According to a Pew Research Center study, more Americans are now renting than at any point in the past 50 years. As of 2016, more than 43 million household heads were renters, compared to 21 million in 1965.
As the number of renters has increased, it appears the number of property managers and landlords requiring renters insurance has gone up as well. A majority of property managers now require tenants to purchase renters insurance. In fact, around 84% of property managers require renters insurance at some or all of their properties. And many will not let you finalize the lease and move in until you show proof of an active renters insurance policy.
There are many routes renters can take to acquire renters insurance. Larger management companies often work with niche insurers to sell renters coverage directly to their tenants. However, your property manager's preferred option may not have the coverage you need or the best prices, meaning it's not the best option for you. In many cases, it may be best to shop around for your own renters insurance provider.
Why Do Property Managers Require Renters Insurance?
The main reason a landlord or management company may require renters insurance is to protect your landlord from liability in certain situations. For example, if a guest slips and falls while in your apartment, they may want to file a liability claim against you. But if you don't have coverage, the guest may try to make a claim against the landlord's liability policy instead. So it's in the landlord's interest for you to be protected.
Under most circumstances, your property manager or landlord will cover the costs of repairing your apartment's structure or fixtures, like the stove, if they are damaged. But when it comes to your personal property, you are generally responsible for repairing or replacing it unless the landlord's negligence led to your loss.
Some property management companies that require renters insurance partner with services like eRenterPlan and ePremium to automatically offer tenants coverage when they sign the lease. For renters, this is an easy option, as it's often straightforward to sign up through the rental company. It also takes some of the guesswork out of the process, as you won't have to worry about whether the insurance you purchase will be approved by your property management company or landlord.
However, these options are often more expensive and limited in coverage. Purchasing your own renters insurance from a separate insurance provider will likely save you money and present you with far more options.
Why You Should Purchase Your Own Renters Insurance
Shopping around takes a bit of effort, but it's almost always the best option in the long run. Here are a few key reasons why you should consider shopping around before purchasing a policy.
1] You can save money. The single best reason to find your own renters insurance policy is that you can save money by going with your own option. The average cost of renters insurance in the U.S. is just $187 per year. That average can vary by state or region, but keep that average in mind as you shop around. If you're seeing much higher rates from your property management company's preferred option, you may be not be getting the best deal.
For example, eRenterPlan's average annual premium in New York City is $251. This is lower than some other options, such as Homesite ($493) or Liberty Mutual ($364), but more expensive than insurance offered through State Farm ($125) or Allstate ($231). Shopping around could help renters explore the cheaper options available to them.
This is also important because your landlord will likely require you to have a minimum amount of coverage. With those minimums in mind, you'll want to find as good a deal as possible.
2] Outside insurance providers may offer better coverage. If your property management company has partnered with a renters insurance provider, it may not have the right kind of coverage for you. For example, the insurance provider may have a coverage limit that is lower than what you need to cover your potential losses. Or, the company might not provide a certain coverage that you need, such as for valuable jewelry. Rather than purchasing a second renters insurance policy, it's probably better to find a provider that has the right policies to help cover the value of your property.
3] You may be able to find a more reputable or higher-rated provider. Even if the renters insurance company working with your landlord is offering you a competitive rate, saving money at the cost of a poorly rated provider may not be the best option. Before going with your property management company's insurance provider, take some time to review the provider's ratings and compare them to other available insurers.
It's important to consider both the cost of the insurance and trustworthiness of the insurance provider. If your property manager's provider has a poor rating, you may want to shop around until you find a renters insurance provider you can trust. It's also possible your landlord's insurance provider has good customer reviews, but you won't know if it's worth the cost until you compare it with other options.
Some of the providers who partner with property management companies have poor customer ratings. Both ePremium and eRenterPlan consistently receive negative reviews, for example, compared to other options such as Progressive or Allstate.
4] You may be able to get a discount by bundling. Many car insurance providers also offer renters insurance at very low rates and will bundle policies together for a discount. Both Allstate and Progressive customers, for example, can get discounts if they bundle car insurance with renters insurance.
These bundling options are a good option if you need multiple insurance policies. It can cut down on the extra paperwork and account management on your part. And your insurance provider will roll all of your payments together, so you won't have to keep track of multiple monthly payments.
5] There's no downside to shopping around. Your landlord can't force you to purchase renters insurance through a specific insurance provider. Plus, getting quotes from a few other companies is free and only takes a few minutes. If you find a different insurer that's cheaper or simply works better for you, your landlord must accept it so long as it's a legitimate company and meets the minimum coverage requirements.
Chances are good that your next rental, especially if you live in a larger apartment complex, will require you to purchase renters insurance before you can finalize your lease.
If your property management company or landlord has an insurance provider they've partnered with, consider shopping around for a better price or a better-rated service before you make a commitment.
Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.
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