Is it worth getting renter's insurance while at school?
Student life is typically all about thriftiness: eating and drinking economically, buying used textbooks, etc. It's a time to embrace things like instant ramen and $5 pitcher nights, the simple and modest pleasures that allow students to make the most of the university experience without breaking the bank.
Those small victories of financial restraint really do add up. Consistently opting for frugal lifestyle choices is likely to result in at least a couple hundred dollars per month staying put in the bank.
But unless a sparing student also has a renter's insurance policy, all of that penny-pinching could be undercut in seconds by a cruel twist of fate. Whether it's because of a break-in, a raucous party where things get out of hand, or any other sort of brutal unforeseen incident, there are many ways in which uninsured tenants can find themselves on the hook for a boatload of payments and replacement costs.
When renter's insurance comes into play
Renter's insurance encompasses three basic types of coverage: personal property, liability, and additional living expenses.
The first is probably the most common claim that would be made on a home insurance policy. Because landlords are only responsible for the dwelling structure and its core property fixtures, any items that don't fall into those categories fall under the jurisdiction of the tenant to insure. As we all know, having personal items damaged or stolen can be devastating. Replacing a computer, a bike, a sound system, or any other number of valuable goods is the last thing a student wants to be doing.
Liability claims are less common but can be equally —or more—devastating. As a resident or host of a dwelling, tenants carry a certain level of responsibility. Injuries that take place on the property will almost always come back to them. The liability aspect of renter's insurance puts the financial burden on the insurer in the event of an injury. Beyond just taking care of medical fees, this could also mean that the tenant may avoid dealing with a potential lawsuit.
With regard to renter's insurance, additional living costs are the expenses that arise from incidents where a tenant is displaced or requires extraordinary amenities to go about a normal routine. Especially if one of the costs in question is staying at a hotel while the property gets repaired, third type of claim can quickly become a big one.
How it works for students
Not every student will be in a situation that requires renter's insurance. Someone living at home obviously wouldn't, because he or she would still be benefitting from parents' (presumably) home insurance.
Many people, however, would be surprised to discover that home insurance can sometimes be eligible—or extended—to cover a student living in a campus dorm. So before thinking of taking out a renter's insurance policy, students and their guardians should always check to see if it is actually necessary.
For those living off-campus in a typical apartment, condo, or housing unit, renter's insurance would be purchased as it would for any other adult tenant. The only potential difference would be if the insurer offered a student discount of sorts. It would also likely be cheaper for students living with roommates to take out a group policy, but students in that situation are certainly able to able to take out an individual policy if they wish to do so.
Is it worth it?
The case for renter's insurance is simple. It is the only way to fully protect one's self from assuming financial responsibility when disaster strikes. Without it, the consequences of an incident almost always become far more dire and the road to recovery far more difficult than it all would be for a policyholder.
If a student isn't covered in some way by a parent or guardian's policy already, then the only good reason for not investing in renter's insurance is if he or she is totally sure that it won't be worthwhile. For example, if there is so little property of value that a theft wouldn't be very devastating, or if the student is so confident in the building's security that there is no need to worry about stolen items, or if he or she refrains from hosting gatherings where the likelihood of people getting hurt drastically increases.
But for the vast majority of students, those things are not the case. Most students love to party at home, or have roommates who do; most students are living in properties and neighbourhoods that have less than ideal security and protection; most students bring a lot of valuable items with them to school.
The cost of renter's insurance is usually in the ballpark of $175-$300 per year. That is significant, but not unreasonably expensive. Considering how much it hedges against, it is definitely worth buying for the average student tenant.