Whether you're living at home while attending community college as a way to avoid hefty student loans -- or you have joined the "boomerang generation" of Millennials whose economic circumstances have required a move back home -- you may be wondering how best to set yourself up for a bright financial future. In some cases, this can mean investing in renter's insurance while you still live under your parents' roof. While your parents' homeowners insurance coverage is likely to provide the depreciated or replacement value of your belongings if they're damaged or destroyed, there are a few exceptions -- and you don't want to find yourself dealing with one of these exceptions after your parents' house has sustained damage. Read on to learn more about some situations in which taking out an additional renter's insurance policy on your belongings makes sense.
#1: You're paying rent
Homeowners' insurance is designed to cover the structure of the house itself along with any items within. However, this coverage is contingent on the relevant items belonging to the homeowner or other residents. Paying rent to your parents or even helping out with certain household expenses (like utility bills or HOA dues) could blur the line between resident and renter, potentially excluding your belongings from coverage.
While paying your parents rent can be a wonderful gesture of appreciation, it may be worth a call to a local insurance agent who can analyze the situation according to your state's laws and let you know the likelihood of coverage for damage to your furniture, electronics, or personal effects.
#2: You have valuable or irreplaceable items
Even if you're well aware of your parents' homeowners insurance coverage limits, you may be underestimating the value of other items covered under this policy. In some cases, it's possible your parents' household item coverage isn't enough to replace all or even most of the furniture, art, electronics, and appliances. If you have a few valuable items and aren't sure whether your parents are carrying enough coverage to absorb them in the event of fire, theft, or natural disaster, a renter's insurance policy can inexpensively provide you with some additional peace of mind.
#3: You're planning to move to your own rental soon
If you're already making an exit plan to move to a new rental home or apartment, it's likely you'll need renter's insurance there, as well. In some cases, it can be more cost-effective to go ahead and purchase this insurance now rather than waiting. (This is especially true if you purchase insurance from a company that offers a loyalty discount based on the number of years you've been a customer.) Not only will this ensure your items are protected while in your parents' home, your renter's insurance can also cover damage from moving -- allowing your transition from your parents' home to your own to be much more seamless.