College Bound: What insurance applies?

You know all that stuff packed into your car, truck, or U-Haul to move your student into their college dorm? What happens if the dorm room is robbed, or there’s a fire. Think of all the money you’ve paid for the computer, printer, iPod, MP3, television, microwave, clothes, and books. Any guess on the values involved? Is any or all of it insured?

Easy response is that students living in a college dorm room are covered under their parent’s homeowner or renter’s insurance policy, if their legal residence is at the parent’s home address. When the student rents a house apartment or condo, coverage is not likely going to follow.

The biggest item of concern for most parents is the new laptop or desktop computer and the related software. Many colleges offer to provide the student with a computer including all the software needed. That price also commonly includes insurance that will pay for its replacement if stolen, damaged in a fire, dropped, or even if a beverage is spilled on the keyboard. What the college program covers is usually broader then your regular homeowner policy; you can “schedule” the computer to obtain the broader coverage.

Why do you need the special coverage? The homeowner policy is not going to cover accidentally spilling a beverage into the laptop keyboard. The college program commonly has nominal if any deductible applied to a loss. You can broaden or expand the common home owner coverage provided for a computer, and establish low, or no, deductibles by “scheduling” the unit just like you can a specific piece of jewelry.  The scheduled computer usually has near identical coverages as available through the college with what may be a lower cost to you.

When you send your student off to college often forgotten is the liability part of your homeowner policy that follows your student anywhere in the world, as long as your home is still their legal residence. If your student does something that unintentionally causes injury or damage to another, your homeowner policy will likely respond. A big loss for an insurance company I represent, involved a student away at college. She was attending an off campus party at a friend’s apartment. While likely inebriated, she found a hand gun belonging to one of the apartment residents. She began waiving it around. The gun accidently discharged hitting a guest. Her parent’s homeowner policy is now defending her.

Courts have consistently determined that a dependent child away at school living in a college dorm is still a resident of the named insured’s household. The student’s possessions located in the dorm room are considered “personal property located away from the insured residence.” The standard homeowner’s and renter’s policies include coverage for up to 10% of the limit noted on the homeowner/renter policy Declarations Page (that’s the page or pages with custom typed information in your policy; usually located on the front or within the first few pages of your policy).  Just like your homeowner’s policy, there will be a deductible, there may be limits as to what the insurance company will pay for a particular item, and coverages will be limited to the same “causes of loss” identified in your homeowners policy.

After a year or two of dorm life, students frequently discover the independence offered by living in an off-campus apartment. That move brings a whole new array of exposures needing to be protected. Under the standard Homeowner policy, it is usually found that when you sign a lease to rent the apartment, you are establishing a legal residency that is not directly connected to the college or university being attended.  The parent’s homeowner’s policy is not likely to extend coverage to an off-campus rented apartment or house for a group of students. Then, each student shares in the responsibility for the incurred liabilities when he, she, or the group host a keg party. They are responsible for the damage to the property when a kitchen fire results while learning to cook for themselves. Your student and roommates are on their own when someone breaks in and cleans out the apartment of all their iPods, PCs, laptops, cash, and jewelry.

Most entities renting to the students will require a Renter’s Policy. One policy can be taken out to cover the 1-4 students together renting an apartment. One person is commonly the “named insured” and the other tenants are added as “additional named insureds”.  If not named on the policy, they’re not covered. The cost for a typical renter’s policy with 2-4 students is usually $250-350 a year providing 20,000-$25,000 in personal belongings coverage and liability limits of $100,000.

In the shooting case noted above, complicating that case for the students hosting the party, two tenants had a renter’s policy together in their names, while the other two assumed they didn’t need coverage or that their parent’s homeowner policy would respond if ever needed. Imagine the legal circus dealing with all the attorneys involved in that case. These legal proceedings will distract these kids through what is now their senior year of college. Consider also the stress it has placed on all of the parents involved. Not the learning experience anyone wants!