September 4, 2012
What to bring to college: Renters insurance can help protect against theft, damage
For college students who rent off-campus housing, renters insurance may be worth adding into their budget to protect personal belongings, according to Bret Eisenbarth of Kansas State University's Powercat Financial Services.
Eisenbarth, a graduate assistant with the university's free students financial counseling service, said that in most cases a student's personal property is usually not covered under their parents' homeowners insurance because the student is living away from home.
"Renters insurance protects personal property including, but not limited to, a computer, bicycle, furniture or a television in the event that it is damaged, destroyed or stolen," Eisenbarth said. "Renters insurance even covers items that you may take out of the home. For example, your renters insurance can cover your laptop computer. So if it gets stolen while you're out and about, then your insurance can help you to replace it."
Eisenbarth said providers typically offer two types of coverage: personal property and liability. Personal property coverage pays to replace or repair personal property if it is damaged, destroyed or stolen.
"This is the most common type of renters insurance because of the low cost associated with the policy," he said. "Renters insurance also will help you pay for a new place to live if your place becomes unlivable. If something happens to your apartment and it's not possible to live there anymore, your renters insurance may pay for up to one year of rent at a comparable property."
Liability insurance provides coverage for such things as bodily injury or property damage to others caused by an accident while on the policyholder's property. Additional renters insurance plans can be purchased to cover expensive items, such as jewelry. This type of insurance is often referred to as rider insurance because it is additional coverage on a specific item. Rider insurance can be applied to multiple pieces of property, but each will cost additional premium dollars, Eisenbarth said.
The cost of renters insurance varies by policy, but Eisenbarth said his experience with basic renters insurance puts the cost at $10-$15 a month, with additional liability insurance increasing the cost to $25 a month for a plan with a $500 deductible.
As with any type of insurance, it is often hard to make a decision on what amount of coverage to get for personal property. Eisenbarth said it's important to consult with an insurance provider to determine the amount and type of insurance needed. Some providers offer discounts if you already have a policy with them, such as for your car.
"Renters insurance is just like any other insurance in that there is an inverse relationship between the premium and deductible," Eisenbarth said. "If students believe they are unlikely to ever incur damage to their property, have property stolen, or have an accident that makes them liable for the rental property, then a high deductible, low premium plan may be best for them or vice versa as well. Also, adding rider insurance for expensive items will result in additional coverage.
Before choosing a policy, Eisenbarth said to do an in-depth inventory of your personal property. This involves noting the value and the serial number, if available, of each item you own. Most people take a photograph of the item and mark the photo with the value of the item, which helps determine exactly how much coverage is needed.
Even students living in a campus residence hall should consider renters insurance, Eisenbarth said.
"Because students in residence halls typically bring less personal property with them to school, they probably don't need as much coverage as a student living off campus," he said. "Low coverage plans will often cover possessions such as laptops, electronics and other personal property, but do not include any liability coverage."
Parents of students living in residence halls should check their homeowners policies to see what coverage, if any, can extend to their students.
Based on personal experience, Eisenbarth said it's becoming more common for landlords to require tenants to have liability insurance.
"This provides a safety net for landlords because the liability of tenant-caused damages or destruction then falls on the tenant and not the landlord, the owner of the property," he said.
For additional help and free financial counseling, contact Powercat Financial Counseling, in the K-State Student Union, at 785-532-2889 or check it out on the Web at http://www.k-state.edu/pfc. Earlier this year a White House advisory council cited Powercat Financial Planning as an example of an effort to improve the financial capability of college students.