How to Save on Renters Insurance

One of the most effective ways to reduce the premiums of your renters insurance policy is to raise the policy's deductibles, but you should only do this if your emergency fund can cover a larger deductible.

A deductible is an amount that a policyholder must pay from their own account before an insurer will cover the cost of a claim. In the case of your renters insurance, the deductible determines how much you'll have to pay if your apartment is broken into or destroyed, or if someone files a liability lawsuit against you.

To see how a deductible works, consider a break-in where a thief steals $3,000 worth of television and stereo equipment. If your policy had a $250 deductible, you'd need to cover the first $250 of this loss yourself. Your policy would then give you $2,750 to cover the remaining value of your stolen equipment.

Since a deductible influences both how much an insurance company might have to pay on a claim and how likely you are to file a small claim, your policy's deductible directly impacts the premiums you pay. If you opt for a larger deductible, your premiums will go down. 

A larger deductible comes with additional risk, though, for you must pay more if you have to file a claim. Therefore, you should only use this strategy if you have enough in savings to pay a larger deductible in the event that you need to. If you don't, start saving up and raise your policy's deductible once you have more in your savings account.

The limits in your renters insurance policy stipulate the most that your policy will pay for a covered claim, and they also influence your policy's premiums. Since higher limits can result in bigger payouts, policies with large limits have higher premiums — and you can lower your premiums if you choose a lower limit.

Lower limits should be chosen with care, however, for some insurance claims can be extremely expensive. To lower your limits without taking on undue risk, lower only some of your policy's limits.

You may want to leave the limit for your personal liability coverage fairly high, for there's not an upper limit to how much a liability suit can cost. These can be exceedingly expensive after legal costs and a settlement are accounted for, so you should maintain as much liability coverage as possible.

The limit for your personal property coverage, in contrast, can safely be reduced to however much your belongings are worth. This limit applies to claims where your own stuff is damaged or destroyed, and your policy will only pay up to either the value of your things or your policy's limit — whichever is less. Thus, you don't need a limit that's higher than the value of your belongings.

If you own a car and need car insurance, you can save if you purchase car and renters insurance from the same company. Most carriers offer multi-policy discounts, and combining a renters policy and an auto policy is an easy way to get this discount.

Moreover, a multi-policy discount can result in substantial savings. In many cases, multi-policy discounts lower premiums of both policies by 15 to 25 percent.

If you need a renters insurance policy, contact Illinois Insurance Center to get a quote.