Renters insurance protects renters’ possessions in the case of fire, theft, and other things that can leave them unusable. In addition, many policies include liability coverage that protects tenants if they are sued by someone who is injured in their home.
When the COVID-19 pandemic hit the United States last year, many people shifted to working from home. Along with that, many in-person activities, such as shopping and social events, were shut down due to health concerns.
All of this left many people spending large parts of their days in their homes, opening up the possibility for more things to go wrong inside them.
Google searches for “renters insurance” so far in 2021 are up by 265% compared to 2019—indicating a considerable increase in demand as people shift to the new normals brought on by the pandemic.
With so much change, we wanted to figure out if the pandemic caused renters to take out policies, what they look for in policies, and why those who don’t have renters insurance do not. To do so, we surveyed 1,000 adult renters living in the United States, asking them those questions and much more.
- 49% of those with renters insurance took out a policy during the COVID-19 pandemic due to being home more often.
- 60% of respondents have renters insurance, 70% of which think it’s worth it.
- 66% of those without renters insurance mistakenly think it costs over $1,000 a year and 78% overestimate the cost of it.
- 67% of those without renters insurance don’t have enough savings to replace their possessions if they are damaged.
- 17% of respondents whose landlords require renters insurance still don’t have it.
- 11% of uninsured respondents mistakenly think they don’t need renters insurance because their landlord has insurance.
COVID-19 Pandemic Causes Many to Take Out a Renters Insurance PolicyOf all our respondents, 60% currently have renters insurance. We were curious if the COVID-19 pandemic caused these renters to get insurance due to being home more often.
As shown, nearly half of insured respondents (49%) took out a renters insurance policy during the pandemic due to being home more often, while 36% already had a policy and 15% took out a policy during the pandemic for another reason.
By spending more time at home, there may be an increased chance of something going wrong that could cause damage to possessions, such as a fire.
In addition, liability coverage becomes more important as the chance of someone getting injured on the property increases. If renters have a visitor fall and get injured at their home, such as a delivery man, for example, liability coverage can help protect them if the injured person pursues litigation.
Taking out a renters insurance policy is a cheap way for renters to protect themselves from these dangers and it’s apparent that many decided to do so during the COVID-19 pandemic.
Many Skip Renters Insurance Due to High Cost but Majority Overestimate CostsWe also wanted to figure out why those with renters insurance don’t have it. It is relatively cheap at only $14 per month, on average, and can help renters replace their belongings if they are damaged or stolen.
So why don’t more renters have insurance?
When asked to choose the primary reason why they don’t have renters insurance, the plurality of respondents, 23%, indicated that it’s too expensive. This is surprising given the relatively low cost of renters insurance.
The results from our next question indicate that many of these respondents may be overestimating the cost of renters insurance.
Of those who don’t have a policy because they think it costs too much, the average amount they think policies cost is $140 monthly while the median amount is $100. When factoring in all respondents without renters insurance, the numbers jump to $179 (average) and $138 (median).
In addition to those numbers, 66% of uninsured respondents think renters insurance costs over $1,000 annually, including 59% of those who primarily don’t have renters insurance because they think it costs too much. Altogether, 78% of those without renters insurance overestimate its cost.
By not having renters insurance, these respondents are putting themselves at financial risk if something were to happen such as a fire or theft. If they knew how cheap renters insurance really is, a good portion may reconsider their decision to not have it.
It’s also worth noting that 11% of respondents said they don’t have renters insurance because their landlords have insurance. This is actually a common misconception. Typically, landlord’s insurance covers the building itself but not tenants’ belongings inside the building.
These respondents would be in for a rude awakening if something happened and their possessions weren’t covered as they expected them to be.
67% of Those Without Renters Insurance Don’t Have Savings to Replace Possessions if DamagedIn addition to figuring out why those without renters insurance don’t have it, we wanted to determine if these people have savings to replace their items if something goes wrong.
As shown, a concerning 38% don’t have the savings to replace their possessions if they were destroyed while another 29% only have savings to replace some. Only 12% of respondents indicated that they would be able to replace all of their possessions if they were lost.
While paying for renters insurance is another monthly expense that may seem unnecessary to these people, many of which may already be hurting for cash, they will find themselves in a much worse financial situation if they were to lose everything in their apartment due to a fire or something else.
17% of Those Whose Landlords Require Renters Insurance Still Don't Have ItLandlords can require tenants to have renters insurance in every state besides Oklahoma. This not only protects tenants if something were to happen but also helps protect the landlord from lawsuits and responsibility for covering relocation expenses if the building becomes unliveable.
According to our survey, landlords requiring renters insurance is pretty common.
We found that 45% of renters’ landlords require renters insurance while another 18% are unsure if it’s required or not.
Oftentimes, landlords put a clause in the lease stating that the tenants must have renters insurance. Landlords may not always ask for proof, however, and some may simply accept a verbal confirmation.
Using data from our questions asking if respondents have renters insurance and if their landlords require it, we found the portion of respondents who have renters insurance grouped by if their landlords require it or not.
As shown, those whose landlords require renters insurance are much more likely to have it. This indicates that landlords requiring insurance may have a large impact on whether renters take out a policy or not.
Perhaps the most interesting statistic from this graph, however, is that 17% of those whose landlords require it still don’t have policies. Not only could this leave these respondents liable for damages to their possessions, but it could also be considered a breach of the lease, leading to eviction or a fine.
70% With Renters Insurance Think It’s Worth ItShifting back to questions directed towards respondents with renters insurance, we found that the average monthly cost of renters insurance for our respondents is $33 while the median is $30.
We also wanted to figure out whether this group thinks their renters insurance is worth it.
As shown, the majority of respondents, 70%, think their renters insurance is worth the cost while another 16% are unsure.
Even if respondents haven’t had to use their insurance in the past, it provides peace of mind knowing that their possessions would be covered if there was a fire, theft, or something else.
How People Shop for Renters Insurance & What They Look ForFinally, we wanted to better understand how consumers shop for renters insurance and what they look for in a policy.
Starting with the former, we asked respondents how they primarily shop for renters insurance.
As shown, online comparison sites are the most popular answer (38%), nearly doubling the next-most popular response. After that, using an insurance provider they use for another type of insurance (20%) and going directly to the website or a provider they knew about (15%) were the most popular answers.
Insurance comparison sites can help consumers quickly compare costs and coverage, saving them time and money. These sites are almost always free and users can receive quotes in a matter of minutes.
Going with a current insurance provider, on the other hand, opens up the possibility of bundling discounts that can make renters insurance even more affordable on top of the ease of only having to deal with one company.
Finally, speaking to local renters insurance agents allows consumers to better understand their policies such as how much coverage they have and what is covered. Agents can also help find the best deals available and answer questions that come up.
So we know how consumers shop for renters insurance, but what do they look for in a policy?
That’s what our next question asked:
The above table shows how respondents value each part of a renters insurance policy/company.
Consumers value good coverage the most in renters insurance, following closely by good customer service, low cost, an easy application process, and how fast claims get processed.
Customer reviews and brand recognition check-in as the least important relative to the other options, but still over two-thirds of respondents consider these as “very important” or “somewhat important.”
It’s apparent that consumers are looking for the whole package when it comes to renters insurance.
Our final question asked all respondents what insurance companies offering renters insurance they recognize:
The above graph shows the percentage of respondents that either recognize each company “very well” or “somewhat well.”
The insurance powerhouses such as State Farm, Nationwide, and GEICO top the list, likely largely due to their consistent and recognizable advertising.
It’s not surprising that Lemonade, a company just launched in 2015 that uses artificial intelligence to help craft policies is much less recognizable than the other companies. While Lemonade has surged in popularity since launching, it still pales in comparison to the other companies on the list.
Full Survey Results1) Do you have renters insurance?
- Yes – 59.8%
- No – 40.2%
- Yes – 45.3%
- No – 36.5%
- Unsure – 18.2%
- Average: $32.66
- Median: $30.00
- Yes – 69.6%
- No – 14.4%
- Unsure – 16.1%
- I used an online comparison site – 38.1%
- I went directly to the website of an insurance company I knew about – 15.1%
- I went to the insurance provider I use for auto insurance or another type of insurance – 19.6%
- I spoke to a local insurance broker that works with multiple companies – 9.2%
- I spoke to an agent that works for a specific insurance company – 11.4%
- Other – 6.7%
- I went with the cheapest plan possible – 32.4%
- I based it on an estimate of the value of my belongings – 33.4%
- I went with less coverage than the value of my belongings (but not the cheapest plan possible) – 11.9%
- I went with the default plan the insurance company showed me – 13.9%
- I’m not sure/I don’t remember – 8.4%
- Actual cash value – 47.2%
- Replacement cost – 30.6%
- I’m not sure – 22.2%
- Yes, I got coverage specifically due to being home more during the pandemic – 49.2%
- No, I already had coverage when the pandemic started – 36.1%
- No, I got renters insurance after the pandemic started for another reason – 14.7%
- It’s too expensive – 23.4%
- I think there is no or low risk of damage to my items (such as if there is a fire or flood) – 12.4%
- I think there is no or low risk of my items being stolen – 10.7%
- I have never heard of renters insurance – 12.2%
- I’ve heard of renters insurance but don’t know enough about it – 11.0%
- I don’t know where to get renters insurance – 10.0%
- My landlord has insurance – 11.0%
- Other – 9.5%
- Average: $179.29
- Median: $138.00
- Yes, I would be able to replace all my possessions – 11.9%
- Somewhat, I would be able to replace most – 20.7%
- Somewhat, I would be able to replace some – 29.4%
- No, I wouldn’t be able to replace any – 38.1%