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Now that May has begun, college seniors across the country are preparing their final papers and presentations for the big moment of college graduation.  After graduation, students will be looking for a job and a place to live.

With real estate prices so high, it is not surprising that an unparalleled amount of college grads are now renting.  The problem with this is that many of these recent grads are foregoing renters insurance solely because they are unsure about the costs and what it specifically covers.

Insurance Business America released a Nationwide Insurance survey that revealed astonishing numbers about how little men and women in their early twenties know about renters insurance:

  • 75% of uninsured renters don’t have an accurate view of what renter’s insurance costs and what it provides.
  • About one in three renters don’t know that party mishaps are covered under renters insurance.
  • 40% don’t realize insurance may cover their stolen property.
  • 44% of millennials have any form of renter’s coverage at all.

In most cases, recent grads take a job after graduation that may not pay the highest.  This is where a strong family support system comes into play.  Without them it is hard to say that the younger generation would be able to afford renters insurance.

In order to really intrigue these young men and women about renters insurance, it is imperative to discuss the affordability of the coverage and its significance.  

Renters insurance covers your possessions, liability and additional living expenses. Let’s take a look at these three types of protection:

Possessions
Standard renters insurance protects your personal belongings against damage from fire, smoke, lightning, vandalism, theft, explosion, windstorm, water and other disasters listed in the policy. Floods and earthquakes are not covered.

To decide how much insurance to buy, you need to know the value of all your personal possessions—including furniture, clothing, electronics, appliances, kitchen utensils and even towels and bedding.

The easiest way to figure this out is to create a home inventory, a detailed list of all of your personal possessions and their estimated value.

There are two types of renters insurance policies for your possessions:

Actual Cash Value pays to replace your possessions minus an amount for depreciation (the reduction in the value of items due to age and use) up to the limit of your policy.

Replacement Cost pays the full cost of replacing your possessions (with no deduction for depreciation), up to the limit of your policy. The price of Replacement Cost coverage is about 10 percent more than Actual Cash Value coverage, but can be well worth the additional cost.

Note that a standard renters policy offers only limited coverage for items such as jewelry, silver, furs, etc. If you own property that exceeds these limits, it is recommended that you supplement your policy with a floater. A floater is a separate policy that provides additional insurance for your valuables and covers them for perils not included in your policy such as accidental loss.

Liability
Standard renters insurance policies also provide liability protection in the event you or members of your familiar case injury to others or damage their property.  It also pays for damage your pets cause.

If you are sued, the liability portion of a renters policy may pay for both the cost of defending you in court and for court awards, up to the limit of the policy. Liability limits generally start at about $100,000. Your policy may also provide No-Fault Medical coverage. If visitors are injured in your home, regardless of fault, you can submit their medical bills directly to your insurance company. You can generally get $1,000 to $5,000 worth of this coverage. It does not however, pay medical bills for your own family or your pets.

Additional Living Expenses
Many people are pleasantly surprised to learn that Additional Living Expense (ALE) coverage is typically included in a renters insurance policy. If the home or apartment you are renting is damaged or destroyed and you need to live elsewhere while it is being repaired or rebuilt, renters insurance will cover your additional living expenses—namely the difference between your regular living expenses and the additional costs incurred by having to live away from your home, such as hotel bills, temporary rentals, restaurant meals, etc. 

Need help deciding what coverage is best for you? Contact us today at 1-888-512-8878.  We also have a Renter's Insurance 101 report you can download for free. 

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