Find out when it does and doesn't make sense for college students to buy renters insurance. Get the Money Girl book at http://MoneyGirlBook.com
Money Girl
326 MG Do College Students Need Renters Insurance?
[MUSIC PLAYING] Hi, friends. Thanks for downloading the Money Girl Podcast. I'm Laura Adams. When I went off to college, the last thing my parents or I considered was renter's insurance. But since then, I've learned the surprising amount of protection these inexpensive policies offer. In this episode, I'll tell you what renter's insurance covers and whether students really need it. If you live in a rented apartment, condo, or house, your landlord's insurance never covers your personal belongings. That means if something valuable is stolen or a fire destroys everything you own, it's your responsibility, not your landlords. Since the cost to replace your personal belongings could be much more than you can afford, having a renter's policy is a smart way to protect your finances. A renter's insurance policy typically gives you the following three types of coverage. Number one, personal property. This coverage protects the value of your belongings from a covered event, such as damage from a natural disaster, theft, or vandalism. Number two, liability coverage protects you against a claim or lawsuit if a visitor gets injured. And three, additional living expenses. This pays for temporary housing and meals if you can't live in your rental while damage for a covered event is repaired. Whether college students need the protections of renter's insurance depends on where they live. A student who lives at home or in on-campus housing is covered under his or her parents, renters or homeowners insurance, assuming that they have it. Both renters and home policies usually have a cap on the amount of off-premises coverage. For instance, claims that a student makes on campus could be limited to 10% of the parents' coverage limit at home. In other words, if parents have $100,000 of coverage on their home, the student would be covered up to $10,000 after paying the deductible. However, students who rent off-campus in an apartment, condo or house should have their own renter's insurance policy. They typically aren't eligible to get coverage from mom and dad's renters or homeowners policy. Don't make the mistake of thinking that students are too poor to have belongings to protect. Most students living off-campus have thousands of dollars worth of personal items, such as electronics, computers, furniture, bicycles, clothing, and textbooks that make buying renter's insurance worthwhile. Now that we're in Q4, it's a good time to start thinking about making memories with the people you love most before the end of the year. We put a lot into the time we spend with our loved ones. So you want to extend that care, comfort, and peace of mind to what happens when you're gone. 41% of people don't have the life insurance coverage they need. Policy genius makes finding and buying life insurance a breeze. 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If you want to do more and spend less like Uber, 8x8 and Databricks Mosaic, take a free test drive of OCI at oracle.com/advanced. That's oracle.com/advanced, oracle.com/advanced. - So what does all this protection for renters cost? You might be surprised to learn that the average cost of a renter's policy is only $184 per year. That's a really inexpensive financial safety net that no renter should be without. If a student is renting off campus with one or more roommates, they may be able to purchase a policy together and split the cost. However, if you're unsure about how long your living arrangement will last, I recommend that you go ahead and buy your own policy. Having renter's insurance means that you'll be in good shape. If a roommate leaves the toaster oven on and causes a fire or there's a bad roof leak, you'll have a reimbursed living expenses to help pay for temporary housing and food if you have to move out due to an unexpected event. You won't have to live without your favorite electronics or clothes for very long, and you can stay focused on your schoolwork. When you're shopping for renter's insurance, make sure you understand whether the policy offers cash value or replacement value for your claims. Here's the difference. Cash value coverage reimburses you for the value of personal belongings at the time of a claim. For example, if your three-year-old mountain bike is stolen, you'd receive the value less depreciation. So if the original cost was $2,000, you might only receive $1,000 minus the deductible. Replacement cost coverage, on the other hand, reimburses you for the full value of an item. So if you'd have to pay $2,500 to buy that same mountain bike today, that's what you'd receive less than deductible. The annual premiums for replacement coverage will be higher than for cash value coverage, but can be worth it if you have to make a substantial claim. Here are three tips to help parents and students find the best renter's insurance. Tip number one, ask your insurance agent. If you already have a home or renter's policy, find out exactly whether your student can be covered and at what cost. Tip number two, ask your school. Many colleges and universities strike deals with certain insurance companies that allow students to receive discounted rates. Tip number three, shop around. Get quotes from several insurance companies and compare prices. You can use sites like insurancequotes.com and netquote.com to get free quotes for your next renter's insurance policy. To read a transcript of this show, connect with me on Facebook or Twitter or sign up for the free Money Girl newsletter. Just visit the newly redesigned Money Girl page at quickanddirtytips.com. This is episode number 326 called Do College Students Need Renner's Insurance. I'm glad you're listening to Qing. That's all for now. Courtesy of Money Girl, your guide to our richer life. [music] [BLANK_AUDIO]