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Insurance for grads? Yes!
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May 26, 2000: 1:03 p.m. ET
Tips for twenty-somethings with a need for rental and car insurance
By Staff Writer Rob Lenihan
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NEW YORK (CNNfn) - You're graduating from college? Way to go. Now, as you pick up that sheepskin and prepare to take on the world, naturally the first thing that jumps into your mind is ... insurance.
No? All right, insurance may not be the hottest topic to come down the pike, but it is important -- even for the twenty-something set. The new car and apartment are great to have, but they come with responsibilities.
As much you may hate to think about it, If something should happen to either your car or your apartment, you could be looking at some major expenses.
The Insurance Information Institute (III) has some advice for Generation Y types to consider.
Home sweet rental
The apartment may belong to your landlord, but all that stuff inside it -- like the TV, DVD player and the computer -- is all yours.
Renters insurance provides financial protection for your belongings in case of such disasters as fire or theft. It will also cover you against lawsuits for injuries or property damage other people may incur while under your roof. Liability coverage pays both the cost of defending you and any damage a court rules you must pay.
If you don't have renters insurance, you've got plenty of company. The III said three out of four renters don't have this kind of coverage.
There are two types of renters insurance you can purchase: replacement and actual cash value.
v Replacement value replaces the item with an item of similar kind and quality.
v Actual cash value provides replacement cost minus depreciation. So, if your five-year-old stereo system is stolen, you will only be covered for whatever it is worth now, not for the cost of a new system.
Be aware that some policies cover you for replacement value, while others do not. Certain items, like diamond earrings, for example, probably cost more to replace than your policy coverage limit.
A floater or endorsement will provide protection for your valuables, not just in your apartment, but wherever you go. Check with your insurance agent or company representative to discuss which items will need additional coverage.
Take an inventory of all your belongings when your first move into an apartment. Take photos or a videotape of these items and keep them in a place other than your apartment. Update inventory annually to include new purchases.
If you have some very special items, such as jewelry or an expensive camera or computer, Dan Kummer, manager, personal-auto lines, at the National Association of Independent Insurers, said you might want to get special riders to cover these items because the basic rental policy generally won't cover all of these different items.
Car care
You may have a car to go along with the new apartment. The cost of insurance added to your monthly car payments can be a major financial pain.
If you want to save money on auto insurance, experts say you should think about buying a car that has relatively low repair costs and is not very popular with thieves.  Kummer suggested consulting with your insurance agent to see what cars are being stolen and what cars require more repairs.
"If you've got alarms, airbags ... and you've taken a defensive driving course," Kummer said, "you can take 5-to-10 percent off your auto insurance department."
Sports utility vehicles are popular, but Kummer said young people tend to have more rollover accidents with SUV's.
"They look like fun," Kummer said, "but usually you need a little more time behind the wheel."
You can also lower your insurance premium by raising your deductible, or dropping collision, if it's an older car. Remember prices can vary substantially from company to company, so it pays to shop around.
Which brings us to our next point—finding an insurance agent or company. The III suggests you ask your relatives, friends and colleagues where they have their insurance and what kind of service they receive. Also, contact your state insurance department for information and companies in your area. A.M. Best rates insurance companies.
Susan McKenna, director of media relations for the NAII, said you should look for an agent who is willing to work with you. Ask other people if they are happy with their agent and why, she said.
"I often tell people to go to a broker who might handle seven or eight companies," Kummer said. "They can quote you the best price from the best companies."
For more information about auto repair and renters insurance, you can contact the National Insurance Consumer Help line at 800-942-4242 or access the III's consumer Web site. 
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