THURSDAY, AUGUST 17, 2017
College is the first time many students move out of their parents' house — whether to a dorm room or sharing an apartment with friends. It's also the first time that students really start to acquire their own possessions — computers, electronics, furniture, and more. Plus, college students typically don't have a lot of spending cash — mom and dad help out with a lot.
As a result, it's really important for college students to protect the small amount of assets they have. Chances are, if a student get's their laptop stolen, it will cost at least $1,000 or more. And college students typically don't have that kind of cash lying around. In 2011 (the last year statistics are available), there were close to 10,000 burglaries and robberies on university campuses nationwide. And that was only what was reported on campus. That doesn't include the potential losses from near-campus locales — apartments, coffee shops, parks, etc.
With roughly 14 million college students nationwide, the odds of you getting something stolen sometime during your four years of school is 0.3%, or 1-in-300. That's important to keep in mind.
As such, I've put together my how-to guide for college student renters insurance which hopefully answers any questions you may have.
Why You Need College Student Renters Insurance
The bottom line is that you need college student renters insurance to protect yourself and your stuff. Renters insurance is actually a misnomer — the actual policy is personal property insurance. That means it covers your stuff anywhere.
When you live in a dorm room or have a roommate, your stuff is just less secure. People are always coming and going, and you may not know a lot of them. Then, you probably have to go the library, the computer lab, the quad, the coffee shop, and more. There are so many places that have the potential for someone to take your stuff.
And that's just theft! Renters insurance also covers things like a regular policy: fire damage, vandalism, and more. Many college students think the landlord or university (if you're living in a dorm) will pay for loss if the building burns down or something happens. That's incorrect. Landlord insurance only covers the structure — renters are responsible for their own contents!
Prices to Expect
The amazing thing about renters insurance is that it is extremely cheap! I'm talking incredibly cheap. When I was going to college, I had a renters insurance policy worth $5,000, and I was paying $4 per month for the policy. Plus, I used the same company that did my auto insurance, and I received a “multi-policy discount” of $15 on the car insurance. The bottom line: it was free.
Why did I choose $5,000 for my policy? I really only had a computer and TV that I cared about, but my apartment also had a cheap couch, a bed, and my clothes. I figured in a worst-case scenario, that $5,000 would get me back on my feet.
You can take the $4 per month as a baseline. You can get a policy worth $10,000 for about $10 per month, and a policy worth $20,000 for about $20 per month. The question is, as a college student, do you really need that much insurance?
What Coverage to Look for with Renters Insurance
This is always the tough one, because every company calls their coverage a little something different. Plus, each insurance company typically offers add-ons that may or may not be of value to you.
The biggest benefit you're looking for is property protection. You want to make sure that your stuff is safe. A typical policy would cover:
- Theft — ensure the policy covers theft from your unit and theft anywhere you are, like a coffee shop.
- Smoke damage
- Lightning damage
- Discharge of water — for example, if the fire sprinklers go off accidentally.
Here are some other important coverages:
- Loss of use: This helps you pay for another apartment or hotel should you not be able to use your rental for whatever reason.
- Liability: This is coverage that insures you if you are sued. Say your dog bites someone, and they sue for the cost of medical bills. Your liability coverage will help you pay for this expense.
Here are some typical terms:
- Deductible: This is what you pay if something happens. Many policies offer no deductible, but the average deductible is $500. I would aim for a deductible of $0 for a policy, but get the lower amount you can afford.
- ACV vs. replacement cost: This determines whether you will get the actual cash value of the loss or the replacement cost of the loss. Think about it this way: if your two-year-old laptop is stolen, will you get enough money to buy a new laptop, or will they give you the current eBay price for your laptop? I always opt for replacement cost, since I will get a new laptop.
Here are some random coverages (you may not need these, but you could depending on your situation):
- Hurricane damage coverage
- Flood damage
- Identity theft protection
All of these extra random coverages probably have extra charges associated with them. I wouldn't opt for them unless you're very concerned about those issues. Chances are, though, as a college renter, you don't need hurricane or flood protection because you could probably take the small amount of personal property you own with you when you evacuate.
Companies That Offer Renters Insurance
All of the major insurance companies offer renters insurance, and there are many small companies that focus on renters insurance. I'm a firm believer that you should apply for renters insurance with whatever company you currently have an auto policy or other insurance policy with. Many times, you'll qualify for a multi-policy discount, and it will allow you to save enough money to easily cover the cost of renters insurance.
What You Need to Apply for Renters Insurance
You don't need much to apply for renters insurance. You typically fill out a form online that includes your name, address (of the unit you're going to be renting), phone number, and possibly your Social Security number.
They may also ask you questions about whether you have pets (certain breeds of dogs may disqualify you from insurance), whether you have roommates (may increase the cost), and certain characteristics of the unit (fire alarms, smoke detectors, burglary alarms, etc.).
Whatever you do, don't lie on your insurance application! If you lie, and have to file a claim, your claim will be denied, and you could even be sued for fraud.
Otherwise, the process is painless and will probably take about 15 minutes to get you a policy.
How to File a Renters Insurance Claim
Should something happen and your stuff is stolen or there is a fire, you'll have to file a renters insurance claim. This simply means you contact your insurance company (typically by phone, but many companies are moving to online claim forms), and tell them what happened. Your insurance company will then open an investigation and process your claim.
Important: They may ask for proof of your belongings, such as a laptop. That's why it's so important to keep records of your purchases — either by keeping a copy of the receipt, or saving the transaction online. Also, storing photos of your belongings is a good practice if you don't have receipts.
Depending on your insurance company and the nature of the claim, they will typically pay for losses within several days to several weeks. As such, it's still a very good idea to have an emergency fund to help you get through the interim.
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