What if your laptop was stolen. How would you plan on replacing it? Renters insurance can help pick up the tab.
If I am living on-campus do I need renters insurance?
If you live on-campus in a dorm, your parents homeowners policy will likely still cover you, although they should check with their insurance agent to make sure that is the case.
If you are living off-campus, you may not be covered by your parents homeowners insurance policy and you should consider purchasing a policy of your own to protect your personal belongings.
Your landlords insurance will only cover the building, not your possessions. In this case, you'll need to think about protecting what you own if it is caught on fire, stolen or carried off by a tornado or flood. Renters insurance also protects you for liability coverage in case someone is injured while on your property.
When you are deciding how much coverage to buy, there are a couple of terms you need to know— actual cash value and replacement cost.
How does renters insurance work?
Say your five-year old TV is stolen from your apartment. An actual cash value policy would give you what a five-year-old TV is worth today. A replacement cost policy would give you the amount it takes to buy a new TV of the same kind and quality, after you purchase the new TV and submit your receipts. Premiums will be higher for replacement cost coverage.
Actual Cash Value: Present property cash value. This is equal to the replacement cost minus depreciation.
Replacement Cost: An endorsement that insures for actual replacement cost rather than actual cash value, which only covers the replace cost minus depreciation.
Depreciation: The decrease in the value of property due to wear, tear and age
How much will renters insurance cost me?
The cost of renters insurance varies based on several factors:
- Building. Apartments in a structure that is new, fire-resistant, and equipped with safety features like smoke detectors and deadbolt locks get better rates.
- Location. High-crime areas with a greater chance of theft will lead to higher premiums. Same thing with areas prone to natural disasters.
- Amount of coverage and the amount of deductible you choose.
Other things to keep in mind: Some companies may allow roommates to purchase a policy together; some may not. Check with your insurance agent to determine what options are available.