The benefits of renter’s insurance for college students

Renter’s insurance protects a renter’s personal property against damage or loss. College students don’t have much personal property, but their most important possessions, such as laptops or bicycles, are also the most often stolen and the most expensive to replace. To protect themselves and their parents, all college students who rent an off-campus apartment or shared house while away at school should consider getting renter’s insurance.

Under renter’s insurance, the insurance company will pay to repair or replace personal belongings if they are damaged, destroyed, or stolen. Some policies also cover other forms of loss, while others don’t. In particular, most policies place a low cost value on the information stored on a laptop, cellphone, or PDA.

Some policies pay the replacement cost of the item. Others only pay its cash value. The difference can be quite large, especially for electronic items such as computers, which quickly become outdated and lose their cash value. The cash value of an item is usually based on its original purchase cost minus depreciation.

Any personal property valued at over $1000 should be separately itemized on the policy. Very expensive items may require additional coverage. This is known as an insurance ‘rider’ or ‘floater.’

Although college students may be covered as dependents under their parents’ insurance policy, that coverage does not usually include the student’s personal property while living away from home. Landlord’s insurance never covers personal property damage or losses where the landlord cannot be held directly responsible for those losses. For example, damages resulting from a college student’s party or unattended candle are not the landlord’s responsibility. The landlord’s insurance may also be inadequate to cover all damages for which the landlord is liable.

Many renter insurance policies also include liability protection. This protects the renter in case another person is injured while inside the rental unit or as the result of legal activities inside that rental unit. Liability insurance also covers loss or damage claims for another person’s personal property while a guest of the renter. Student parties often involve drinking, and the host of the party may be held liable if an intoxicated guest is injured. If a dependent college student is found liable for another person’s property damage or injuries and cannot pay, his parents are responsible for the settlement cost. Serious injury can bankrupt a family.

Compared to other types of insurance policies, renter’s insurance premiums are very low. The exact amount of the premium depends on the type and location of the rental unit, its existing risks or safety measures, the value of possessions to be covered, and the renter’s insurance history. Renter’s insurance which offers replacement cost coverage is more expensive than renter’s insurance which offers cash-value cost coverage.

College students who share an off-campus room or house might be able to get a group renter’s insurance policy. This may be a cheaper alternative per student. However, it also requires more trust between housemates than several individual policies would. It is a good idea to research both options before committing, to determine which is best for you.