Do College Students Really Need Renters Insurance?
Posted By Terri Williams on December 6, 2016 at 12:48 pm
Students moving to college already have made a lot of decisions, such as choosing a college, and selecting a place to live. However, they may not be thinking about another important decision: Do they need renters insurance? The answer isn’t as easy as they might think.
Kristy Moffat, owner of Brightway Insurance in Gainesville, FL, tells GoodCall, “Anyone renting should consider getting renters insurance, and college students are no exception.”
Students living on campus may expect their school to cover damaged or stolen items. Off-campus students may assume their landlords will cover these costs. But in most instances, this is not the case. “Most college students usually have thousands of dollars worth of personal items, such as electronics, furniture, clothes, textbooks, and bicycles,” explains Moffat. “As a renter, it is your responsibility to provide coverage for your valuable items.”
Renters insurance: on-campus vs. off campus
While specifics may vary depending on the policy, college students under the age of 26 who live in on-campus housing are usually covered under their parents’ insurance policy, whether it is a homeowners or a renters policy. “However, often there are coverage gaps that could be minimized through purchasing a renters insurance policy,” Moffat says. “For example, many homeowners insurance policies limit the amount you can recover for contents at locations other than the one stated on the policy.” An example would be a student vacationing in another state when their phone was stolen.
According to GradGard, students who live off-campus typically will not be covered by their parent’s policy. In addition, some homeowners policies are dependent on whether the student is enrolled in school on a full-time basis.
College students who purchase renters insurance can also get liability insurance, which can protect them from being sued if they damage someone else’s property. Example of this include leaving the water running in the bathtub and it floods the apartment or leaving food unattended on the stove that starts a fire in the kitchen.
Liability coverage also helps if someone is injured in the policyholder’s apartment. For example, if someone slips on a wet floor.
According to the Massachusetts Office of Consumer Affairs and Business Regulation, monthly premiums for renters insurance are usually between $15 and $30 a month. The amount depends on the size of the rented space and number of insured items.
For students who may be covered under their parents’ homeowners policy, Moffat says, “Homeowners policies often have higher deductibles than what you can obtain through a renters policy.” For example, deductibles for renters insurance could be a low as $100, compared with a homeowners insurance deductibles, which vary but could be anywhere from $500 to $1,000 or more.
State of mind
Mackey McNeill, CPA/PFS, a member of the AICPA’s Consumer Education Advocates Group, tells GoodCall that college students may be considered adults legally, but it’s important to remember that some of them may not fully grasp the consequences of their decisions.
Young students who are notorious for losing their keys and phones, dropping their phones and computers, forgetting to lock the door, etc. might be more likely to victims of accidents, damage, or theft.
Types of renters insurance coverage
College students can choose from two types of renters insurance coverage: actual cash value, or replacement cost coverage. So what’s the difference? For example, two years ago, a student purchased a MacBook Air for $1000. The computer has now depreciated by several hundred dollars and actual cash value would be much lower.
Replacement cost coverage would cover the cost of getting the exact same MacBook Air, regardless of how much that would be. Consequently, replacement coverage will cost more than actual cash value.
There are several factors to consider when weighing the decision to purchase renters insurance. Ultimately, students have to weigh the cost of paying for insurance that they may never use versus the cost of replacing their personal property in the event of an accident or theft or the cost of paying for damage or injuries they cause.