Why College Students May Need Renter’s Insurance

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The insurance can help pay for property damaged in a fire or stolen. And replacing clothes, furniture and electronic gadgets adds up.

By Ann Carrns

College students who are already shopping for laptops, textbooks and other campus gear may want to add something else to their list: renter's insurance.

The insurance can help pay for personal property that is stolen or damaged by accidents like fires from cooking. It offers liability coverage to help cover medical and legal costs if someone is injured at your place or someone's belongings are damaged. And some policies pay for a hotel and meals, if a calamity leaves the property unlivable.

Students may not think they have much gear, but replacing clothes, furniture and electronic gadgets adds up. A stolen backpack with a laptop, tablet and textbooks can easily total $3,000, said John Fees, co-founder and managing director with GradGuard, which markets student renter policies.

Students living in dorms may have partial coverage through their parents’ homeowner policies, said Loretta Worters, a spokeswoman for the Insurance Information Institute, an industry group. This "off-premises" coverage, however, is often less than the homeowner policy's benefit limit — say, 10 percent. If the policy covered belongings up to $100,000, the coverage for the dorm room would be $10,000.

"You may not have as robust coverage at a different location," said Karen Collins, assistant vice president of personal lines at the American Property Casualty Insurance Association, an industry group.

Some homeowner policies don't automatically include a student's residence, so it's best to confirm coverage, Mr. Fees said. Homeowner policies often have a higher deductible — an amount that is subtracted from a claim payment — than a renter's policy, he said.

Some colleges may require students to carry insurance as part of their campus housing contract. And many property owners who rent off-campus housing require students to buy coverage, said Alexandra Alvarado, director of marketing and education for the American Apartment Owners Association, which provides services to landlords.

"The landlord has insurance on the property itself," she said, "but that doesn't include the tenant's property."

If you have a renter's policy, your belongings are often covered even if they are stolen away from home. Ms. Alvarado recalled that when she was in college, her laptop was stolen from her car and her renter's policy paid to replace it.

A renter's policy doesn't cover everything. The policy may shield you if someone trips and gets hurt in your apartment, but not if a guest intentionally punches a hole in the wall, Ms. Alvarado said: "That's what the security deposit is for."

The average annual renter's premium was $174 in 2019, according to the Insurance Information Institute. Some policies cost less. Lemonade, an online insurer, offers basic policies starting at $5 a month.

Coverage details can vary by state and by insurer. Make sure the policy's maximum benefit is high enough to cover your belongings. Always check to see if the policy pays the replacement cost of damaged property rather than actual cash value, which may be less, and if it lists any exclusions. Policy language can be confusing, so ask if you don't understand something.

Students with items that exceed their policy's coverage amount, like special computer equipment or musical instruments, may be able to add them at extra cost, Ms. Worters said.

A renter's policy typically covers water damage caused by sprinkler systems that are accidentally set off or from rain entering through a damaged roof — but generally not from floodwater flowing in from the ground up. For that, you would need a flood insurance policy.

How frequent is water damage from sprinkler system mishaps? "I wouldn't describe it as common, but when it does occur, it's significant," said Josh Gana, facilities and physical environment director with the Association of College and University Housing Officers-International.

Students may mistakenly activate a sprinkler by knocking a ball around the room or by hanging something on a system fixture, he said. Water can soak a room quickly, and linked sprinklers may also damage other students’ belongings.

After a fatal dorm fire in 2000 at Seton Hall University, more colleges installed fire suppression systems, Mr. Fees said. There were about 1,200 fires in on-campus housing in 2020, according to federal data.

Here are some questions and answers about insurance at college:

No. Some insurers may add a roommate to your policy for a slightly higher premium, Ms. Worters said. If not, your roommate would need a separate policy to have coverage.

Not likely. Renter's policies typically cover theft of a laptop as well as damage or destruction from fire or other "perils." But knocking the device off a desk and cracking the screen doesn't qualify. Special laptop plans offered by some insurers and device makers, or an extended warranty or service contract, can provide coverage. Consumer Reports found little benefit in extended computer warranties, however, because the cost is similar to the cost of a repair.

Auto rates are typically higher for teenagers. But if your student is away and not driving your car, you may be eligible for a lower rate, so check with your insurer, said Robert Passmore, vice president of auto and claims policy with the American Property Casualty Insurance Association.