Leaving the Nest: College Students and Renters Insurance

By Shannon Ireland

College students live for summer. They get a much-needed break from reading dense textbooks and studying for exam after exam.

However, after months spent at home with Mom and Dad, they're typically ready to head back to campus and regain their freedom when the fall semester rolls around.

Back-to-school shopping typically includes new clothes, upgraded laptops, and textbooks. But don't forget about one crucial item to shop for this summer: renters insurance.

Here's the deal with coverage

Students who live on campus are typically covered by their parents' insurance policies. So if their items are broken, lost, or stolen, Mom and Dad's insurance can come to the rescue.

But what about those who live off campus in rented apartments or homes? The story is a little different. Not only will their parents' policies likely not protect their belongings, but their landlord's policy typically won't, either.

When students move off campus, they're no longer considered a dependent, which is why their parents' insurance goes away. And a landlord’s insurance usually only covers the structure of the property. A student's belongings are his/her responsibility, and that's where renters insurance comes into play.

Oh, and don't expect your roommate's policy to cover your stuff, either. Renters insurance only protects the person listed on the policy.

What is renters insurance?

Renters insurance is a policy that offers protection for your belongings, such as furniture, electronics, clothes, and kitchenware, and liability in case someone is injured while on your property.

So if fire, smoke, windstorm, lightning, water damage (excluding flood damage), theft, burglary, or an explosion (yes, explosion) leaves your apartment in shambles, your policy can help pay for repairs or replacements of your belongings.

Or if you throw a party and someone falls down the stairs and breaks a bone, your coverage can assist with the medical or legal fees that arise.

Some policies even include additional living expenses coverage in the event that you're displaced while repairs are made due to damage from a covered claim.

Is renters insurance necessary?

Technically, no, unless your landlord requires you to have it.

However, foregoing the purchase of renters insurance will leave you paying to repair or replace all of your belongings by yourself if they're damaged or destroyed by perils, such as fire or lightning. And think about how quickly that sum can add up when you factor in a laptop, TV, bed, and the entirety of your closet.

The Insurance Information Institute found that 95 percent of homeowners had homeowners insurance in 2015, while only 40 percent of renters sought coverage.

How much coverage do I need?

That depends on how much you own.

The average renter owns between $20,000 and $30,000 worth of belongings. And the easiest way to figure out how much you need to protect your belongings is to compile a home inventory - an itemized list of everything you own, including photos or videos and receipts or listed values.

If you have an extensive collection of family heirloom jewelry or other high-value items, you may need to purchase a floater policy to properly insure them, because policies typically have a cap on coverage for high-value items (usually $1,500).

Once you figure out how much protection you'll need, shop for a policy that reflects that. And make sure it includes a minimum of $100,000 in liability coverage.

That sounds expensive …

Renters insurance is actually very affordable. Your landlord is taking on the expensive burden of insuring the structure and the costs associated with rebuilding. Renters insurance protects your belongings, so your premiums just reflect that value.

For context, homeowners insurance for the structure of the house is set at the amount necessary to rebuild it from the ground up, including building materials, while contents coverage (protection for a homeowner's belongings) is set between 50 and 70 percent of the structure coverage amount.

The average cost of renters insurance is just $12 per month, according to the Independent Insurance Agents and Brokers of America.

The bottom line

Factor the $12 fee into your monthly budget.

Renters insurance may not be necessary, but students have enough to worry about during the school year without trying to scrape together money to pay for damaged or stolen belongings, or hospital bills resulting from their dog biting a guest. To put things in perspective, did you know that the average dog bite claim was $37,214 in 2015?

So, do yourself a favor and make sure you're covered with a renters insurance policy for the school year.

Related:

• Renters Insurance Helps Cover the Gap
• The Inside Scoop on Renters Insurance and Roommates
• Are You Shelling Out Too Much for Renters Insurance?

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

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