Q: “I’m moving out. What insurance coverage do I ne..
I'm Moving Out. What Insurance Coverage Do I Need?
Q: “I’m moving out. What insurance coverage do I need?”
A: Your own renters, auto and perhaps life insurance policies are the key types of protection most young adults may want to consider, says Tonia Maxwell, an Allstate agency owner with offices in Norwalk, Ohio and Vermilion, Ohio. Many coverage and cost options are available for each type of insurance, and an experienced agent can help you sort through your choices, she says.
Leaving Mom and Dad's Policies
If you've been covered in the past by your parents' insurance, it may be time to bid their policies a fond farewell. Once you're living on your own, you may need insurance in your own name, says Maxwell.
Why? As you begin to manage life on your own, it's important that you choose the coverages that fit your specific needs, notes Maxwell. Also, having your own policies can help you build an "insurance history" of your own (similar to a credit history) that may save you money in premiums over time.
You may think of renters insurance as coverage for your belongings — clothes, computer, TV, etc. — in case they’re damaged or stolen. While personal property coverage is a key part of most renters insurance policies, Maxwell points out that a renters policy typically provides liability coverage, too.
The liability portion of a policy may help provide protection if, for instance, a visitor is injured at your apartment or if you accidentally damage the rental — through a kitchen fire, for instance. This coverage may help cover medical payments, legal fees if you’re sued and property damages for which you’re found legally responsible.
Renters insurance may also help pay your increased living expenses (which can keep you from schlepping home to Mom and Dad) if you temporarily have to live somewhere else while your place is being repaired due to a covered loss at your rental home or apartment.
“The best part is that renters insurance is a great bargain for its value,” says Maxwell.
Premiums will vary based on location and the coverages you choose. A local agent can help you chose the policy that's right for you.
Maxwell says many of her young customers worry about affording auto insurance premiums. “Don’t worry — you’re not 16 anymore!” she tells them. She helps customers select their own coverages and suggests ways in which they may be able to lower their premiums.
For instance, she says, purchasing car insurance from the same company that provides your renters policy may result in savings, as some insurers will offer a "bundling" discount. If you commute via public transportation or aren’t a frequent driver, some insurers also offer low-mileage discounts.
Still not sure if you're ready to hold your own policy? Keep in mind that some states have rules about how long you can remain on your parents' auto policy. Check your state laws to learn about any insurance requirements that may affect you.
Maxwell says young adults — particularly if they’re not married or don’t have kids — often overlook life insurance. However, there may be benefits to purchasing a policy while you're young. “First, you’re the youngest and probably the healthiest you’ll ever be. If you buy life insurance now, you’ll likely get the lowest possible rates and keep them for decades,” she explains.
Why might you need life insurance? Student loans are a big reason, suggests Maxwell. “If your parents or other family members cosigned for your college loans and they don’t include a death discharge clause, your family would be financially responsible for them if you were to die unexpectedly,” she says. “Life insurance could give co-signers the money to pay off your loans if you pass away.”
You may also want to consider life insurance if your parents financially depend on you (or may in the near future), and would not be able to get by if something happened to you.
If your employer offers life insurance as a benefit — “Take it! It’s a great extra,” says Maxwell. “However, you should still buy your own life policy that you can take with you when you change jobs.”
As a young adult, you have a lot to consider when you're venturing out on your own. A local insurance agent can help you navigate the process and answer questions to help you chose the protections that you feel are right for you.