College offers many young adults the first opportunity to live in their own apartment or share one with friends. But living independently can leave you financially exposed to unexpected disasters, like fires or burglary. Renters insurance—sometimes required by apartment complexes—offers a form of relatively inexpensive financial protection from these risks. And you’ll want to pick the right deductible to balance both coverage and costs.
What Is a Renters Insurance Deductible?
When you make a renters insurance claim, the cost of any covered event is split into two parts: the amount you pay and the amount your insurance pays. Your share of the cost is the deductible, with your insurance company paying the balance.
If your policy has a $1,000 deductible and you file a claim for $1,500 of stolen items, you’ll be expected to cover $1,000 of that claim. Your insurance company will pay $500 to cover the expenses of replacing your lost items.
How Deductibles Affect the Cost of Insurance
Renters insurance deductibles can have a notable impact on the price of your renters insurance. When you purchase a policy with a high deductible, you’ll pay a lower rate for your insurance. The reverse is also true: A lower deductible results in a higher rate.
If you file a claim for the theft of $1,500 in personal belongings and have a $500 deductible instead of $1,000, your insurance company will pay you $1,000 to cover the damage. However, your renters insurance policy will cost more, likely a few extra dollars per month.
How to Pick a Deductible
How do you decide between higher or lower deductibles? There are a few things to consider.
A higher deductible will get you a lower premium. However, you’re also increasing the costs of replacing your property should a loss event occur. It is a cost-saving measure in the short term, but in the event you make a claim, you’ll pay more money than you would with a lower deductible.
College students who can afford to pay more money out of pocket and have expensive items to cover may consider a lower deductible. The premiums will be higher, but if you need to file a claim, the insurer covers a larger share of your costs.
Unique Risks for College Students
College students should also consider the risks posed by their location and roommates. If your apartment or rental is located in a high-crime area, you’re more likely to experience a theft. Roommates also represent a risk, as they may be the cause—directly or indirectly—of thefts, fires or other potential losses covered by your renters insurance. The higher your risk, the more appropriate it is to select a low deductible.
College students own thousands of dollars in property, and financial protection for all these items is important. The average cost of textbooks and class-related supplies can be over $2,000, according to CollegeBoard. And even if you have digital versions of your class materials, your laptop and other electronic equipment are high-value items that are at risk for theft or destruction. Picking the right deductible will help you balance affordability with financial protection. GradGuard offers low deductibles to benefit students the most. Get a quote at any time online on our website!