Insuring Your Kids in College

Times have changed. It's not unusual for today's college students to have an arsenal of computers in various forms, plus smart phones and other high-tech devices — all of which they consider essential. This may be in addition to expensive clothing, sports equipment, high definition television sets with surround sound, gaming systems, a Blu-ray player, and so on.

college students posing for a group photo

Few college students could afford to replace everything at once in the event their dorms are burglarized, or a disaster such as a fire destroys everything they brought to school with them.

The college's insurance policy chiefly protects the college itself. It won't protect your children or make them whole if their belongings get stolen or destroyed, and it's unlikely to provide any liability coverage at all for your children.

What your Homeowners Insurance Policy Covers

If you have a standard homeowners insurance policy, it will generally include some basic protection for adult children who are away at school, up to age 24, provided these students still maintain their primary residence as their parents' home. This is likely true even while they're living in a college dormitory.

Coverage on students residing away from home while attending college is typically more limited than it is for those still living in their parents' households. A coverage limit of 10% of the insured value of parental belongings is common.

Additionally, the relatively high deductibles that will apply on most homeowner insurance claims before the policy will begin paying benefits may make them a poor fit for insuring property in a college dorm. The reason: The claim may involve the loss or theft of a laptop or mobile device with a fair market value of just a few hundred dollars. If the sole coverage in place is the parents' homeowners policy, an incidence of dorm theft may fall well below the usual deductible. Thus, the policy doesn't provide meaningful protection to the cash-strapped college student.

What's worse, repeated small claims could cause your insurer to raise premiums or in the worst case scenario, cancel your homeowner policy. So, to better ensure your policy stays in place, many insurance professionals recommend not filing on smaller claims that are barely above the deductible. The policy should also provide the maximum limit of coverage to protect against a catastrophic loss to your home and belongings.

Consider Renters Insurance Instead

Often, a renters insurance policy is a better choice for students attending college — even if they're eligible for inclusion on their parents' policy. These policies typically have lower deductibles that are more appropriate for dormitory living. They're comparatively inexpensive, with premiums averaging $200 to $300 per year for $15,000 in protection against loss or theft.

If the student has additional property to insure, such as a high-end musical instrument or additional electronic gear, it's generally easy and affordable to buy a higher limit, if desired.

Health Insurance Considerations

Currently, parents can keep full-time students on their own health insurance plans until the age of 26. In most cases, this is a better choice than enrolling in more limited plans available through colleges. Many college plans, for example, exclude injuries related to drugs and alcohol, which your own plan will usually cover. College plans may also put a cap on catastrophic coverage, often limiting it to $50,000 per incident.

If your plan is an HMO or PPO, be sure to look at available care providers not just where you live, but also where your student will be living. If your network has no authorized care providers in the area, you may have to make other arrangements. Contact your health insurance professional for more information or to explore other options.

Auto Insurance Considerations

If your college student is driving a car you own, you're still responsible for insuring the vehicle. This is true even if the college student — and the car — are away at college full time.

If the car is routinely stored in a location other than your residence, you must inform your insurance carrier, as different rates may apply. Also, be sure to add your child to the list of authorized drivers on the policy.

Advise your son or daughter not to let friends borrow or drive the car. Also, remind your student that, if he or she chooses to drink, it's now a relatively simple matter to get a cab or ride home via a ride-sharing service such as Uber or Lyft. Many families opt to send their students to school without a car at all.

What if a student with a car decides to earn extra money by driving for a ride-sharing service? In such cases, check with your insurance carrier or agent regarding whether additional insurance is required.

Umbrella Coverage

Sometimes, large liability claims arise that are beyond the limits of typical homeowner policies. For this reason, it's often prudent to own umbrella insurance. This insurance provides additional coverage to protect you and your child if either of you incur a liability that maxes out your homeowners, renters or auto insurance.

For example, suppose your auto insurance policy provides liability coverage, but only up to $100,000. If your student causes an accident that does $500,000 in damage, your umbrella insurance policy can pick up the other $400,000, or any other amount up to the limits of the policy that you'd otherwise have to pay out of pocket.

Talk it Over

If you're not sure what level of insurance you need for your college students who live away from home, ask your kids to take an inventory of what they have with them. Then, talk it over with your insurance agent.

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