May 19, 2021 By College Ave Student Loans

Renters Insurance 101: How Renters Insurance Works

Renters Insurance 101: How Renters Insurance Works

When you live off-campus as a college student, renters insurance may not be top of mind on the “must-have” list — you might worry more about having enough money for groceries and textbooks. After all, you’re not quite ready for that “adulting checklist.”

Don’t automatically assume you’re covered by renters insurance as an apartment-dweller. If you want to get renters insurance, be sure you understand exactly how renters insurance works, so you can find the policy that’s right for you.

If you’re just beginning to explore how renters insurance works, we’ll cover the basics here, starting with: What is renters insurance?

What is Renters Insurance?

Think of renters insurance as security that swoops in as soon as something happens to you and your stuff. Renters insurance obviously can’t prevent something from happening. For example, it can’t prevent your apartment’s pipes from bursting, your things from getting stolen, vandalism, and other events.

Instead, renters insurance protects you after the fact by covering your things with two types of coverage options within your renters insurance policy: Actual Cash Value coverage and Replacement Cost coverage. Actual Cash Value coverage reimburses you for the value of your items at the time of the damage or loss. Replacement Cost coverage covers the costs needed to replace your lost or damaged items.

Renters insurance may also cover temporary living expenses and certain medical or legal fees when it’s applicable to the terms of your policy.

What Does Renters Insurance Cover?

This is one of the major questions you might have about renters insurance, and it’s a good one. One thing to understand right off the bat: Renters insurance covers way more than you might think, including:

  • Damaged personal property. Your renters insurance company covers the cost of damage up to your policy’s limits as long as the damage occurs under a covered peril. A covered peril or a damaging event named in your policy could include fire, wind, hail, explosions, smoke damage, theft, vandalism, water damage (from freezing or plumbing and appliance leakage), mold, volcanoes, falling objects, debris removal, building additions, and alterations. It may even cover credit card theft, check forgery, spoiled food, and snow and ice collapse.
  • Stolen personal property. Your renters insurance covers your personal property if it is stolen, no matter where in the world you happen to be. For example, let’s say your bike gets stolen from your apartment patio, or your laptop gets swiped right after class. You’re covered up to your policy’s personal property limit. Your deductible applies, which is the amount you pay out of pocket before your insurance provider kicks in the rest.
  • Personal liability costs: If something happens to someone in your apartment and you get blamed for the incident (such as if a friend trips and whacks his nose on your balcony and breaks it), your policy will cover limited liability costs, including the costs of your legal defense. A standard policy includes up to $100,000 in liability coverage.
  • Medical and legal bills: Your renters insurance can help pay for medical and legal bills if you are found liable for damaging someone else’s property.
  • Additional living expenses: If your rental home or apartment becomes unlivable because of a covered peril, your renters insurance policy will pay expenses above and beyond your normal living expenses. This is sometimes called loss of use coverage. For example, let’s say wind damages your roof, causing it to cave in and you cannot live in your apartment (hey, it could happen!). Your renters insurance will pay for your living expenses.

What Does Renters Insurance Not Cover?

The personal property and liability coverage provided by renters insurance won’t protect you from every risk you’ll encounter. The standard policy may also only cover a limited amount of some items. If you have any of the below, you may need to add extra coverage.

Ask your insurance provider about coverage for the following:

  • Property damage due to floods, earthquakes, and sinkholes
  • Liability coverage for situations related to dangerous dog breeds
  • Specific high-value items, such as jewelry and instruments
  • Vehicles
  • Your roommate’s property
  • Damage from pests like rats, termites, bed bugs, or cockroaches
  • Landlord negligence
  • Intentional destruction of property
  • Business-related property, such as your business computer (you must carry business insurance for items like that)

You’ll want to weigh what renters insurance covers and what it doesn’t before you take the leap.

How to Decide If Renters Insurance is Right for You?

Why might you, a recent graduate or college student, need renters insurance? You might want to ignore it altogether, because in most cases, you have a choice about whether you get renters insurance or not – you only need to get it if your landlord or building requires it.

The simple answer: Do you want your belongings protected in case an incident occurs? Or cover yourself for liability costs if another person injures themselves on your property? (You could find yourself on the hook for thousands of dollars.) Think of it as similar to auto insurance, except it covers your belongings in case something happens to you that’s out of your control.

Note: Your landlord does have insurance but it covers the things that are attached to the walls – not your belongings. Also, your roommate’s renters insurance doesn’t cover your stuff.

How Much Does Renters Insurance Cost?

If you decide that a renters insurance policy is right for you, you should know that the average cost is low in the U.S., you’ll pay about $14.90 per month, according to data from the Insurance Information Institute. Renters insurance can help you avoid potentially devastating financial consequences.

How Do I Get Renters Insurance?

If you’re a recent graduate or college student, you likely don’t have extra money lying around to cover the costs if something were to happen to your personal property. Similarly, liability and loss of use can cost you a lot of money. That’s why it’s a good idea to tap into a renters insurance policy to reduce the financial impact that could await you if the worst does happen.

College Ave has reviewed the different renters insurance providers and partnered with Lemonade. Like us, they focus on making their experience simple and easy to understand. You can get a quote in a few minutes. Should something happen to your belongings and you need to file a claim, you just submit a video explaining what happened. Their goal is to pay out a claim instantly. If your situation is more complicated, you’ll work with a person to do so. Then at the end of each year, they give what would be their extra profits from unused premiums to a charity of your choice.

Lemonade is available in these states and will add more: Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Virginia, Washington, and Wisconsin.

If you think you’ll need renters insurance, go ahead and get a quote today. It only takes 90 seconds and there’s no commitment.