Do College Students Need Renters Insurance?
Find out what renters insurance covers and if it’s a worthwhile expense for college students
When I went off to college, the last thing my parents or I considered was renters insurance. But since then, I’ve learned the surprising amount of protection these inexpensive policies offer. In this episode I’ll tell you what renters insurance covers and whether students really need it.
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What Is Renters Insurance?
If you live in a rented apartment, condo, or house, your landlord’s insurance never covers your personal belongings. That means if something valuable is stolen or a fire destroys everything you own, it’s your responsibility, not your landlord’s.
Since the cost to replace your personal property could be much more than you can afford, having a renters policy is a smart way to protect your finances.
A renters insurance policy typically gives you 3 types of coverage:
- Personal Property protects the value of your belongings from a covered event, such as damage from a natural disaster, theft, or vandalism.
- Liability protects you against a claim or lawsuit if a visitor gets injured on the property.
- Additional Living Expenses pays for temporary housing and meals if you can’t live in your rental while damage from a covered event is repaired.
Do College Students Need Renters Insurance?
Whether college students need the protections of renters insurance depends on where they live. A student who lives at home or in on-campus housing is covered under his or her parent’s renters or homeowners insurance.
Both renters and home policies usually have a cap on the amount of off-premises coverage. For instance, claims that a student makes on-campus could be limited to 10% of the parent’s coverage limit. In other words, if parents have $100,000 of coverage on their home, the student would be covered up to $10,000, after paying the deductible.
However, college students renting an off-campus apartment, condo, or house should have their own renters insurance policy. They aren’t eligible to get coverage from mom and dad’s renters or homeowners policy.
Don’t make the mistake of thinking that students are too poor to have belongings to protect. Most students living off-campus have thousands of dollars worth of personal items, such as electronics, computers, furniture, bicycles, clothing, and textbooks that make buying renters insurance worthwhile.
So what does all this protection for renters cost?
How Much Does Renters Insurance Cost?
You might be surprised to learn that the average cost of a renters policy is only $184 per year. That’s a really inexpensive financial safety net that no renter should be without.
If a student is renting off-campus with one or more roommates, they may be able to purchase a policy together and split the cost. However, if you’re unsure about how long your living arrangement will last, I recommend that you go ahead and buy your own policy.
The average cost of a renters policy is only $184 per year. That’s a really inexpensive financial safety net that no renter should be without.
Having renters insurance means that you’ll be in good shape if a roommate leaves the toaster oven on and causes a fire or there’s a bad roof leak. You’ll have reimbursed living expenses to help pay for temporary housing and food if you have to move out due to an unexpected event. You won’t have to live without your favorite electronics or clothes for very long and can stay focused on your schoolwork.
How to Shop for Renters Insurance
When you’re shopping for renters insurance, make sure you understand whether the policy offers “cash value” or “replacement cost” for claims. Here’s the difference:
- Cash value coverage reimburses you for the value of personal belongings at the time of a claim. For example, if your 3-year-old mountain bike is stolen, you’d receive the value less depreciation. If the original cost was $2,000, you might only receive $1,000, minus the deductible.
- Replacement cost coverage reimburses you for the full value of an item. So if you’d have to pay $2,500 to buy that same mountain bike today, that’s what you’d receive, less the deductible.
Premiums for replacement coverage will be higher than for cash value, but can be worth it if you have to make a substantial claim.
Tips to Find the Best Renters Insurance
Here are 3 tips to help parents and students find the best renters insurance:
Tip #1: Ask Your Insurance Agent
If you already have a home or renters policy, find out exactly whether your student can be covered and at what cost.
Tip #2: Ask Your School
Many colleges and universities strike deals with certain insurance companies that allow students to receive discounted rates.
Tip #3: Shop Around
Get quotes from several insurance companies and compare prices. You can use sites like InsuranceQuotes.com and NetQuote.com to get free quotes.
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About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.
