Make sure that you’ve learned the ins and outs of renter’s insurance

The staff of the Housing Resource Center suggests that you purchase insurance to protect your… The staff of the Housing Resource Center suggests that you purchase insurance to protect your property and your guests.

Renter’s insurance is a good idea whether you have nice furniture and lots of expensive stuff, or are living with secondhand furniture and milk-crate tables. Most students have more to lose than they can afford to replace. In case of fire or theft, they are often surprised by the high cost of replacing the television, stereo, computer, books, clothes, sporting goods, bicycle, jewelry, eyeglasses, CDs and other items usually taken for granted.

Renter’s insurance handles three types of problems:

Personal Property Protection covers the loss of your personal property because of fire, theft, water damage, smoke, etc. The value of the policy ($3,000; $5,000; $10,000, etc.) sets the limit of your compensation for damages. You determine the amount of coverage you want, and the premium or cost of the policy is set accordingly. The greater the coverage, the more you are eligible to collect and the higher the premium you will pay. With this type of coverage, if your $200 CD player is 5 years old, you are only able to collect the depreciated value of the machine, not the actual cost of a replacement.

Replacement Coverage covers the actual replacement cost of damaged property. It covers the actual cost to replace damaged items, as long as the cost doesn’t exceed the total policy value. Replacement coverage is more expensive than traditional property protection. If you have high-quality or expensive possessions, consider buying replacement coverage. If you don’t, regular coverage will probably be adequate. With either type of coverage, having proof of ownership and the purchase price of major items is recommended. A videotape of your apartment will help to show ownership, and either credit card or store receipts will establish the value of the items.

Personal Liability is the third type of protection provided by renter’s insurance. If a guest, visitor or service worker is injured while in or around your apartment, regardless of whose fault it is, his or her medical expenses will be covered by your policy. This is important protection in case of injury to friends or relatives who might be reluctant to sue you for damages, as well as protection for you if strangers are injured. Your insurance coverage provides payment for their documented medical or property expenses arising out of an accident in or around your apartment. For instance, if you were at fault for leaving objects blocking the stairway, your insurance would pay damages and defend you against legal action. If the landlord were responsible for not fixing the handrail, for example, your insurance company would pay damages and then collect damages from the landlord or his insurance company. If the injured person were at fault, your insurance company would either deny his claim for damages or pay and then sue for recovery from the individual or his insurance company.

The cost of renter’s insurance is fairly low, only $75 to $250 per year for a policy that provides reasonable coverage for the average student. A discount may be available if the insurance is purchased from the same company that provides your automobile insurance or your parents’ homeowner’s policy. Students may even be covered by their parents’ homeowner’s policy. Increasing or decreasing the policy’s deductible value – essentially the threshold of damages for which the insurance company will pay – will raise or lower the cost of coverage. It pays to shop for renter’s insurance, but most reputable insurance companies provide comparable coverage at competitive prices.

Do you need to have renter’s insurance? Be sure to read your lease carefully. A number of landlords who rent to students include a “waiver of liability” clause in which they deny any responsibility for a tenant’s belongings or for injury to guests or visitors. They may also stipulate that the tenant must purchase renter’s insurance as a condition of occupancy. If these clauses are included in your lease, and you do not purchase renter’s insurance, you will be personally responsible for the costs of property damage or loss, personal injury liability, and legal expenses in connection with those events, and you may be unable to collect damages from your landlord, even if he or she is partially responsible. If your lease stipulates that you purchase renter’s insurance, you must purchase it.