Does Credit Affect Renters Insurance?
Moving into a new apartment can be nerve wracking. It’s notoriously expensive, and there are a lot of things to straighten out before you are approved for a lease. One of the several factors that affect your likelihood of getting an apartment is your credit. What some people don’t know is that credit also affects the cost of your renters insurance.
Renters insurance provides coverage for you, your belongings and your neighbors. This includes:
Liability: Liability insurance covers bodily injury and property damage that you or a pet may cause to someone else. It can pay for medical bills and legal expenses in case of a lawsuit.
Personal Possessions: Personal possessions coverage compensates for loss or damage to your personal possessions due to fire, smoke, lightning, theft, vandalism and more. This coverage does not cover floods or earthquakes. Depending on where you are, you can purchase additional coverage for both.
Additional Living Expenses (ALE): If a disaster makes it impossible to live in the rented property, ALE helps with the cost of temporarily living elsewhere while repairs are being made.
Liability insurance is required by most landlords, and you must provide proof of carrying this coverage by the time you’re ready to move in. Besides the amount of coverage you purchase, things that influence your renters insurance rates include:
Certain locations charge more for renters insurance. If you live in or are moving to an area that’s prone to bad storms or high crime rates, you will likely pay more for renters insurance. You can also use your deductible to affect your monthly premiums. A higher deductible typically means lower premiums, but it also means that you will owe more if you ever have to file a claim.
Can You Be Denied Renters Insurance?
There are rare circumstances in which you can be denied renters insurance. When you apply for renters insurance, an underwriter will review your personal data. They will be able to view your past claims and credit history. If you have a long list of past claims, you could face higher premiums or even be denied insurance. Before signing a lease on an apartment that requires renters insurance, review your credit. If your credit score is low, make sure you take measures to raise it. You can do this by paying bills on time and paying off debt, such as credit cards. To help you stay on time, you can set up auto draft for your utility, car and cell phone bills.
Also make sure that the information you provide is completely accurate. It’s important that no claims are incorrectly placed on you.
Do All Insurance Agencies Consider Credit?
Not all insurance is credit-based. Some insurance agencies don’t consider credit scores when underwriting, and others have more leniency with lower credit scores. If you have a low credit score or a long claims history, you should shop around for insurance companies that specialize in nonstandard clients. Some apartments will offer renters insurance through them, but this may not be the best choice if you’re not sure your credit will be approved.
The good news is that if you have credit that is approved by the landlord, your credit will typically be approved for renters insurance.
How Much is Renters Insurance?
The national average of renters insurance is around $16 a month. In Georgia, the average is a little higher at about $18.83 a month.
Shop around between insurance companies in your area. Some will offer lower rates, while others specialize in clients who have a spotty credit history.