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Busting Renter’s Insurance Myths for New Grads

June 6, 2013

On the heels of graduation season, a lot of young folks are about to strike off on their own and move into their first apartment. We have one piece of advice for these would be tenants: buy renter’s insurance. It’s not as expensive as you might think and a good renter’s policy can provide a significant amount of property and liability protection to someone just starting out.

In an effort to dispel some widespread misconceptions surrounding renter’s insurance, here are three things every graduate (or first time tenant) should know when it comes to purchasing a renter’s policy.

Your Landlord’s Policy Doesn’t Cover Your Belongings

One commonly held myth is that a landlord’s insurance covers renters’ personal property inside the apartment. This leads a lot of renters to believe they don’t need insurance like homeowners do. This is false. A landlord’s insurance likely covers structural damage to the building and may even protect the landlord against damage caused by tenants, but this sort of property protection does not extend to renters’ belongings.

It Isn’t as Expensive as You Might Think

We’ve found that most people overestimate the cost of renter’s insurance. This is likely the reason why so many young renters go uninsured – they think they can’t afford a policy. The National Association of Insurance Commissioners estimates that, on average, a renter’s policy costs between $15 and $30 a month ($180 – $360 a year). This might be a good deal if you consider what it would cost to replace your more valuable belongings, as in the case of a theft, or the costs of being found liable for an accident on your premises.

It Protects More than Just Your Property

A renter’s policy is a valuable tool for protecting property you keep in your apartment, but as we suggested above, renter’s insurance also provides important liability protection. In fact, the biggest risk exposure young renter’s face isn’t theft or property loss but liability for accidents caused on the rented property. If someone gets hurt while visiting your apartment, a renter’s insurance policy can help cover any resulting liability costs. If, for example, you leave the bathtub running and water overflows or if you start a fire while cooking in your kitchen, you might be found liable for any resulting damage to the landlord’s building or other tenants. Renter’s insurance can help defend you and pay for these types of damages. For someone just starting out, this could mean avoiding an early bankruptcy.

Lastly, some renter’s policies go even further and offer “additional living expenses” (ALE) in addition to property and liability coverages. If your apartment is destroyed or if it becomes temporarily uninhabitable, these policies will cover the cost of other living arrangements.

When you look at the myths and misunderstandings surrounding renter’s insurance, it’s easy to see why a lot of people, especially young people, choose to live uninsured. By taking a closer look at the facts and by doing a little of the math we hope we can convince a lot of new grads that renter’s insurance is a worthwhile investment in their personal security and their future.

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