If you have a child heading off to college, you will want to make sure they are protected while away. Considering renters insurance is one option that can help protect possessions in their dorm room or apartment or rented house. Without insurance of your own, you could be left with nothing in the event of a fire, theft, or an accident.
That’s why renters insurance (HO-4) is a great option, not just for college students but for anyone renting property. It is a special kind of homeowners insurance providing no coverage for the building itself. Instead, it covers your child’s personal possessions and protects them against liability claims if they live in the dorm, or rent a nearby house or apartment.
“A renters policy is one of the most affordable insurance policies that a person can purchase. It also has the potential to be one of the most impactful policies as it can help prevent a major life setback if a claim where to occur,” says Insurance Agent Jesse Wiedrich.
Property damage coverage
Renters insurance policies cover only losses that result from any of 17 named perils. If your renter’s property is lost or damaged as a result of one of these perils, your insurance company will compensate you for your loss. The covered perils are:
- Fire or lightning
- Windstorm or hail
- Riot or civil disturbance
- Vandalism or malicious mischief
- Broken glass
- Volcanic eruption
- Falling objects
- Weight of ice, snow, or sleet
- Accidental discharge or overflow of water
- Sudden and accidental tearing apart
- Artificially generated electrical charge
Keep in mind that some renters insurance policies specifically exclude certain perils (earthquakes, flooding). As a result, you may need to purchase a separate policy to insure your possessions against these additional hazards.
Property coverage levels typically start somewhere around $15,000 and go up from there. As you increase your coverage level, your premiums increase as well. One of our insurance professionals can help you determine the amount of coverage that you or your child may need.
Replacement cost vs. actual cash value
Actual cash value coverage reimburses you for only the amount that your property was worth at the time it was stolen, damaged, or destroyed. This means that if all of your child’s clothes suffer smoke damage in a fire, your insurance company probably will pay as much as they could’ve made at a yard sale–not the $4,000 spent over the last couple of years to create that wardrobe.
Replacement cost coverage, by comparison, reimburses you for the amount that it will cost to replace the renter’s property. If you bought a $400 television two years ago, you’ll receive enough money to go out and buy another television just like the old one. You will probably have to replace the lost property with personal funds and submit the receipt before receiving compensation. Nevertheless, replacement cost coverage typically pays significantly more than actual cash value coverage.
Replacement cost coverage is somewhat more expensive than actual cash value coverage, but it is usually worth the extra money. When you get a quote from an insurance agent, make sure you know which type of coverage is being described.
Renters insurance also provides liability coverage. A typical renters insurance policy covers you for accidents and injuries that occur in your home, as well as accidents outside of your home that are caused by you or your property. This liability coverage includes legal defense costs, if you are taken to court over such an accident. The amount of liability coverage that you need depends on your individual circumstances.
What does it cost?
The cost of renters insurance varies greatly depending on where you or your child will be living, the construction of the building, your deductible, and how much insurance coverage you need. But renters insurance is much less expensive than homeowners insurance. In addition, dorm insurance policies typically have lower deductibles than home insurance policies as well.
For peace of mind in case the unexpected happens while your child is away at college, and to know your college student can get their items replaced as quickly as possible to get back focusing on their studies, renters insurance is a great option. Again, renters insurance does not just apply to students heading away to college but is a great option for anyone who may be renting property.
For more information on renters insurance policies, rates, and coverage limits, please contact a Dakota Community Bank & Trust insurance agent.