State Farm Renters Insurance Review: Does It Pay to Bundle?

November 17, 2011 1 Comment »

for rent

Finally! A television ad campaign from State Farm that actually talks about one of their insurance products, as opposed to simply showing Lebron James dancing around in a parking structure.

But wait, it gets better. The new insurance-centric ad focuses on one specific product, State Farm’s renters insurance program. Yep, they offer more than just car insurance folks. And they want you to know all about it.

In fact, they specifically tout the ability to get you a standard renter’s policy for as little as $4 per month if you bundle auto insurance with them as well.

Insurance for only $4 per month!? While it may sound too good to be true, it is very possible because renters insurance doesn’t tend to cost all that much regardless of where you purchase it.

So, is this $4 per month renters insurance from State Farm a good deal or not?

Depends on the Rental Insurance Coverage State Farm Provides…

  • When insurers advertise a low rate flat for something
  • You have to dig down into the details to see exactly what is being offered
  • While $4 per month sounds really cheap, especially for a State Farm policy
  • It’s not all that surprising because renters insurance tends to be low cost

Let’s face it. We’re all out for the best deal we can get when it comes to our insurance expenses. And best typically means cheapest.

However, it’s more important to ensure the coverage is adequate, otherwise what’s the point? Not only do you need enough coverage to replace or repair your personal property, you also need to be covered against the right perils (this is equally important).

What do we mean? Well, you could have $50,000 worth of coverage for your personal property, but if your “stuff” is damaged by a sewer or drain back-up and you don’t specifically have coverage against that type of loss, you’re simply out of luck. Claim denied!

So be sure to verify with your State Farm insurance agent exactly what is, and more importantly, isn’t covered by their renter’s insurance policy. After all, $4 per month is pretty darn cheap!

If it’s a named perils policy rather than an all perils policy, you should probably move on. Again, if things like water back-up aren’t covered, you may want to opt for a different insurer who offers more comprehensive coverage, even if it is a little more expensive.

State Farm’s Renters Insurance Options

  • Typical renters policy comes with $100k in liability coverage
  • Deductibles generally offered at $500 and $1,000
  • Discounts offered for things like smoke detectors and/or fire extinguishers
  • Cost can vary greatly based on location, deductible, and any add-on coverage you choose

State Farm says the typical renters insurance policy offers $100,000 in liability coverage, but points out that you should consider more coverage if your assets exceed that amount.

When it comes to deductibles, State Farm tends to offer a choice of either $500 or $1,000, meaning your losses need to exceed those amounts before they pay you a dime in claims.

The price you pay for coverage will be determined by things such as location, condition of the building, and so on. Put simply, it’ll be cheaper to get coverage in a low-crime area, or near a fire station versus the opposite.

And you might be able to qualify for discounts if you have smoke detectors and/or fire extinguishers in the unit. So be sure to mention those when obtaining a quote.

The cost of rental insurance with State Farm will vary based on your needs, the coverage you select, the deductible you choose, and whether you tack on optional coverage like earthquake or business liability.

Should I Bundle Auto and Renters Insurance with State Farm?

  • What we always say around here is
  • Don’t buy one type of coverage just to save on another
  • If the State Farm auto policy is way more expensive than alternative coverage
  • You may not want to purchase it just to get your hands on cheap renters insurance

Good question. Only if it makes sense financially. A $4 monthly renter’s insurance policy may not be worth your time if you have to purchase more expensive auto insurance in order to qualify for it.

In other words, if you’re overpaying $100 per month for State Farm’s auto insurance coverage simply to get cheap renters insurance, you may want to go back to the drawing board.

We should point out that you might also qualify for a multiple line discount if you bundle other types of insurance with State Farm, such as life insurance or a business policy. So if a different pair of policies make sense financially, there you go.

Do the math and shop around to find the best of both worlds. You may have to pay $10 or $20 a month for quality renters insurance, but if your car insurance is $50 or $100 less a month with a different insurance company, you still win.

Just be sure to do your homework! And consider using an independent insurance agent, one who can shop all lines of insurance, including auto, home, renters, and so forth with multiple carriers all at once to find you the most comprehensive coverage at the most affordable price.

Tip: Depending on who you rent from, renters insurance may be required as part of your lease agreement (Is renters insurance required?). If that’s the case, a bare-bones policy might make sense just to meet their demands.

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One Comment

  1. AJ February 14, 2015 at 8:42 am -

    This really is a misleading add since it probably assumes you buy the very minimum amount of coverage available (maybe $10000 in contents). You get both a discount on the auto (for having renters ins) and on the renters for having Auto insurance. The higher your auto premium the better a deal this is.

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