You’re throwing a housewarming party at your newly rented house, and suddenly your friend accidentally sits on the laptop that cost you an arm and a leg. Unfortunately, it’s now broken beyond repair, and you have to sacrifice a significant portion of your budget to buy a new one.
But you could have salvaged this situation if you had a renters insurance policy. Then, not only would you have been reimbursed the full value of your laptop, but you would have been covered against most major disasters accompanying students’ effervescent lives.
If this sounds familiar, renters insurance might just be an option for you.
But how much of it do you need? Let’s find out.
What Does Renters Insurance Cover?
- Personal property: damage to your personal possessions
- Personal liability: injuries to third parties and damage to their property
- Additional living expenses: extra expenses if the rented home becomes uninhabitable
- Medical payments: medical costs of third parties
With these four types of coverage and optional coverages like debris removal, food spoilage, and credit card forgery, most students can feel safe at a rented property, and – most likely – so can you.
But hold on for a second…
What If You Live On Campus And Are Already Protected By Your Parent’s Homeowners Insurance?
If so, you may not need renters insurance (as you are already covered – partially or fully). But then again, whether you need renters insurance or not also depends on the deductible of your parent’s homeowners insurance policy and your risk tolerance. Here’s why:
- Most homeowners policies have a high deductible ($1,000 or more), which – getting back to our laptop case – means you would have to pay for your broken device out of pocket. On the other hand, with a deductible as low as a few hundred dollars or less, a wisely chosen renters insurance plan would reimburse you for your broken laptop and similar losses alike.
Three Variables To Determine The Amount Of Renters Insurance You Need
1. Policy Type
First, you have to understand what exactly you want to get covered. While most policies provide property and liability coverage, items such as jewelry or valuable electronics may only be covered as an extension of the policy. For example, if you own $20,000 worth of jewelry, no standard policy can cover that. So you will need extra coverage.
2. Coverage Limits
Depending on the policy itself and the particular item in question, claim limits can be as low as $100 for banknotes and coins and as high as $10,000 for computers, phones, and electronics. At the same time, the higher the coverage limits of the policy, the higher the premium.
3. Deductible
The deductible on your policy is how much you have to pay out of pocket before the policy covers the rest. For example, a high deductible on your parents’ homeowners policy would make it impossible to protect your laptop. That said, policies with a high deductible are cheaper, which is kind of a trade-off.
How To Balance These Variables?
Insurance shopping may seem boring for a student, but it will help you understand insurance and allow you to choose any other policy in the future on your own or by verifying your agent’s recommendations.
To get the best value for the price:
- Estimate what type of coverage you need based on your risk tolerance and other insurance plans you own.
- Decide on the realistic amount of coverage you need based on your way of life, history of claims, and risk tolerance.
- Find out whether the deductible is reasonable by researching several policies from different agents.
Renters insurance is relatively cheap – about $190 per year on average – but it can save you and your family from substantial financial troubles. Furthermore, it can help you demonstrate to your parents that you can successfully venture out on your own while keeping your guard up.
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