What New College Graduates Need to Know About Insurance
Posted on May 31, 2018
You’ve just graduated college and the world is at your feet. Before you go out into the world, it’s important to learn a few key facts about insurance and your need for it. This guide will walk you through three of the most common types of insurance you’re likely to need:
Health Insurance
If you’re among the fortunate few, you may still be covered under your parent’s health insurance, at least until you reach the age of 26. However, as you’re exploring your job options, you may find that you can buy your own health insurance.
Some parents are willing to continue paying for health coverage to make sure you have it as you’re starting out. If you’re the independent sort, though, you might want to spring for your own company-sponsored health insurance plan.
If you have the best of both worlds, consider comparing the two plans and choose the one that offers a better combination of deductibles, copays, and coverage – not to mention the amount of your expected contribution each month.
One huge consideration for new college graduates is privacy. If your parents continue to pay for your health insurance, they will likely receive the statement each month describing the services you received. If you purchase your own health insurance, that statement goes to you.
Renters Insurance
Renters insurance protects your possessions if a covered event takes place. Covered events will vary from one policy to the next but may include some or all the following:
- Fire
- Wind
- Tornado
- Vandalism
- Theft
Many new college graduates decide to cut costs by skipping renter’s insurance. That is a mistake most do not realize until well after the fact. The reason it’s such a huge mistake is that renter’s insurance provides you with another form of coverage: general liability insurance.
Liability insurance offers you protection from lawsuits and judgments awarded against you related to injuries or property destruction caused on your property or by your property. For instance, if you live in an apartment complex and a kitchen fire originates in your unit, you could be on the hook, legally and financially, for fire and water damage to the building and other apartments affected by the fire. Plus, you’re likely to have extensive legal fees from multiple suits filed against you.
General liability coverage protects you from the legal fees and any judgments awarded against you – up to the limits of your plan. Which is a huge relief at a time when you’re just getting started in life.
Of course, you shouldn’t overlook the benefit of being able to replace your own possessions that are damaged, destroyed, or stolen. You might not think you own much, but when you’re trying to replace everything at once, it adds up quickly.
Your personal property involves everything you own from your toothbrush and bathroom towels, to your computer, electronics, musical instruments, appliances, furniture, clothing, jewelry, and more. The more possessions you have, the more important it is to make sure you have adequate renter’s insurance to cover the costs of replacing these items if a covered event takes place.
Auto Insurance
If you own a car, you need auto insurance. It’s as simple as that. How much and what kind of auto insurance depends on a variety of factors. If you have a loan on the car, you are required to have comprehensive vehicle coverage. You may be able to get by with only liability coverage if your vehicle is paid off and has limited value. If you depend on your vehicle, though, and can’t afford to be without transportation for very long, then you should consider getting comprehensive and collision coverage to protect you from things like:
- Theft
- Vandalism
- Accidents
- Hit and Run Accidents (where the other car fled the scene)
- Acts of nature (trees falling on your car, deer running out in front of you, etc.)
You must, at the very least, meet your state’s minimum requirements for auto insurance coverage. Failing to do so could leave you facing stiff fines and huge liability judgments. However, the state minimum coverage offers your vehicle and passengers little, if any, protection, and is not recommended.
Getting your insurance protection right is one of the most important things you can do to give yourself a healthy financial start in life after college. These coverages will help.
