A lot of people who rent apartments and houses do not have renter’s insurance. This is really risky business. Some are under the mistaken belief that their stuff is covered along with the apartment or home insurance policies that are held by the owners of those buildings.
Not so. Those policies only cover the dwelling, not the contents. The same applies to injuries. While the home or apartment owner can be held liable for accidental injuries that occur outside (driveway, walkway, or hallway in an apartment building), the renters can be held liable for injuries that occur inside. And unless their parents understand all of this and insist, college students just don’t buy renter’s insurance.
The Risk – It’s Big
College students tend to be busy, active people. They attend classes; they study; they party; they often go without sleep; and they can keep odd hours. And through all of this, stuff gets broken, stuff gets stolen, people get injured, and other mishaps occur that mean loss of property. Think about the possibilities (most of them are actually from personal experience):
The Drunk Guest: You have a party and it gets a bit loud and boisterous. Jim is a lot drunk and slips and falls in the bathroom. He hits his head on the bathtub. There is a huge gash, lots of blood and Jim is unconscious. It’s definitely “911” time, and all of you feel really bad for him. Until a month later. You and your roommate get a bill for thousands of dollars. Jim didn’t have health insurance and, since he was injured in your place, your renter’s insurance will have to take care of it. Uh – what renter’s insurance?
It is quite possible that you could be personally responsible for that hospital bill, if Jim decides to sue you because the hospital is suing him. You probably won’t invite Jim to another party, but the damage has already been done.
You Have Another Party: This time you monitor everyone’s drinking and force people to leave if they are too drunk. However, you have not planned for a couple of guys deciding to engage in some good natured roughhousing, and they accidentally fall into your brand new smart TV mounted on the wall. The screen cracks in thousands of places. They are really apologetic but have no money and no credit cards either. So, tomorrow you will be at the big box store replacing your TV, and fortunately you have a credit card - a card that will now be maxed out. So, don’t have any emergencies until you get it paid down.
You Have Still Another Party: This time you monitor the drinking, and you put your new TV under the bed for safe-keeping. But you fail to monitor the smoking. One of the partygoers knocks a burning cigarette out of an ashtray onto the couch. It gets buried between the cushion and the side, where it smolders for quite some time before finally turning into a real fire. It’s “911” time again. (Do you sense a tendency?) By the time the firefighters get there, the living room is truly “toast,” and every piece of furniture is ruined. Your landlord will repaint the walls, but he won’t clean your clothes from the smoke, nor will he be replacing your furniture. As the last firefighter leaves, he reminds you to call your insurance agent first thing in the morning. What insurance agent?
You are Absent-Minded: We all are at times. But you are late for your part-time job and you run out of the apartment, forgetting to lock the door. Your roommate is out of town for the weekend. You come back from work later that night, to find your apartment trashed and every possible valuable gone – television, TV, laptop, tablet, your roommate’s game system, the watch that came from your grandfather, and your coveted collection of beer steins. Of course you call the cops who take a full report and ask you for a listing of everything taken, including serial numbers of all of the electronic items. Serial numbers? At this point, you cannot even come up with a full listing of what is gone. The cop reminds you to call your insurance agent as soon as possible. Insurance agent?
So, You are Getting the Message – Now Get the Insurance
As you look at renters’ insurance policies, understand first of all that they are all different in the details, and you will need to do some solid research, get some quotes and read the fine print before you buy a policy.
Here are some of the important things to look for:
1. You want replacement value, not just market value based upon the age of the items to be replaced. Replacement value means you get a brand new item, not just money toward replacement based upon the age of your item. A 4-year old TV will be worth very little, but it will cost you a great deal to replace. You lose.
2. You want no exclusions. Sometimes, in order to get your price down, insurance companies will exclude certain really pricey items. If you have expensive jewelry, or some really valuable item, like a baseball card collection, these will be excluded unless you have a “rider” that will cost you more. A “rider” is an amendment to your policy that lists and places a value on those pricey items. You will pay extra for them to be covered, but at least you will be reimbursed the stated amount if they are destroyed or stolen.
3. Your valuables: Some insurance agents, if they deal with you in person, will ask you to take pictures of your valuables, including all electronics. This is a wise thing to do. If you purchase your insurance online, you will not be asked for photos. You will simply be given a price based upon your estimate of the value of all of the contents of your apartment.
Here is where things get tricky. If you then have a loss, you will be asked to make a list of everything destroyed or stolen. If you have replacement coverage, you will be given a percentage of the value of those goods and told to go replace them. You then must submit receipts for everything you purchased, and that is what you will actually get. If you have a total loss, don’t expect to get what you gave as a total value in the policy. Expect to get what it really cost you to replace.
4. Take Pictures: Even if your insurance company does not ask for photos, you take them anyway. Go through each room of the apartment and take pictures of every item. If you have items in drawers, such as jewelry, take pictures. Take pictures of your closet interior. You can keep those pictures in your phone of course, but you need a backup. Print them out somewhere that will date-stamp them and then store them somewhere outside of your apartment. And if you buy something new, add it to the stack of photos. In this way, there will be no question regarding what items you had.
5. Make a List: It is also a really good idea to take inventory of everything in your apartment – everything, down to the number of plates in the cupboard. Yes, this will take some time, but you will be so grateful that you did this if you should have an incident. It is impossible to remember everything you had, and, long after the insurance company has settled, you will remember things that were lost.
6. Loss of Use: If the apartment is damaged or destroyed by a fire, tornado, earthquake, and it cannot be lived in until re-built, where will you live? While it certainly adds to the cost, if you and your roommate(s) are in school and need to stay in town, you will need someplace – a homeless shelter is probably not the answer. You can get coverage through your policy that gives you options – the deposit on another apartment, for example. If the damage will only throw you out for a couple of weeks, you can get coverage for temporary living in a residential “hotel.”
7. Cost: The very basic plan, with a high deductible will usually run $15 a month. However, there are variables. For college students, rates can be higher, just as your car insurance is higher. Anything that is added, like replacement rather than market value, special items, and a lower deductible will drive up the cost. Premier packages with a reasonable deductible ($500), will run up to $40 a month. Divided by three roommates, this is less than $14 per month – well worth it. And if you can “muster up” the money and pay for a whole year up front, you can get a considerable discount.
8. Deductible: If you have a car, you know what “deductible” means. You are responsible for the first $500 or $1000, before the insurance payments are made. All renters’ insurance policies have a deductible.
Renters’ insurance should not be considered an optional expense. You need the protection it offers – college is expensive enough without the prospect of replacing all that you own.