Spring is here, and across the country this means an annual rite of passage is occurring — graduation. As grads enter the work world, many often look forward to that first “real” paycheck and their first apartment. In addition to making sure you can afford that amazing apartment you just found on your salary, don’t forget to factor in all of the costs associated with renting — such as renters insurance.
Why do you need renters insurance?
Your landlord will have property insurance on the space you are renting, so why do you need coverage too? Renters insurance covers your property and also covers things like accidents and liability. A fairly common response to this statement, particularly from those just starting out, is “my stuff just isn’t worth that much.” Some of this may stem from how said “stuff” was acquired. You might not have paid much (or anything) for furniture and kitchen hand-me-downs, but that isn’t how you should assess the value of your belongings.
Instead, take an inventory and add up how much it would cost to replace all of your items if they were damaged or stolen. List everything, including personal items, TV, laptop, and furniture. Mom and dad might have given you the equipment to set up your first kitchen, but if you price out pots, pans, dishtowels, plates, and flatware you might be surprised to discover how much it would cost to replace just the kitchen — now imagine what it would cost to replace everything you own.
As noted above, accidents and liability are two more very good reasons to have renters insurance. Renters insurance covers things like accidental damage to an adjoining apartment or an injury that occurs when someone is visiting your apartment. Either of these scenarios could be costly — and without renters insurance, those expenses will come out of your pocket.
Read — and understand — the renters insurance policy
As with most things in adult life, it’s important to know what you are getting into before you start signing documents that are legally binding. This includes both your lease and your renters insurance policy.
First, the lease: many leases will require you to have renters insurance, and it will spell that out somewhere in your lease agreement. Next, the renters policy: make sure you are crystal-clear on what it covers, and what that coverage means. Know the difference between an actual cash-value and a replacement cost coverage policy, for example. If you are in an area that experiences earthquakes, hurricanes, or high winds, you might need an additional rider to cover potential damage from those types of disasters.
Having a roommate is a great way to reduce the costs associated with your first apartment, but not all costs can just be split down the middle. There are usually stipulations on renters policies that spell out whether and how non-family members are covered, so read your policy closely. Also think about things like roommates moving (it happens), and what sharing coverage would mean if there was a need to file a claim. Having separate policies for each roommate is a cleaner, albeit a slightly more expensive, way to go.
Moving into your first apartment is exciting, but there’s a lot to consider. Taking the time to make sure you are getting the right policy for your particular situation is important, so start planning now. Do the research, and talk to your roommates. One step you can take right now is to check out what other renters have to say about their rental insurance companies on Clearsurance.
Armed with the right information, you’ll feel better prepared to sign on all those dotted lines.
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