Do College Students Need Renters Insurance or Does a Homeowner’s Policy Provide the Right Coverage?

In 2012, the average student spent $907.22 on back to college shopping*. You need a lot of things for college, but are those belongings safe in your residence hall or off-campus apartment? As you pack up your things for school, you may want to consider ways to protect your stuff. Insurance is one way to protect these items by offering financial protection in the case of a loss. However, it can be confusing to know what kind of insurance you need to protect your belongings (and liability!) and how much that can cost.

The first step is to determine whether your parents have homeowners insurance, then ask them about the terms of that insurance. Will it extend to cover you while at school? Is it enough coverage? If the answer is no to either of these questions, you may want to consider Renters Insurance. But how do you know what to get?

Luckily, I had the opportunity to sit down with GradGuard President and insurance expert Bill Suneson to get the scoop, which I’ve summarized for you below.

When a student moves into a residence hall, typically the terms of the housing agreement make it clear that the school is not responsible for stolen or damaged personal property. Also, the student becomes personally liable for any damage caused to the dorm room or residence hall. The same applies to most rental agreements if you move into an apartment off-campus. Without the proper insurance, you (and your family) can incur a significant financial loss if you cause unintended damage to your residence or suffer a loss to your personal property. For example, if you burn the wall making a late night snack, or someone steals your bike, without insurance the burden is on you to replace those items and pay for the damage.

Renters insurance is an easy and affordable way to protect your personal property against theft, water damage, fire, etc.  It is not uncommon for a laptop computer or bicycle to be stolen from a dorm (you can probably name a friend his has happened to!) and most low deductible renters insurance plans would provide a quick replacement.

Also, a renters insurance plan protects students if you are personally liable for causing damage to your residence – colleges or building owners would promptly bill you for your portion of the loss. It’s not something you would necessarily think about when you’re excited to move in and start the semester, but just think about how easy it could be to inadvertently trigger the sprinkler system if you caused a small fire cooking in your kitchen.  That’s a lot of damage and a lot of money that you’d be responsible for. Without the proper coverage, you may find yourself with a hefty bill.

Renters insurance is just one way to protect yourself. You may already have some coverage thanks to your parents. Yes, most homeowner’s insurance policies do extend coverage to students when they are away at college. However, your parents should review their policy closely before you leave for college as some policies may have certain limitations.  For instance, policies may limit coverage to students attending college full-time or living on-campus.

But there are some things to consider about a homeowner’s policy that you should discuss with your parents. Most homeowner’s policies have high deductibles and families are unlikely to file claims such as a $500 bike theft because the payment would not exceed their deductible.  Also, home insurance rates are increasing and filing small property or liability claims generally result in higher rates for your family over time.

With deductibles as low as $100 and most premiums less than $150, renters insurance is usually both valuable and affordable for students even though some coverage may exist through their parents’ homeowner’s policy.  Spend a couple minutes reviewing this information with your parents to figure out what will work best for you and your family. You may find you feel comfortable with the cost of replacing your personal items and decide against coverage all together, but likely, you may find you’ll want some protection. As always, speak with an agent to find the best policy for you. Happy packing!

* National Retail Federation/BIGinsight: 2012 NRF Back to School, Back to College

 

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