Rental Insurance for the College Graduate


Trying to think of a gift for a special college graduate? If you lean to practical gift giving, rental insurance might be just the ticket! OK, it might not have the same immediate allure as cash, but it could be much more valuable in the long run. Even if you don’t want to give it as a gift, you can do the young renter a huge service by helping them to understand the importance of this coverage – and by dispelling a few myths, in the process.

Homeowners understand the importance of home insurance. The Insurance Information Institute (III) reports that about 95% of all homeowners have insurance. Renters not so much. In a 2014 survey, only 37% of renters said they had rental insurance coverage.

Rental Insurance Myths

There are several misunderstandings about what rental insurance is and why it’s important. Here are a few myths and objections that we often hear.

My landlord has insurance. Many renters are under the false impression that they are covered under landlord’s policy but the landlord’s policy is for the building. If a fire or some other disaster occurred, a renter’s personal possessions would not be covered. Plus, a landlord’s policy would not help you with expenses for temporary living if the building is destroyed or for any bodily injury lawsuits that could happen if someone is injured in your apartment.

I don’t own enough to make it worth it. That’s rarely true. Look around your apartment at furnishings, electronics, kitchen goods, clothing, books … how much would it cost you to replace those things if you had to start from scratch? Plus, renters insurance also offers liability protection against bodily injury or property damage lawsuits and coverage for additional living expenses if you are displaced from your home in a disaster.

I can’t afford it. Rental insurance is surprisingly affordable. III did a national assessment of average rental and homeowners premiums in 2012 and found that the average rental premium was $187 a year. It can work out to as little as $12 to $14 a month. The amount you (or your premium) will vary by state and by what type of and how much coverage you need.

I’m not sure what or how much to buy. An independent agent can help you determine what you need and can tell you about various options – such as “actual cost” vs “replacement value.” They can advise you on deductibles and whether there are any add-ons that would be beneficial to your unique circumstances. A good agent will be able to get quotes with several insurance companies and will advise you about any available discounts. For example, there are sometimes discounts if you combine a rental policy with your car insurance.

Learn more about Renters Insurance

Renters Insurance Checklist
What you need to know about rental insurance