If you’re sending your child to college for the first time, his or her tuition, books and living arrangements are likely among your top concerns. But if you want to make sure your child is truly prepared for the unexpected turns of college life, insurance needs should be examined as well.
“Determining the insurance needs for the college-bound student requires consideration of many factors,” says Acquenette Sims, a vice president at TD Insurance, which has offices in the mid-Atlantic and Northeast.
Here’s what you need to consider.
Contact your auto insurance provider before your child goes off to school, because the policy may need to be adjusted depending on the location of the college and whether a vehicle will accompany the student to school, Sims says. If the student will be driving in another state, the minimum insurance requirements for that state may differ from those in the student's home state, so the policy would have to comply with both regions. The city and state where the college is also could affect the insurance rate, as rates vary by geographic region.
“In many cases, the college is in a smaller town and smaller towns have less frequency of collisions, so the premiums are lower,” says Jim Swegle, a vice president at Seattle-based Safeco Insurance.
Parents may be able to save some money if the student won’t have access to the family car while at school. “Parents of students attending school at least 100 miles from home and electing not to take the family vehicle oftentimes find that their insurance company will discount the auto premium for the family policy,” Sims says.
Talk to your agent if your child buys and registers his or her own car, since the child may need a separate policy, Sims says. However, some insurance companies offer discounts just for being a student, while others give discounts for good grades.
College students typically have a number of options for health insurance, including a parent’s policy, a school-offered policy and an individual policy.
When Nicole Singletary of Frisco, Texas, enrolled her son Julian at Morehouse College in 2010, “we verified that all our medical and dental insurance was valid during his time in Atlanta,” Singletary says. The school also offered a plan, so the Singletarys added that one as well.
Under federal law, health insurers that cover dependents must allow children to remain on their parents’ health insurance policies until age 26. However, if your child stays on your plan and will be out of state, find out whether your child will be using out-of-network health care providers while at school. If your coverage is through an HMO, check to see whether there's a service area near the school, the Illinois Department of Insurance says.
The school can tell you about student health insurance plans, but check to see whether your child will be covered when classes are dismissed for the summer, says Alan N. Canton, owner of A.N. Canton Insurance Services in Fair Oaks, Calif.
If none of these options pans out, an insurance broker can help you find an affordable insurance plan. For students with pre-existing conditions, a pre-existing condition insurance plan was created as part of the federal health care reform law that was signed in 2010. Many states also have high-risk pools.
Parents should review their home insurance policy before a child goes off to school.
“Many policies will provide up to a specified percentage of the family's personal property limit for registered students,” Sims says, although there may be some limitations on certain types of losses.
Some home insurance policies won't cover a student in certain cases, such as when he or she reaches a certain age or when the student moves to off-campus housing. In such cases, “a renter’s insurance policy will protect your child’s personal property against damage or loss and provide liability coverage in case someone is accidentally injured or their property is accidentally damaged while on your property,” Sims says.
Whether coverage is through a home insurance policy or a renter’s insurance policy, the student should have an updated inventory of belongings. Swegle says parents also may want to buy additional coverage, known as riders, for expensive items such as electronics. A rider will cover that item from any type of damage or loss. With a general home or renter’s insurance policy, “your computer is covered for theft, fire and water damage, but it’s not covered if your roommate jumps on it or you drop it on the stairs,” he says.
Since life insurance is designed to provide financial security for survivors if you should die, most single college students without dependents can go without it, the Illinois Department of Insurance says.
However, for a student with a lot of debt, that might be short-sighted, says Jim Sherratt, a vice president at TD Insurance.
“While most conventional undergraduate students don't have spouses, dependents or mortgages, they do tend to have credit card debt, car payments or a lease agreement,” Sherratt says. In the event of the student’s death, he says, “all of these outstanding personal expenses plus any privately funded college loans would need to be paid by surviving family members.”
Another reason a life insurance for students could be a good idea: Since they’re younger and most likely healthier, premiums are lower at that stage. In the case of whole life insurance, students could get low rates that could benefit them for the rest of their lives, Sherratt says.