. renters actually carry renter’s insurance, according to III. But renters are actually at a higher risk for loss and damage than homeowners! So nearly two-thirds of renters are in a position to get stuck paying exorbitant expenses out of pocket because they’re aren’t properly protected with renters insurance.

The average cost of renters insurance is only $185 per year. At around $15.42 per month (equal to about 6 grande coffees from Starbucks…), that price could be well worth it to have peace of mind in the case of disaster in the form of a renters insurance policy.

Determine if you need renters insurance here.

A lot of renters want to figure out how to pay the lowest premiums while still getting full coverage for their personal property. One easy way to help lower your renters insurance costs is by setting your deductible higher. The deductible directly impacts how much you pay monthly versus how much you’d pay out in the case of a claim.

So what should your renter’s insurance deductible look like? We give you the specifics of selecting your deductible below!

What is a renters insurance deductible?

A deductible is the amount you are responsible for paying out of pocket in the case of a claim. You pay the deductible first, and then the insurance company steps in to pay the remainder of the cost of the claim.

For example, you have a $500 deductible. You have $3,000 worth of water damage in your rented home (that you, not your landlord, are responsible for). You would be responsible to pay for $500, and your insurer would pay you for the remaining $2,500 (up to your coverage limits).

The deductible usually only applies to property damage and loss, not to the liability portion of your renters insurance. See what renters’ insurance will cover here. (Renters’ insurance usually doesn’t cover flood, but you should consider flood insurance anyway!)

Why do insurance companies have deductibles?

The purpose of an insurance deductible is to share risk between the company and the policyholder. It makes sure you have responsibility, so you have to pay something yourself in the case of a claim.

This reduces the frequency of small claims, because the insurance company won’t pay out unless it’s above your deductible amount. It also helps reduce the risk of insurance fraud, because people are less likely to commit fraud if they have to put their own money in for the claim as well.

How much should my deductible be?

The average renters insurance deductible ranges from $500 to $2,000, but some insurance companies will go as low as $100 or even $0 deductibles for renters. This usually depends on the company and how they calculate deductibles.

Most renters insurance carriers have a dollar amount deductible, meaning they’ll work with you to set a specific amount, like $500. Some will offer a percentage of your policy’s property coverage. For example, if your personal property coverage is $5,000, and your deductible rate is 10%, then you would have a $500 deductible. If you raise your personal property coverage to $10,000, you’d have a $1,000 deductible.

Though your insurance carrier may have a minimum deductible, you usually have the option to raise your deductible. An insurance advisor can help you determine what kind of deductible makes sense for you, give one a call today at (877) 469-5447.

Read: It’s My First Time Buying Renters Insurance, Where Do I Start?

Should I raise my renters insurance deductible?

Why would someone raise their renters insurance deductible? Because a higher deductible means a lower premium. A premium is the monthly cost to your insurance company to pay for your policy.

You want to talk to an insurance advisor about the relationship between your deductible and premium. Some insurance companies offer major premium discounts for raising your renters deductible, while others have a smaller boost. Call an expert InsuraMatch advisor today at (877) 469-5447.

Let’s say that you’ve raised your deductible from $500 to $1,000 in order to save on your premiums. But with Carrier A, this only saves you $10 per year on your renters’ cost. That means it would take you 50 years to make up the difference in the $500 deductible that you would have to pay if a loss occurred.

But let’s say with Carrier B, this deductible increase saves you $10 per month on your renters’ cost. That means it would take 50 months to make up the difference, which is just over four years. This might be worth it to you if you rent your home for more than that time period. 

There’s an important distinction between renters and homeowners insurance when it comes to raising a deductible. Raising your homeowners’ deductible usually offers more significant savings on premiums, because the overall cost of insurance is higher. But renters insurance is usually much less expensive, so higher deductibles usually won’t shift the cost of premiums that much.

It’s also important to note that premiums aren’t static. If you make a claim, your monthly premium will usually go up. After just one or two claims, your premium could be even higher than it would be even if you had a lower deductible.

So, what’s the solution?

Ask your insurance agent for the numbers before you raise your renters insurance deductible. How much would you pay in deductible versus premium? How much would you pay monthly if your deductible were $100, $500, or $1,000?

Then, do the math. How much are you saving each month by raising your deductible, and at what point do you breakeven on these savings?

Still not sure how to balance your renters’ insurance deductible versus premiums? No worries! We’ve got you covered.

Call an InsuraMatch insurance advisor and we’ll do the math for you. We work to bring you the greatest coverage, at the lowest cost, with the best short-term and long-term savings. Give us a call today at (877) 469-5447.


Review your renters insurance needs with an expert insurance advisor today by calling (877) 469-5447.

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