Millennial To-Do: Get Renter’s Insurance
Many of us have children who will be graduating from college this May and what an exciting time, it is! For you, it’s a time to embrace your freedom. Your work is done! Your child has left the nest! But you probably still worry and who could blame you? Your child is navigating a whole new world – and their decisions start to count more with every passing year.
If you’re anything like me, you are doing everything you can to help your favorite millennial start off on the right foot. That includes saving a little bit of money each month and putting it in a tax-advantaged retirement account such as a ROTH IRA. That includes making sure he or she has Health Insurance. And, finally, that includes a current Renter’s Insurance policy.
I certainly understand that money is tight for those who are just starting out…and the “big three” aren’t exactly fun things to allow for in a budget. But, the price of going without in favor of a gym membership and a couple of weekends out on the town can be too big to pay if luck isn’t on your side. If the young adult in your life won’t listen to you…just press the share with your friends button on the bottom of this post, because I have some advice on the matter.
You already know that’s it’s important to start saving for retirement right away. (The more time you have to compound interest, the sooner you could get to retire!) And, Health Insurance is a no-brainer. But Renter’s Insurance is the three headed monster of protective measures for young adults. And I would argue that it is every bit as important as the first two that I listed here.
It’s easy to say that you don’t need Renter’s Insurance. Many young people rely on two basic arguments to back up their assumption. A) Their landlord has property insurance, and B) they don’t have anything worth insuring.
These arguments have merit until you dig just a little bit deeper. Yes, your landlord does, indeed, have property insurance. However, his or her property insurance will not cover your stuff in the event of an emergency. And while you may think that your stuff isn’t worth anything…just think about how much cash you would need to replace what you have if you needed to do so tomorrow. Computers, cell phones, couches, clothing, bedding, kitchen, and more. The price tag to recreate your home environment from scratch (and hotel bill to put a roof over your head while repairs are being made,) will easily top $20,000. Now do you still think that your stuff isn’t worth anything?
Moreover, we are living in a time when weather-related acts of God are more common than ever. In the past decade, we’ve seen mudslides in California, hurricanes in New York City, and major flooding in both Louisiana and Texas. Unexpected disasters will arrive at your doorstep at some point and there is no need to make these episodes more painful than they already will be.
And finally – and I often find that young adults are impressed by this tidbit – Renter’s Insurance will cover your bike if it’s stolen, (there is usually a $250-$500 deductible). You will also enjoy being covered for liability if you’re in an accident that results in injury to someone else.
So now that we’ve decided that you’re going to get renter’s insurance, let’s discuss how you can make it affordable. Actually, here’s the good news. It already is. On average*, Renter’s Insurance costs $12 a month ($30,000 of property coverage and $100,000 of liability coverage).* That’s roughly what you spend on your Netflix subscription. Of course that number is an average…so if you find that your quote is higher than that…there are ways to reduce the monthly premium. They are:
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1
Increase the deductible.
If your deductible is $1000 instead of $250, that will decrease the monthly payment.
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2
Make sure that you’re living in a safer neighborhood.
Either way, consider installing a home alarm and add a deadbolt to your door. These things can reduce the risk that an insurance company is taking on you and, therefore, reduce the monthly cost.
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3
Live right.
Life gets much easier when you do the right things. If you’re not a smoker, your renter’s insurance rates will be lower. (Smoking isn’t just harmful for your health, but also is the cause of too many house fires.) Ditto goes for your credit rating. If your score is high, your premiums will be lower. In short, the less risk you present, the more reward you’ll see in the long run.
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4
Bundle your insurance.
If you have auto insurance, likely your carrier can provide renter’s insurance and may provide a discount for multiple lines of insurance.
Now go out there and do what’s right. At the very least, the reward will be peace of mind that, alone, will be worth the monthly payment!
*According to the Independent Insurance Agents and Brokers of America
This material is for general, educational use and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact Annette, or your insurance agent. Guarantees are based on the claims paying ability of the issuing company.