13 Ways to Save on Renters Insurance

Why do only 37 percent of renters have a renters insurance policy while 95 percent of homeowners have a homeowners policy? Partially because of misinformation, suggests a poll from the Insurance Information Institute, which found that some people believe their personal property is covered by the landlord's insurance or that renters insurance is expensive. Neither is true. A landlord's insurance covers only the building, and on average a renters insurance policy costs $187 annually.

If that still seems like too much, the following tips can help decrease premiums -- although there's one coverage type that renters may not want to scrimp on.

Just like auto and health insurance, renters policies have a deductible that must be paid by the policyholder before an insurance company covers a claim. Higher deductibles result in lower premiums, but policyholders must really be prepared to pay the deductible.

Many policies have a coverage limit -- the total amount paid when there's a claim. Decreasing this amount will also reduce premiums, but the limit should be at least enough to cover the cost of replacing all personal property.

It's in everyone's interest to keep a fire from destroying property. Keep a fire extinguisher in the closet and replace the batteries on the smoke detector to get a discount. A building with sprinklers counts toward lower premiums as well.

Preventing break-ins is another win-win for insurers and the insured. Install deadbolts, window locks, or a security system and save on premiums -- and avoid the need to make a claim.

Many insurers offer discounts to customers who buy multiple policies. For example, Nationwide offers up to 20 percent off to renters who also have an auto insurance policy with the company.

Paying for an entire year in advance often brings a discount -- or, rather, avoids an extra charge that accompanies many monthly bills. When necessary, it's possible to cancel the policy and get a refund for the portion of the year the policy isn't used.

Those who can't afford to pay for a year in advance can still get a discount by signing up for paperless billing or automatic payments.

Accidents happen; that's why people buy insurance, after all. But people who haven't had a claim in recent years can get a significant discount on renters insurance; Allstate and Nationwide offer up to 20 percent off.

Some insurers offer discounted rates to members of specific business or professional groups. Farmers Insurance, for instance, offers discounts to dentists, doctors, nurses, teachers, firefighters, and police officers. Liberty Mutual has similar discounts for members or employees of more than 14,000 different groups, including non-professional organizations such as credit unions or alumni associations.

Shopping for a rate quote can result in savings with no change in coverage because most insurance companies use different formulas to determine premiums. Requesting a quote and switching providers before the current policy expires is usually the best way to save. Some companies also offer discounts to customers who stay with them year after year, though.

Quitting smoking can save money in multiple ways. Not only are cigarettes expensive, but because smoking leads to thousands of fires each year, smokers also pay higher life, health, and renters or homeowners insurance premiums.

Retirees may get a discount on their renters insurance policy because they are more likely to be home throughout the day and can keep an eye on things -- detecting odd odors such as gas and possibly preventing disasters. Allstate offers up to 25 percent off to those who are at least 55 years old and aren't seeking full-time employment.

Many insurance policies automatically cover policyholder's relatives who live in the same home, but it may also be possible to share a policy with a roommate. Some providers charge extra for this, but the total cost will usually be lower for each person. (Tom Austin, cofounder of Bungalow Insurance, warns that splitting the cost with a roommate also carries some additional risk: If one roommate makes a claim, it could affect the other's ability to get insurance in the future.)

Here's that extra expense renters might find worth paying for: a "replacement cost" policy. Often less than $20 a year, this means an insurer will pay the full price to replace damaged, destroyed, or missing personal property. In contrast, an "actual value" policy reimburses policyholders based on items' current value. Considering how quickly electronics and other personal property lose value, replacement cost policies are usually worth it.