The Price of Peace of Mind: States with the Most Expensive Renters Insurance

Renters in the U.S. often opt out of insuring their homes, and in some states, high premium costs may be why.

Over the past decade, the United States has seen an uptick in the number of renters occupying housing units compared to homeowners — the U.S. Census Bureau reported between 2010 and 2016, the proportion of renters among all occupied housing units in the United States increased steadily from 33.4 percent in 2010 to 36.4 percent in 2016. While the share of overall renters dropped slightly in 2018 to 35.6 percent and has remained level since, it’s clear that renters are far from an invisible minority.

Renting may be less of a long-term investment than buying a house, but protecting your home is nonetheless important, even if you aren’t its formal owner. However, renters are far less likely to insure their homes — according to the Insurance Information Institute, only about 37% of renters invest in renters insurance, compared to the 95% insurance investment rate of homeowners. Renters insurance accounts for unexpected events that may occur while leasing your home, including personal property coverage, liability coverage, and additional living expenses such as replacement costs. Likewise, renters insurance costs are affected by similar determinants as homeowners insurance premiums, such as vandalism, weather-related casualties, or other forms of property damage. With all that renters insurance covers, why wouldn’t all renters want to insure their homes?

A driving factor in the low proportion of renters with insurance may be the fact that renters are overall associated with greater economic vulnerability. According to a report by the National Low Income Housing Coalition, renters are more likely to work in low-paying or minimum wage jobs — renters are overall less likely to have as much in savings as homeowners, meaning that renters are more susceptible to economic hardship. The cost of renters insurance coverage is therefore more of an expensive investment for renters, even though the actual cost of a renters policy is much lower than that of homeowners. To take a deeper look into national trends, the research team at Insurify crunched the numbers to identify the states with the most expensive renters insurance premiums.

Insights

• National averages. The average cost of a renters insurance premium is $180. Across the country, the average cost of rent for a 2-bedroom unit is $1,080. The average annual number of property crimes per population of 1,000 is 22.45 from the FBI’s most recent estimates in 2018.

• The Midwest enjoys low premium costs. The states with the cheapest renters insurance premium prices are North Dakota, South Dakota, Wisconsin, and Minnesota. The average premium cost for these states is at least 23 percent below the national average at $120, $123, $134, and $140, respectively.

• Rent prices do not inform premium costs. The mean cost of monthly rent for a 2-bedroom unit is not significantly associated with the price of renters insurance rates across the United States. This finding suggests that in states with more expensive rental markets, rented properties are not necessarily more expensive to insure. While property value is one factor that is kept in consideration when determining premium costs, a variety of other determinants also contribute. This finding suggests that the actual cash value of a property as determined by rent price is not an overpowering determinant.

• Safety first: property crime does affect insurance premiums. Unlike rent costs, property crime rate is significantly associated with renters insurance premium prices. The number of property crimes per population of 1,000 has a significant positive correlation with premium costs — as the number of property crimes increases, so do the prices of renters insurance premiums. This finding suggests that renters insurance companies value the potential for property damage as a factor for higher deductibles.

Methodology

The data science and research team at Insurify, a site to compare homeowners insurance, studied rental premium data from the Insurance Information Institute to determine the states with the most expensive renters insurance.  Data on HO-4 renters insurance policies for tenants released by the National Association of Insurance Commissioners (NAIC), which includes broad named-peril coverage for the personal property and liability of tenants, served as the basis for measuring average renters insurance policy costs by state.

To identify the average monthly cost of coverage for each state, researchers used rent estimates from real estate data made public by Apartment List, an online rental property platform. Property crime rates were extracted from the FBI’s Uniform Crime Reporting Program’s estimated data at the state and national levels derived from their Summary Reporting System (SRS). Property crime, as defined by the FBI, includes the offenses of burglary, larceny-theft, motor vehicle theft, and arson.

The rankings in this list are primarily determined by the average cost of renters insurance in each state. However, for states with equal average costs, state property crime rate was used to decide the final rank, as property crime rate and the cost of renters insurance are significantly correlated.

States with the Most Expensive Renters Insurance

10. Massachusetts

• Average annual renters insurance premium: $194

• Mean monthly rent for 2-bedroom unit: $1,629

• Number of property crimes (2018): 12.63 per 1,000

With the tenth-highest renters insurance premiums in the nation, Massachusetts kicks off the ranking by presenting a fascinating case. Its average renters insurance premium is 8 percent higher than the national average, despite the fact that the property crime rate is actually 44 percent below the nationwide mean. Renters in Massachusetts are paying higher premiums even though the likelihood of vandalism is relatively low. Especially with rent prices 34 percent above average, it suggests that renters policies in the Bay State are primarily determined by other factors.

9. New York

• Average annual renters insurance premium: $194

• Mean monthly rent for 2-bedroom unit: $1,536

• Number of property crimes (2018): 14.41 per 1,000

New York, the ninth state on our list, has an average renters insurance premium equivalent to that of Massachusetts, but its 13 percent bump over Massachusetts’ property crime rate edges it out in the rankings. New York and Massachusetts are relative outliers in this list — they’re the only northeast states of the top ten, and they both have above-average rent prices and below-average crime rates. The somewhat counterintuitive placement of New York and Massachusetts on this list could be attributed to the overall cost of living in the two regions. The average costs of rent imply that these are expensive states to live in, all things considered.

8. Tennessee

• Average annual renters insurance premium: $199

• Mean monthly rent for 2-bedroom unit: $879

• Number of property crimes (2018): 28.25 per 1,000

Breaking from the pattern of outliers, Tennessee has the eighth-highest renters insurance premium in the nation. With both an average premium cost that’s 10 percent higher than average and a property crime rate 21 percent above, renters in Tennessee are susceptible to steeper costs when it comes to protecting their homes. Tennessee’s property crime rate is the 11th highest in the nation, meaning that the potential for vandalism or theft may be a driving force in the state’s renters insurance rates.

7. Arkansas

• Average annual renters insurance premium: $212

• Mean monthly rent for 2-bedroom unit: $733

• Number of property crimes (2018): 29.13 per 1,000

The jump between spots seven and eight in the rankings is the largest thus far. Arkansas renters who choose to insure their homes do so at a price 16 percent higher than the national average. While monthly rent in Arkansas is relatively cheap, the potential liability from property crimes, which occur at a rate that’s 23 percent above-average, likely drives up the prices of insurance premiums.

6. Georgia

• Average annual renters insurance premium: $219

• Mean monthly rent for 2-bedroom unit: $1,038

• Number of property crimes (2018): 25.73 per 1,000

Living in Georgia isn’t always peachy when it comes to insuring your rented home. Renters in Georgia are spending 18 percent more on their renters insurance premiums than the nationwide mean, even though rent prices are nearly equivalent to the U.S. average. With a property crime rate that exceeds the national average by 13 percent, providing insurance for rentals in Georgia is no cheap feat.

5. Texas

• Average annual renters insurance premium: $232

• Mean monthly rent for 2-bedroom unit: $1,065

• Number of property crimes (2018): 23.67 per 1,000

They say everything is bigger in Texas, which is certainly true for the Lone Star State’s renters insurance policy prices. The average renters insurance premium in Texas is 23 percent higher than the national average, even as the state’s property crime rate is only slightly higher than normal. Texas also has notoriously high home insurance premiums, which suggests that factors such as Texas’s high rate of natural disasters contribute to these high prices.

4. Alabama

• Average annual renters insurance premium: $235

• Mean monthly rent for 2-bedroom unit: $835

• Number of property crimes (2018): 28.17 per 1,000

The fourth state on the list continues the pattern of southern representation within the top ten. On average, Alabama renters pay 24 percent more for insurance than other renters in the United States. Even as rent is relatively cheap — Alabama residents spend 23 percent less on a 2-bedroom unit than the rest of the nation — higher-than-average property crime rates and high hurricane incidence drive up insurance premiums.

3. Louisiana

• Average annual renters insurance premium: $235

• Mean monthly rent for 2-bedroom unit: $833

• Number of property crimes (2018): 32.76 per 1,000

Louisiana has the third-highest renters insurance premiums in the nation. Louisiana’s statistics are similar to those of Alabama’s, its predecessor on this list — they have equal annual renters insurance premiums, but Louisiana edges out Alabama in the rankings due to its higher property crime rate. Louisiana has the fourth-highest number of property crimes per population of 1,000 in the United States, in addition to having the most expensive homeowners insurance premiums nationwide. The liability from crime-driven property damage as well as notoriously volatile weather conditions likely contribute to their notably high renters insurance premiums.

2. Oklahoma

• Average annual renters insurance premium: $236

• Mean monthly rent for 2-bedroom unit: $778

• Number of property crimes (2018): 28.75 per 1,000

Oklahoma, where rent insurance premiums come sweeping over most other states! While only $1 higher than the rates of Louisiana and Alabama, Oklahoma’s 24 percent higher-than-average renters insurance premiums are the second highest in the nation. While Oklahoma does experience more property crime rates than the norm, it does not have the highest property crime rate of all the states on this list.  Oklahoma’s high renters insurance costs are an interesting case and are likely informed by Oklahoma’s unique geography. Tornadoes, winter storms, and droughts are just a few of the natural disasters that Oklahoma experiences, which can significantly raise coverage rates.

1. Mississippi

• Average annual renters insurance premium: $258

• Mean monthly rent for 2-bedroom unit: $812

• Number of property crimes (2018): 24.02 per 1,000

Although nicknamed the Hospitality State, Mississippi’s high renters insurance premiums seem to tell a different story. In order to protect their homes, Mississippi renters must pay premiums at rates 31 percent higher than the national average. Interestingly, Mississippi’s property crime rate is only slightly above the national average, meaning that other factors such as natural disasters may be more prominent determinants of liability coverage. Mississippi’s geographic location renders many of its communities susceptible to flooding, which could account for the state’s expensive renters insurance costs.

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