Many people are used to having the ability to negotiate the prices of products and services. When it comes time to purchase insurance, one might expect to be able to handle it the same way. However, generally the only thing you can do to impact renters insurance prices is to choose the appropriate level of coverage for your personal situation and level of risk tolerance.
Why are renters insurance prices not negotiable? How are those rates set, and why can’t they be changed or discounted for the same reasons that most other products and services might be discounted? Why doesn’t renters insurance have a “six month introductory rate” like cable often does? Who makes these decisions, anyway? Let’s take a Glendale, AZ Renters Insurance as an example and dig in!
Renters Insurance Prices Are Based On Rating Factors And Risk
Renters insurance prices are the result of some fairly straightforward math. To be clear, the math involved in calculating risk and expected loss ratios is somewhat complex. But that’s all done behind the scenes by actuaries. The actual math of determining renters insurance prices is not complex at all.
While there’s little reason for you to bother, you could manually calculate the rates for most types of insurance. Of the various types of insurance, renters insurance would be one of the simpler varieties to calculate in most situations. In a nutshell, there’s a base rate for your location. To that base rate, additional factors are added depending on the various risk factors specific to you and your policy.
How Are Renters Insurance Prices Impacted By Rating Factors?
What does that mean in practical terms? Here’s a hypothetical and somewhat simplified example of how it might work:
Let’s say the base rate for a tenant policy in Glendale, AZ is $150 for the year. Let’s also say that you’re a smoker, but you have smoke detectors in your home. In addition, your credit is somewhat damaged but in overall decent condition. Your dwelling or apartment is of wood frame construction, with an asphalt shingle roof that’s fifteen years old. How are renters insurance prices determined from that information? The underwriter has a manual with the correct factors to apply for each of those things. It might look a little like this:
- Glendale, AZ Base Rate: $150.00 per year
- Smoker: Apply factor of 1.03
- Insurance Credit Score Tier “C”: Apply factor of 1.22
- Wood Frame Construction: Apply factor of 1.05
- Asphalt Shingle Roof: Apply factor of 1.02
- Roof > 12 Years Old: Apply factor of 1.07
A factor expressed as a decimal number is simply adding an additional percentage to the cost. For example, a factor of 1.03 adds three percent. So here’s what that looks like:
- Smoker: Add $4.50
- Credit: Add $33.00
- Frame: Add $7.50
- Asphalt Shingle: Add $3.00
- Roof > 12 Years Old: Add $10.50
Alternatively, $150.00 + $4.50 + $33.00 + $7.50 + $3.00 + $10.50 = $208.50 total annual premium in this hypothetical case.
These factors are based directly on the anticipated additional costs brought to the insurance company based on those additional risks presented by a given policy. Being a smoker means a higher risk of fire. There is a correlation between certain negative credit events and increased frequency of claims. And so on.
Because each factor that is applied is based on the anticipated losses, renters insurance prices are not negotiable. They are set in order to ensure that enough money is brought in to cover the expected losses. Offering discounts other than those which correlate to decreased frequency of losses (such as a smoke detector) would upset the entire equation and make the policy impractical to write.
Can Companies Change Renters Insurance Prices At Will?

Why Are Renters Insurance Prices Not Negotiable?
These rates are filed with the state. Once they’re filed, those are the rates which an insurance company is allowed to charge for a particular set of risks that make up a given policy. New rate filings are not frequent, and often involve a significant amount of red tape and a lengthy approval process.
Different companies can and do file different sets of rates, of course, which is why prices can vary between companies for a substantially similar policy. This is because each company has a business model defined in part by the types of risk that they prefer to accept. Renters insurance prices can be set in a way so as to encourage the company’s preferred risks to do business with them.
On top of all that, the policy form that the company uses is also generally filed with the state, along with any endorsements the company might wish to offer and prices for the same. Most companies write Glendale, AZ Renters Insurance on a variant of what’s called the HO-4 policy form. It includes a standard set of coverages and has a standard set of endorsements.
Companies are, of course, often free to make changes to the policy form or to the endorsements, or even to create an entirely new endorsement. But that form would generally need to be filed with and approved by the state in which they intend to offer it.
There is a potential benefit to you as an insurance consumer in the fact that the policy forms are largely standardized in most states. Namely, you have a good idea what coverage you’re getting, and what the coverage means because it’s usually similar to what other companies are offering.
The amounts may vary, and some policy language may vary, but most renters insurance policies will include personal property, loss of use, medical payments to others, and personal liability coverage. The details of those types of coverage are in the policy document, and as the insured it is absolutely your responsibility to read and understand the policy.
“Understand” doesn’t mean you need to be able to explain every nuance. It does, however, mean that you should broadly know what’s covered, and under what circumstances. The responsibility to know what’s written in the policy lies with you, as does the responsibility to determine if the coverage amounts and policy language are suitable to your needs and your personal level of risk tolerance.
So how do you compare coverage and renters insurance prices and make sure that you’re getting the coverage you think you’re getting? You ask questions! While the policy language controls, it can be helpful to ask for an explanation of the coverage. That gives you perspective so you can go back to the policy language and see how the specifics would be applied to a given situation.
Renters insurance prices aren’t terribly complex, but some policy language can be. But once you understand that your liability coverage is designed to pay for bodily injury or property damage that you do to someone else accidentally (i.e., through your negligence), you can then gain a better understanding of what the policy language means to your lifestyle.
To find out more about how renters insurance prices are set, why they’re not negotiable, and what that all means to you, just call Effective Coverage and speak with an insurance expert for renters. Quotes take just sixty seconds online! Just call (800)892-4308 or click to get covered - whether you need Glendale, AZ renters insurance quotes online or coverage anywhere else!
Effective Coverage offers the nation's only completely mobile platform to quote and purchase renters insurance right from your phone or tablet in just one minute. Get an online renters insurance quote today and protect your family.
What's Your Insurance Language?
- Do You Need Renters Insurance ASAP? Check out the fastest way to buy renters insurance online and get covered in just 60 seconds!
- Do You Feel Like Talking About It? Just call Effective Coverage and a renters insurance expert can help you get great coverage in minutes.
- Do You Need Some Time Alone With Your Thoughts? We understand, which is why we created the Arizona Guide To Renters Insurance.
- Just Want To Watch A Movie Together? See our Video Arizona Renters Insurance Guide!