Many parents will soon be sending one or more of their children to college and many of those children will be living in an apartment or rental house. Among the lengthy list of things to consider when your child is moving back to college is whether your child should purchase “renters’ insurance.”
Renters’ insurance policies are designed to cover the tenant for a number of losses that may arise during the rental period, including theft and personal liability. Coverages of course vary but most policies are issued with a $500 deductible. “Contents coverage” includes everything from appliances, musical instruments, clothing, furniture, computers, Xboxes, etc.
Additional coverage for such things as jewelry or computers can be added by specifically “scheduling” such items in the policy at an additional premium. By scheduling such items, there is usually a small or no deductible as to the scheduled item in the event of a loss. It is recommended that the student’s computer be “scheduled”. In the event of the theft or damage to the computer, the replacement cost of the computer (if the computer is replaced) will be paid by the insurance company without depreciation for the age of the computer. The coverage for the scheduled computer applies to not only damage or loss caused by theft, fire, storm of water damage but also if the computer is damaged by the negligence of your child such as dropping the computer or, perhaps more likely, spilling a “cold beverage” on it.
Another important benefit of renters’ insurance is that it provides personal liability protection. Some insurers do not automatically include personal injury protection so be sure to discuss this issue with your agent. Such coverage may include protection up to the dollar amount of the policy limit for everything from personal injury claims to libel and slander claims. The insurance company will provide a lawyer and pay your child’s defense costs if he/she is sued.
Perhaps the most important feature of renters’ insurance is that the policy will provide fire/legal liability coverage to the tenant in the event that the tenant’s negligence causes damage to the building. Unfortunately, this not an uncommon occurrence and when it occurs it usually results in the landlord or its insurer suing the tenant for damages to the building. This is especially important coverage to the parent(s), as parents are often required to sign the lease as a guarantor of the tenant child.In summary, the landlord does not insure the contents of the apartment but only the building itself. As such, renters’ insurance is an important consideration for all tenants and in some instances is required by the landlord. The good news is that renters’ insurance is relatively inexpensive ($1 5/$20 per month on average) compared to automobile insurance or homeowner’s insurance.
Finally, when parents send their children off to college they should not only make sure they have renters insurance, they should make sure their children have named their parents as Agent under a Financial Durable Power of Attorney, and as Patient Advocate under a Durable Power of Attorney for Finances. That way, every one is protected and being look out for wherever they may be.