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A New College Graduate’s Guide to Insurance


Website: Trusted Choice

Source: College Graduate Insurance Guide

Congratulations! Your child (technically, now an adult) just graduated college and is embarking on the transition into real adult life. For new college graduates, it’s an exciting time filled with many “firsts.” They are starting to hunt for a great job, looking for their first place, and maybe purchasing their first new vehicle.

In all the transitions, it’s easy to overlook an important detail—insurance. While considering insurance is certainly not as thrilling as those other significant “firsts,” it is an essential need to keep in mind.

We are sharing this guide to help you and your new college graduate be aware of what insurance coverages are suggested.

#1 – Renter’s Insurance:

Until now, you probably lived in a dorm room or shared housing with other students. Now, it is time for you to make a home in your first beautiful apartment.

New renters often don’t understand that the landlord’s insurance does not cover their belongings. If you experience an unforeseen situation, your items need to be protected.

Recent graduates sometimes feel they are invincible. However, here are some scenarios that could happen to anyone:

• A burglary

• Stormy weather that causes a leaky roof to destroy their furnishings

• A small fire that creates smoke damage

Renter’s insurance protects you from losing everything you are working so hard to obtain.

It is best to create a spreadsheet and inventory the contents of the apartment, placing an approximate value on all treasures. From electronics to linens and clothing to dishes, every item adds up—and fast if they all need to be replaced!

The total after surveying all belongings is the amount of Renter’s Insurance to purchase.

#2 – Auto Insurance:

Personal auto insurance is a package policy providing four coverages: liability, medical payments, uninsured / underinsured motorist coverage and physical damage coverage. New grads are often most familiar with liability and physical damage coverage.

Liability insurance pays when you injure another person or damage their property (such as their car) in an at-fault accident. This protection is required by statute in nearly every US state. Every state requires you to carry a minimum amount of liability coverage, but don’t be fooled by some of the TV ads you may have seen. Minimum limits are not nearly enough to protect you following an accident that is at-fault. We always advise to purchase higher limits – you will be happy you did.

Many college graduates reward themselves for their diligent work throughout the past years—and for landing a fantastic job—with the purchase of a new car. And why shouldn’t they? Purchasing that first brand new car is a significant milestone.

Enter physical damage coverage. Physical damage covers the cost to repair the damage to your own car. But don’t be surprised when your premiums go up for that new ride, compared to the old, hand-me-down you were driving.

Even if the cost seems scary, don’t skimp on coverage, especially on a lease – purchase “gap” coverage. Physical damage coverage is provided on what is known as an actual cash value (ACV) basis. ACV payment might be less than you owe if the vehicle is “totaled” in an accident due to the application of depreciation in the loss settlement. “Gap” protection avoids a potentially large out-of-pocket expense following an accident.

Remember, liability pays the other person, physical damage is required to cover damages to your car. Both coverages are too important to go with the “minimums.”

#3 – Liability Insurance:

Your renters’ policy includes liability coverage. It is tempting for those just starting out to assume that they will not need high amounts of liability coverage and lighten up on this portion of the coverage.

Liability coverage is the portion of the insurance that protects you from being sued for thousands upon thousands of dollars in the event of an accident causing bodily injury, slander or even damage to someone else’s stuff.

While they might feel that they are not worthy of a lawsuit at their moderate income level, slick personal injury attorneys will advise the injured party to get a judgment against your graduate (these can remain in force for 10 years in some states) and swoop in with a wage garnishment once they increase their earnings.

#4 – Enroll in Employee Benefits:

Chances are that you will have the opportunity to enroll in group coverage at your new job. In most cases, you will fare better under a group policy than trying to fly solo and secure your own coverages.

Take advantage of group rates on the following coverages:

• Health insurance

• Dental or vision coverage

• Disability

• Life insurance

These premiums are paid through payroll deductions pre-tax, taking the sting out of the payment. You may also be eligible to enroll in a Health Savings Account (HSA) that minimizes the financial impact of out-of-pocket medical expenses.

#5 – Life Insurance:

Most college graduates see the standard life insurance included in their employee benefits as sufficient coverage. For many, that could be the case.

Like every rule, there is an exception or two to this rule.

• 1 – If you have a child who will need to be raised, fed, clothed, and educated in the unlikely situation of your premature death.

• 2 – If you have student loans along with a co-signer. In the event the primary borrower on the student loan passes away, Sallie Mae will call upon that co-signer to pay off the debt. In fact, the debt often becomes immediately due in full in that circumstance. Life insurance protects the co-signer in this case.

The Bottom Line

College graduation is not the end; it is a fantastic new beginning. Plan for the unforeseen so that you can live this time of your life to its fullest.

Still not sure how much coverage you need? Schedule an appointment with Hometown Insurance and our trusted agents, we can offer you the guidance you need.

Call Hometown today at 1-800-568-SAVE (7283) or contact us by email at  for helpful information.

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