With fall fast approaching, students will soon be leaving their parent's homes to move to their new lodgings on or near their university campuses. If you're one of them, or a parent or guardian of one, you should know that an important but often overlooked way to protect both their possessions and financial health is to make sure that you have tenant insurance.
In many cases, your child will likely want to bring expensive personal items to their new place, including computers, TV and stereo equipment, and furniture, not to mention hundreds of dollars worth of textbooks and supplies. Without the protection of tenant insurance, you and your child are vulnerable to the cost of loss or damage to these personal items.
In addition, you might be held liable for any damages to their dwelling that happens while they're living away from home. This can add up to serious and even life changing financial heartbreak. Fortunately, the cost of these perils can be easily avoided by contacting your insurance agent or broker to make sure you are covered by tenant (or renters) insurance.
Here are five things you (and your child) need to know:
1. When you sign a rental agreement, you become legally responsible for any damage caused to the building and any injuries to visitors or other residents.
This means you can be sued by the landlord for any damage to the home to cover the cost of repairs, even if you are not directly responsible for causing the damage. Many students chose to rent rooms in older homes which may be more vulnerable to damage.
You may also be responsible for personal liability, meaning that if someone is injured in your home - even if it is one that you're renting, they may be able to sue you for any costs associated with the injury. This can include medical costs, income replacement etc. If you are not covered by insurance, you may have to pay these expenses out of pocket.
2. Your landlord's policy does not cover your belongings or your liability.
Don't assume that the landlord's insurance policy will cover your child. He or she may have insurance on the building, but the personal items that your child brings are not covered by that policy. In addition, the landlord's policy will not cover personal liability for injuries to third parties or damage to the home.
By purchasing tenant coverage for your child, you ensure that you and your child are financially protected in case of loss, damage or legal liability.
3. You should keep an up to date list of your belongings in case of theft, loss or damage.
Have your child keep an accurate list of the belongings that he or she takes with them to school. This will make it easier to get your insurance claims settled faster in the event of theft, fire or other risks. It's important to keep receipts from major purchases, so that you can verify the amount you paid for these items.
It's a good idea to engrave any electronic devices with identifying information to make them easier to track if they are stolen. Using a name, and maybe a student number is highly recommended. Be sure to reinforce the importance of keeping doors locked and keys with you at all times to prevent theft.
4. Know your coverage.
There are two different types of coverage that you can buy to protect your child while they're living away from home, including.
All risk contents coverage to cover their belongings for any type of loss or damage unless it is specifically mentioned in the policy. For example, certain "Acts of God" are considered uninsurable and will be excluded from the policy. The insurance company will not cover any losses caused by these events.
Named-Perils coverage ensures that their belongings are covered in the event of a specific list of potential risks such as fire, theft or water damage.
Within these two frameworks, you can choose to insure your child's personal items for Actual Cash Value (ACV) or Replacement Value.
ACV coverage pays you the current cash value of any belongings that are covered in under the policy. For example, if you bought a laptop for $800 3 years ago, that laptop may be worth $200 today (due to depreciation and general wear and tear). If the laptop were stolen, under ACV you would be entitled to only $200.
Replacement value coverage pays you the amount it would cost to replace your belongings. For example, that same 3 year old laptop may cost $600 to replace with a similar model on today's market, though the damaged or stolen laptop was only worth $200. If it was insured for replacement value, you would receive the full $600. Of course, your monthly insurance premium will typically be higher if you choose to insure items for replacement value.
5. You may already have coverage for your student under your home insurance.
In some cases, your home insurance may cover your child's insurance needs while they are away at school. You will need to contact your insurance agent or broker to find out if this is the case.
Make sure you know the details of the policy. In some cases you may only be covered for a specific time period. For example if your child chooses to stay in their new dwelling after the school year has ended, you may need to purchase another policy to maintain coverage. There may also be age limits or coverage limits. Your insurance professional can review your policy and answer these questions for you.
Purchasing tenant insurance while your child is away at school is an important way to secure your financial situation and protect yourself and your child from the cost of replacing their personal belongings if they are lost or damaged. The cost is relatively inexpensive, often between $100-$150 dollars per year for a basic package. When you consider the potential cost of replacing invaluable items, it makes sense to purchase the protection for your peace of mind.
