Insurance Tips to Protect College Students and Parents

 (Edited 8/14/2009)

If yours is among the nine million U. S. households sending students off to college this year, you need to ensure your planning has included the all-too-often subject of insurance. More than 80 percent of students may not have enough insurance to protect them from property loss or liability, In addition, one-in-seven students has inadequate or no health insurance.

Student Property and Liability Insurance Issues

The typical homeowners policy covering the family home may provide some protection for personal property taken to college by the student as well as personal liability exposures arising out of the student’s residence and personal activities.  There are some potential problems, however, with depending on the family homeowners policy to provide this protection.   

In the first place, the student’s property and liability exposures away from the family home are covered only if the student is considered an “insured” under the terms of the policy.  Homeowners policies sold by some insurers cover children as long as they are legally considered residents of the family household.  There may be borderline cases that don’t meet this legal test, such as a 23-year-old graduate student living in an apartment year-round. 

Coverage under homeowners policies sold by other insurers may be more clear in their intent by specifically covering students under the age of 24 while they are enrolled in school full time (as defined by the school).  This approach, while more clear, presents several potential problems.  As every parent of college kids knows, fluctuations in class offerings each semester, as well as work schedules, often cause students to end up carrying fewer hours than required by the school to be classified as “full-time.” Which means, in essence, that a kid in college might be an “insured” one semester, and not an “insured” next semester.

Another potential problem is the small amount of insurance that may be available to cover a loss. Virtually all homeowners policies cover personal property away from the main residence with a lower limit than that which applies to personal property in the home – usually only 10 percent.  For example, if the policy provides a limit of $100,000 on personal property in the home, then only $10,000 is available to cover personal property while located at the student’s college residence.  And some policies won’t pay when property is stolen from a student’s residence except while the student is living there.  That could be a problem if the student leaves property there when he or she comes home for the summer.

All of these problems can be solved by purchasing a renters insurance policy for the student.  Contrary to popular belief this insurance can be very affordable. A typical policy, providing $15,000 in personal property coverage and about $100,000 in liability protection, costs about $100 - $150 a year.   

Student Auto Insurance Issues

While there are obvious exposures when a child takes a car to college, there can be a dangerous coverage gap for students who don't have a car at college.

It goes without saying that just because a kid does not take a car with them to college does not mean they won’t be driving or occupying a car. Whether they borrow a friend’s car or just ride around as a passenger, coverage for the student on the family auto insurance policy depends once again on that pesky issue of “residency.”  As mentioned above, that issue is a legal one and could be a problem for older students who don’t intend to return to the family home.  In that case, the student may need an auto policy in his or her own name covering just the exposures related to driving or riding in someone else’s car – a so-called Named Non-Owner Auto Policy.

If the student takes a family car to college, the primary issue to discuss with your agent is how the auto will be rated.  Will the auto be rated in the territory where the college town in located (could be higher or lower than the home territory?  Does the student qualify for a Good Student or Driver Training Discount? 

Student health insurance Issues

Health insurance is another tricky issue for college students and parents.  A recent survey revealed that 84 percent of college students and their parents either don’t know or mistakenly believe that the student’s health insurance will cover them when they leave the home to attend college.  Once a student is over the age of 18, he or she may not be covered by a parent’s health insurance unless they are a full-time student. Once a student reaches age 23, that student will usually lose coverage under a parent’s policy, regardless of enrollment status.

Parents and students should visit their insurance agent to discuss student insurance needs like property, liability, auto, and health, to avoid any unpleasant surprises after an accident or other calamity.

More about student's property and non-auto liability exposures...