2008 Insurance Guide
A new grad's guide to insurance

Many renters mistakenly think that their landlord's policy will cover their belongings. But the landlord's policy protects only the landlord's property -- the building.

“Put your money into the major loss areas.”

What you want is something called "renter's" or "contents" insurance to cover your property. And it's fairly cheap. For a few hundred dollars per year, you can get enough to cover everything. (And many companies will let you pay quarterly or monthly to soften the blow.) Look for replacement cost coverage. It will pay full price for new versions of lost or damaged items.

Want to make it easy to collect on a claim? Take digital photos or video footage of your belongings and store an extra copy online or at a physical location away from home (like a relative's house), says Dick Luedke, spokesman for the State Farm Insurance Cos. That way, if you should ever have to file, you've got proof of ownership, plus a complete inventory.

3. Life insurance? Not yet 

You probably don't need (much) life insurance. Life insurance is meant to replace lost income when a family member dies. If no one is depending on you as a breadwinner, you probably don't need much.

Most jobs will supply a minimal policy, usually about one year's salary, and that's more than enough to cover burial expenses, says Hungelmann.

4. Comparison shop online 

Use the Internet to find inexpensive insurance with a company that stands behind its customers.

"Your state insurance department and the National Association of Insurance Commissioners keep records of the numbers of complaints and will share the information," says Bob Hunter, director of insurance for the Consumer Federation of America and former insurance commissioner for the state of Texas. "And the NAIC Web site has complaint ratios, so you can actually compare. The way I shop: Go online and look for five companies that are low for someone like me. Then I go to the NAIC site and look at the complaint ratio." If a company has both low rates and low complaint ratio, says Hunter, "I will call for quotes."

5. Liability isn't for wimps 

Purchase a healthy amount of liability coverage for your renter's and auto policies. You might only own a few thousand dollars worth of goods. A total loss would be a hardship. But if you're found liable in an accident, the tab could run into the hundreds of thousands of dollars to cover medical bills, pain and suffering, etc. And that kind of loss could destroy you financially.

"People have a tendency to buy insurance for the losses that will hurt them the least," says Hungelmann. Instead, "put your money into the major loss areas," he says.

And that means some decent liability coverage for home and auto. Luckily, the cost of that higher liability coverage is "marginal," says Feldhaus.


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