Give renters insurance the old college try

August 8, 2013

Students away at school should consider getting their own coverage.

  POSTAGE by Rob Stamp

It’s that time of year when parents send off their kids to college, hoping that their sons or daughters are making the most of the experience and praying that an uncertain job market doesn’t undercut the investment they’ve made in their children’s education. It’s a concern that shakes the foundation of the American way of wanting a better life for the next generation and striving to make it happen at whatever cost.

We’re asked all the time about the need for renters insurance when a customer’s son or daughter goes away to school. Truth is, in most cases, they don’t really need it because a student is still considered a resident of the family household and remains covered under most homeowners policies. There are often limitations to the amount of personal property coverage for secondary locations like dorm rooms or apartments rented by college students. It’s not unusual for a homeowners policy to only provide 10 percent of the personal property coverage amount for additional locations occupied by an insured. Let’s use a $200,000 home as an example. The policy providing $200,000 dwelling coverage would usually include between 60 and 80 percent of that amount for personal property coverage ($120,000 to $160,000). If the policy has that 10 percent personal property limitation on additional locations, then the student’s belongings would be automatically covered for up to $12,000 to $16,000. Most folks think that would be more than enough to cover Junior’s stuff.

Though most homeowner policies are similar, parents should check their actual policy or ask their agent to make sure their son or daughter remain insured while away at college. But, just because they’re covered by their parents’ policy doesn’t mean that’s the best option. Here’s why:

  • Renters insurance is fairly inexpensive for what it provides. Replacement cost policies often start at $20,000 personal property coverage and can run from between $115 and $200 a year. Included would be personal liability coverage that could provide up to $300,000 protection against incidents like accidentally starting a fire or causing an injury to someone else.
  • The available deductibles on renters policies are usually lower than what many homeowners are forced to carry today. It’s fairly common to see $1,000 or $1,500 homeowner deductibles, while renters policies can be obtained with $250 or $500 deductibles. Because renters premiums are so much lower, it doesn’t save much to carry the higher deductibles on those policies.
  • The student with his or her own renters insurance is beginning their own property insurance history, which could prove helpful down the road when it comes time to buy a new house and purchase an actual homeowners policy. Parents should be interested to know that when their son or daughter has their own policy, any claims turned in on it will stay with the kid. That means mom and dad don’t have to worry about claims at college dragging their more expensive homeowner premium through the mud.

There are few creatures roaming our planet lower than a dorm thief, but that doesn’t prevent expensive items from being stolen. Even the best security measures can be compromised among those living in confined areas like a floor of a residence hall. Today’s flat screen TVs and laptops make it awfully easy for bad people to do bad things. Off campus, you can imagine why a landlord would want his tenants to have the liability coverage provided by renters insurance in case they do something stupid like setting the apartment on fire by burning a bra or draft card. And, sorry, Bubba, I don’t think an illegal still that blowed up in the basement would be covered. So a renters policy may not be for everyone.

Options for special computer coverage and personal injury protection should be part of any discussion you have with your agent regarding renters insurance.

And, now for the obligatory disclaimer: You’ll have to check the policy itself for all the terms, conditions and exclusions that make it the insurance contract that it is.