Understanding the factors that play a role in your Renters Insurance rates can help you secure the most affordable possible coverage. The following are the most common factors insurance companies consider when providing you with a renters insurance quote.

Location

Your location is a major factor in your renters insurance rate. Similar to when insurance companies calculate car insurance or homeowners insurance rates, one of the first things providers consider when pricing renters insurance is local crime rates. If you live in a neighborhood with higher property crime rates, you’re likely to pay more for renters insurance.

Dallas residents may experience higher rates of property crimes and vandalism compared to other parts of the country. Dallas residents face property crimes at a rate of 36.29 per 1,000 residents, significantly higher than the national average of 19.33 property crimes per 1,000 residents. As a result, Dallas residents are likely to pay more for renters insurance.

The specific location of your property might also influence the types of perils you’re subject to. Dallas experiences various natural disasters ranging from tornadoes to periods of extreme heat. Severe weather events can put Dallas residents at risk of experiencing damage from a covered peril — meaning there’s a higher chance your insurance provider must offer a payout. This increases the cost Dallas residents pay for all types of property insurance.

Coverage Limits

Most renters insurance policies include multiple types of coverage. While the specific coverages you’ll find on your policy might vary by provider, some of the most common inclusions include the following.

• Personal property: Personal property coverage helps you replace possessions or belongings that are damaged by a covered peril or stolen.
• Personal liability: Personal liability protection helps you pay for court-ordered judgments and legal expenses if someone sues you after an injury in your home. For example, if a guest walks in your door, trips on a rug and breaks their ankle, they might sue you for the cost of their medical expenses. Renters insurance could help you cover legal costs and the guest’s medical payments if you are court-ordered to pay them.
• Loss of use: Loss of use coverage helps you pay for temporary housing and additional living expenses if you must leave your property for repairs after a covered loss.

Each type of coverage included will also include a unique coverage limit or the maximum your insurance provider will pay you after a covered loss. For example, if you have a coverage limit of $10,000 for personal property, your insurance will pay no more than $10,000 when you file an insurance claim. The higher your coverage limits, the more you will spend per month on your premium.

Replacement Value vs. Actual Cash Value

There are two methods that an insurance company might use to determine the payout you’re entitled to after an insurance claim: replacement cost value and actual cost value. 

• Replacement cost value: Replacement cost valuation reimburses you for the full amount it would cost to replace an item you’ve lost. It doesn’t consider the age or depreciation of the item when calculating payout — it only considers the current dollar amount it would take to replace the item with a comparable version.
• Actual cash value: Actual cash value, on the other hand, takes into account the item’s depreciation. The amount of money you’ll receive is calculated by determining the item’s original cost and then subtracting an appropriate amount for wear and tear, age and obsolescence. In most cases, this results in a lower payout when compared to replacement cost coverage.

The valuation method your insurer offers will vary by provider. Your insurance company will outline coverage in your policy terms. Payouts via replacement cost value are usually higher than actual cash value payouts, so premiums for replacement cost value policies will likely be higher.

Safety Devices

If you have safety devices like fire or burglary alarms in your home, you could pay less for renters insurance. These devices can reduce the odds of a home break-in and quickly alert the police following a burglary attempt. Fire alarms are crucial safety devices that ensure you can leave your home quickly in case of a fire. They also enable you to call 911 faster, reducing the damage to your property. Both devices limit insurance provider liability, which helps you access more affordable premiums if you report alarms present in your home.