As millions of students trundle off to college this fall, they will bring the essentials with them – a slick new laptop or tablet, a care package from Mom and Dad and their own hopes and dreams.
But will they remember to secure proper insurance coverage?
Students often have insurance needs that differ from those of other adults. But that doesn’t mean they can skip coverage.
Following are four insurance questions that every college student should ask before the new semester begins.
Four insurance questions students should ask
1. "Will my parents' health insurance plan adequately cover me?"
Most college students are young and healthy. However, the risk of illness is present at any age.
Health care reform has made it easier for students to remain covered, says Cheryl Fish-Parcham, deputy director of health policy for Families USA.
For starters, young adults – including students – now can remain on their parents’ insurance policy until the student turns 26. However, it is possible that some parental plans may not provide comprehensive coverage if the student is living in a state far away from in-network providers.
"Check to see how the insurer handles claims while the student is away from home," Fish-Parcham says.
Questions to ask include:
- Is there a provider network in the city or town where the college is located?
- If not, does the insurer reimburse for emergency care while the student is away?
- Does other out-of-network care require preauthorization by the health plan?
Beginning in October, students also can purchase a plan through the new state and federal health insurance exchanges. Coverage will go into effect in January. Students and their families may qualify for tax credits, depending on income.
Finally, students from low-income households may qualify for Medicaid coverage. Many states are expanding Medicaid eligibility as part of the health reform. However, be aware that some states, including Texas, Louisiana, Florida and Georgia, have opted out of expanding Medicaid.
2. "Do I need renter’s insurance?"
Today's students have plenty of expensive possessions. Computers, cameras, TVs, iPods, bikes, furniture, and band and athletic equipment are just a few of the items that would be expensive to replace if they were lost, stolen or destroyed.
If you live on campus, you may not need to worry about coverage, says Lori Conarton, spokeswoman for the Insurance Institute of Michigan.
"For students who live in the dorm, most personal possessions would be covered under their parents' homeowner’s insurance policy," she says.
However, the rule varies, so it is important to check with your agent. And even if a parental policy does offer protection, dollar limits may apply.
For example, coverage of a college student's possessions may be limited to just 10 percent of the policy's total coverage for personal possessions, according to the nonprofit Insurance Information Institute.
The equation changes for students who rent an apartment off campus.
"For those students living off campus, renter’s insurance is generally needed," Conarton says.
Not only does renter’s insurance cover personal items, but it also can provide funds for temporary living expenses should the student's apartment become uninhabitable.
3. "Can I remain on my parents' car insurance policy?"
If a student will be driving a car at school, he or she probably can stay on the parents' policy – even if the student lives away from home during the school year – as long as the student's permanent address remains the parents' home. Check with your insurer to be sure this rule applies.
Also, it’s important to let your insurer know that the car no longer will be based at home, says Michael Barry, Insurance Information Institute spokesman.
"If the car is being taken to school, the price of the policy will now be re-evaluated based on where the school is located," he says.
If insurance rates are higher in the area around the school than they are at home, some parents may be tempted to avoid telling the insurance company about the car's change in location. But, not only is that dishonest, it could come back to haunt you.
"The risk of lying about the car's location is that the auto insurer is allowed to cancel the policy," Barry says.
And although it’s not common, the insurer could deny any claims you make if it finds out you misrepresented where the car is being driven, he adds.
4. "Do I need tuition insurance?"
It’s no secret that college is expensive. Annual tuition, room and board and other student fees cost an average of $17,860 for in-state students at public universities, and $39,518 at private nonprofit universities, according to College Board, a nonprofit that tracks college costs.
Tuition insurance reimburses a major portion of the cost of tuition, room-and-board and school loans if a student has to leave college for medical reasons. Qualifying events may include physical or mental illness, or the death of the student.
Some colleges and universities offer this coverage, which is provided by third-party insurers.
"These policies cost anywhere from 1 percent to 3 percent of tuition per semester," Barry says.
Coverage doesn’t apply if the student voluntarily withdraws from school for non-medical reasons, he says.