Insurance for the College Bound

Your son or daughter’s senior year of high school is now behind you.  While trying to enjoy the summer, your focus now points to the first college bills and gathering all the “must haves” for the college dorm.  This big change has insurance issues to consider.

You know all that stuff you’ll pack into your car, truck, or U-Haul? What happens if the dorm room is robbed, or there’s a fire. Think about all that money you are paying for the new computer, printer, iphone, television,  microwave, all their clothes and yes,  their books. Any guess on the values involved? Is any or all of it insured?

Students living in a college dorm room are typically covered under their parents’ Homeowner or Renter insurance policies. The student’s possessions located in the dorm room are considered “personal property located away from the insured residence.” The standard Homeowner and Renter policies include coverage for up to 10% of the “Personal Property” limit. if your homeowner/renter policy has a “Personal Property” limit of $200,000, you should have up to $20,000 coverage for your college student’s dorm room contents. With that there are  three things to consider: coverages will be limited to the same “causes of loss” identified in your homeowners policy, there may be limits as to what the insurance company will pay for a particular item, and the same  deductible for the home applies to the dorm.

The biggest item of concern for most parents is the new lap top or desk top computer. Many colleges offer the student a computer including all the software needed. That price usually includes an insurance policy that will pay for its replacement if it is lost, stolen, dropped, damaged in a fire, or even damaged when a beverage is spilled on the key board. This coverage  is broader than your homeowner policy. The standard homeowner policy limits coverage to fire, theft, smoke, lightning, hail…  Most homeowner policies have a limit on the value of computers being covered; common limits are $1,000, $2500, and some up to $5000. Since most PC’s today cost $2500 or less, your deductible should be your point of concern. Most homeowner insurance policies have a deductible of $1,000. If you want to collect on the loss of a $1500 lap top, the most you can collect is its replacement cost less your deductible. ($1500 lap top less $1000 deductible = $500 insurance claim payment). The adverse impact on post claim rates make it cost prohibitive to submit such a claim.

There is yet another way to protect that lap top. You can “Schedule” or endorse your policy to cover a specific lap top or PC just like you can jewelry. The specifically identified item is then subject to broader coverages and a separate deductible (usually $100-250)making it  similar to the coverage offered by the college. The cost for this “Computer Scheduled Endorsement” is usually a little less than offered by the college.

After a year or two of dorm life, students frequently discover the advantages offered by living in an off-campus apartment. That move brings a whole new array of exposures to be protected. Renter’s insurance is a must. The parent’s homeowner’s policy will not extend coverage to an off-campus apartment or house for the student. The student is responsible for the incurred liabilities when he or she 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 robs them of their iPods, computer equipment, cash, and jewelry. One policy can be taken out to cover the 1-4 students together renting an apartment. The cost for a typical renter’s policy is usually $150-250 a year providing $15,000-25,000 in personal belongings coverage and liability limits of $100,000 and higher. One person is the “named insured” and the other tenants are added as “additional named insureds”. If not named on the policy, they’re not covered.

Now what do you do with your auto policy while they are at school? If they are attending a school that is more than 100 miles away from home and do not have a car with them, they can be listed as a student “away at school”. You notify the agent or insurance company that they are gone  and notify them when the student returns. He or she remains a named driver on your policy, but with coverage suspended…meaning you are not paying for them until they return at the end of the school year.

If the college is within 100 miles and they do not have a car with them it is unlikely that an insurance carrier will allow you to drop them from your policy. Within that distance, your student will be home more than if beyond the 100 mile radius. Being home more means driving the car when home. It also results in the student taking the car “occassionally”  to school. For those reasons carriers are unwilling to budge when requiring that all licensed drivers in your household are listed on your policy.

In those cases where they are gone, and acar is sitting home idle, you can save money by dropping the insurance on the car for all coverages except Comprehensive. It is a cheap coverage providing theft, vandalism, fire …and a few other coverages.  It keeps the car on the policy for ease of adding the liability back on when the student comes home.YOU must remember to have the coverage reinstated before the car is driven.

Students with a car while away at college greatly adds to the student’s new found freedom. Statistically, there is a low frequency but high severity of accidents from these drivers. Insurance companies rate these situations accordingly.

Sorry to stress you out thinking aboout this. Its my job to open your eyes to things that could cause you a loss. But its also my job to find you ways to protect against such loss potentials.