Expect a lot of changes in your life as your kid goes away to school, but an often overlooked change is how you should update your insurance to reflect a child going to college.
Currently, there are about 20.5 million college students in the United States − 14.96 million in public colleges and 5.5 million in private schools. That could mean roughly the same amount of household financial decisions are at stake, specifically whether or not parents should change, add or delete any of their existing family insurance policies.
It’s not easy gauging the impact of a child going to college, at least from an insurance point of view. Parents have to wonder whether the college experience means higher household insurance costs, or how much, if at all, it impacts various insurance policies like health, auto, or life insurance, among others.
Child going to college? Update your insurance
So that begs the question − what should parents do, insurance-wise, when they send a child off to college?
“When your kids go off to college, along with other milestones, is a great time to have a personal conversation with your insurance agent,” notes Derek Benavides, owner at TWFG-Benavides Insurance, in Brownsville, Texas. “Regarding life insurance, there shouldn't be any need to make changes unless your kid is moving away to get married, traveling overseas, or taking on a large amount of debt that could pass down to the parents in the event of an untimely death.”
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“On health insurance, the same would apply -- if the son or daughter is getting married, or traveling overseas, talk to your agent, as these events may warrant changes to be made,” Benavides says.
Additionally, whether your child is going to college locally, in-state, out-of-state, or overseas, you definitely need to have a conversation with your personal agent regarding your auto insurance policy, he adds.
“Every insurance company has their own method of handling "kids away at school", but don't get scared − some companies have discounts,” Benavides says. “The bottom line is this − just like you want your attorney and accountant on speed dial − you want the same with your insurance agent. When your kids go off to college, get married, or experience any other milestone, you want to have a good fact-finding conversation with your agent to be absolutely sure that your insurance policy will behave the way you expect it to in the even that a potential claim occurs.”
Of the major personal insurance categories, parents should look first to life and health insurance when you have a child going to college, other experts say.
“Both household life and health insurance should be reviewed prior to the child leaving for college,” says Darius Cross, a licensed life and health insurance at Michigan-based CrossCorp.
Cross notes that under the Patient Protection and Affordable Care Act, the child, although legally an adult now, can still be covered under the Qualified Health Plan the parents purchased on the Healthcare Marketplace up to age 26.
“In most cases, this would also be the case with coverage provided by an employer,” he says. “In the case of employer based coverage, the policy needs to be reviewed to ensure that the dependent can still be covered under the terms of the coverage. Once it's been determined that the coverage extends for the dependent, it needs to be reviewed to ensure that the coverage limits still meet the needs in regard to deductibles, copays, and prescriptions.”
On life insurance, a major life events almost always triggers a review of a policy, Cross adds.
“In this instance, with the dependent child leaving for college, the policy may need to be adjusted to provide additional funds to ensure the continuation of assistance from the parent to the child so that in the event of an unexpected passing, the child is financially unable to return to school,” he explains.
Consider renters insurance for college students
Grabbing a new renters insurance policy for the collegian also might come into play when you have a child going to college.
“The student might well want to get a small renter’s policy, which many universities offer to protect against petty theft and the like,” says Rob Fuller, a health care attorney in Los Angeles. “Also, if they have a car, they will need auto insurance or continue on the parents’ auto insurance, which most carriers in most states allow so long as the child is a full-time student."
Angi Orbann, second vice president of personal insurance at Travelers, advises parents to evaluate the value of any items the students takes to college.
“Take an inventory of potentially valuable items, and see if they are protected under your existing homeowners’ policy or if they require additional protection,” Orbann says. “Many homeowner’s policies allow for a percentage of your total personal property limit to apply to property that is taken outside the primary residence. There may also be important considerations if your child is taking a car to school.”
Whether the student lives on or off campus is one the most misunderstood things about homeowner’s insurance, Orbann adds.
In most cases, if your student lives on campus (i.e., in a dormitory) they are covered under your homeowner’s policy. But the personal property protection they get on campus usually ends once student moves off campus.
“Homeowners policies typically exclude damage to property rented to an insured,” Orbann says. “And landlords’ policies generally only cover the structure, not the renters’ possessions. So, in most cases, if your child causes damage to a dorm room or apartment, it may not be covered.”
The lesson for today?
Don’t ignore your household insurance needs if a son or daughter jets off to college – you may be missing out on important coverage, and that’s a lesson you don’t want to learn too late.