Gaining financial independence from your parents and being able to live on your own is a pretty big deal. Thanks to student loan debt, rising rents, and stagnant wages, more and more millennials are living at home with their parents.
In fact, according to the Pew Research Center, more than one in five adults (22 percent) of millennial Americans are staying home or coming back to stay in the bedrooms they grew up in.
So congratulations on moving out! And while it’s an exciting time, it’s also one filled with a lot of stress. After all, you’re now responsible for more things than you may think.
Now that you’re financially independent, guess what? You have to spend that money on getting insurance for yourself — if you own a car, that means getting your own car insurance; if you’re renting, you have to get renters insurance.
But here’s a guide on how to go about making sure you’re properly insured for this next stage of your life:
Wait, I need insurance?
If you’re moving out, you’ll need to get renters insurance. And if you have a car, you’ll need to get off your parents’ policy and get your own car insurance.
But my landlord never said anything about renters insurance.
Isn’t it such a great feeling when you’ve found the perfect place to move into? And on the plus side, your landlord didn’t mention anything about you needing renters insurance.
Besides, don’t landlords have insurance? Won’t their insurance cover repairs or damage in your place? While that’s true, the reality is that you can’t rely on your landlord’s insurance to cover everything.
Most likely, their insurance will cover the actual rental unit when it comes to a disaster. But your personal belongings aren’t protected under that.
So, yes. You should get renters insurance.
Can I even afford renters insurance on top of paying rent?
You might be surprised by how affordable renters insurance is.
On average, you can expect to pay anywhere between $15-$30 a month for renters insurance.
And it’s worth it considering how much you’re protected with it in case of a disaster.
I don’t have anything worth covering so renters insurance probably isn’t worth it.
This is a big misconception when it comes to renters insurance. Without insurance, you could be on the hook for expenses related to an unexpected event, such as a break-in, a burst pipe, or a fire.
You might not have one single high-value item, but the value of multiple items can add up.
Just think of all the things you keep in your house or apartment: laptop, computer, furniture, clothes, TV, etc. If all those things were destroyed, how much would it cost to replace them?
And it’s not exclusively about expensive items. Even if you have very inexpensive, secondhand furniture, the cumulative cost of replacing what you use every day — and doing it all at once — adds up quickly.
Having the right coverage can help you replace more valuable items, like electronics, as well as provide you with a way to replace several less-expensive items at once if needed.
No, really. I have nothing worth protecting.
Okay, let’s say that’s the case. Even so, renters insurance does more than just protect your things.
It also comes with liability insurance that kicks in to cover any medical expenses if a visitor gets an injury in your home. If you’re considered responsible, these high medical bills can be devastating. But with the help of a renters policy, you’re more likely to be able to handle the costs.
Renters insurance also comes with additional living expenses. If your house or apartment is damaged to the point where it’s uninhabitable, your policy can help you pay to stay in a hotel until you can move back in.
I just found out my roommate has renters insurance so I don’t need it.
Not so fast! Think twice before sharing a policy with your roommate. If only one of you is named on the policy, only their personal belongings will be covered.
On top of that, if you do decide to share a policy with both your names on it, any claims your roommate makes will directly affect your insurance history.
That means seeing higher rates for you in the future even if you had nothing to do with the claim. It’s best to have your own policy. It makes it easier when one of you decides to move out, anyway.
You’ve convinced me to get renters insurance. Now everything is done.
Well, do you own a car? If you own a car and you’ve moved out, that means you have to get your own car insurance now.
Can I stay on my parents’ car insurance if I move out?
Nope. But Some insurers let you stay on your parents’ car insurance if you’re considered a dependent. In these cases, you’re a college student who lives at home, or you live at home part-time (during the summer and winter breaks), or you drive a car that your parent owns and insures.
But if you’re considered the vehicle owner and you’ve moved out, you have to purchase your own car insurance.
How do I get my own car insurance?
Getting car insurance on your own for the first time is intimidating. But it’s made easier by the fact that you have so many options for how you want to go about it.
You can go see an insurance rep in person, you can talk to them over the phone, you can fill out intake forms on websites, and you can even download an app to get insurance. It all depends on what you want to do.
When you’re using a website or an app, sometimes you can go from being uninsured to insured within 15-20 minutes.
If there’s a minimum amount of car insurance required, should I just get that?
Every state has their own laws and regulations when it comes to car insurance. Some require it, some don’t.
If your state requires car insurance, there’s usually a minimum amount you need to drive legally. But having enough car insurance to drive legally isn’t the same as being properly protected.
Usually, your state’s minimum will do very little to protect you in the event of an accident.
But I’ll save money on my premium if I do this.
Sure, you might save some money for now. You’ll save money as long as you never get into a car accident.
But how can you guarantee that you’ll never get into one? You’re at risk for a car accident every time you get behind the wheel.
Honestly, car insurance is so expensive. Maybe I should just go without it.
Again, maybe you’re saving money for a little while. But driving without insurance is illegal.
If you’re caught driving without insurance, the consequences are severe. You might have to pay exorbitant fines, your driver’s license or registration could be suspended or revoked, your license plate might get confiscated, and your vehicle could be seized.
How much car insurance do I need?
Since your state’s minimum isn’t the magic number, how can you land on the right number that will protect you when things go awry?
When it comes to getting liability insurance, add up the value of your car, house, savings, and investments.
For ultimate protection, you want that number to be equal to or close to your bodily injury liability limit. That’s the middle number you see on your policy liability coverage limit — ex. 25/50/25.
Collision and comprehensive insurance
If you have a newer car, you’ll definitely want to consider adding collision and comprehensive insurance to your policy. These coverages pay for repairs on your car.
The rates you pay for collision and comprehensive depend on the deductible you choose. The higher the deductible, the less you pay each month.
Personal injury protection
If you have health insurance already, adding PIP isn’t a significant cost and it’ll help you from relying exclusively on your health insurance after a car accident.
Uninsured/underinsured motorist coverage
Adding uninsured and underinsured motorist coverage is a relatively cheap cost.
Even if you live in a state that doesn’t require it, it’s good coverage to have. Especially when you think about how many drivers there are with little to no insurance.
But it’s so much cheaper to stay on my parents’ insurance.
Fair, but you still should get your own car insurance. If your rates are high for now, there are still things you can do to try getting that rate down.
First up: shopping around for car insurance. You’re not stuck with your current carrier or your current rate. Make sure you comparison shop to make sure you’re getting the best rate out there.
And since you’re getting renters insurance, see if you can bundle your car insurance with it. You could get a multi-policy discount from an insurance company.
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