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Insurance Coverage for Students Leaving the Nest

September 26, 2011

PRESS RELEASE: August 16, 2011 - The beginning of the school year marks big changes, especially for students moving away from home for the first time. In the midst of packing, moving, course selections, and buying supplies like books, computers and laptop bags, insurance might not have crossed anyone’s mind. However, with the kids out of the house, there are implications for auto insurance coverage, and possibly a need for tenant insurance. In accordance with its focus on educating consumers to help them make informed insurance decisions, InsuranceHotline.com explains how sending children off to school can impact insurance rates and coverage.

Auto Insurance Coverage

Student auto insurance rates are generally quite high. If he or she will be taking a car to school, then it may be a good idea to insure it with the same company as the parent’s insurance to benefit from the multi-vehicle discounts that some companies offer. Some cities have higher or lower risk compared to others so it is important to shop around to compare rates. In some cases, the student may be able to stay on the parent’s policy as an occasional driver, offering the potential for significant savings versus coverage as a primary driver. Another opportunity to save is for students with good grades as some insurance companies offer a discount for strong academic performance. As always, having a good driving record that is free of accidents and tickets can minimize insurance costs; hence, instilling the value of defensive driving among younger drivers has a financial reward in addition to the overarching objective of keeping children safe on the road.

Many parents may be tempted to remove a student completely from their policy during the school year if the child is living on campus without regular access to a vehicle; but, this may result in higher costs down the road when it comes time to adding the driver back on to the policy. Insurance companies will acknowledge that students, while away at school, will be driving less. Parents can investigate the option of changing a child’s status to ‘Restricted Driver’ which could lead to an insurance discount of up to 50% for the student’s coverage. Keep in mind, however, that this status must be changed when the student comes home for the summer to ensure proper coverage in the event of a claim.

Tenant Insurance Coverage

With high-tech devices becoming more common, and in some cases mandatory requirements, students may be going off to school with thousands of dollars of technology. These valuable items may be at risk of theft given that dormitories are generally more easily accessible than personal dwellings as well as the fact that students can sometimes be absent-minded. In addition to ensuring a student’s belongings are covered, it is also important to make sure that there is liability coverage in place. Parents should start by checking the insurance policy of the residence in the school to determine if coverage exists; However, most schools will not cover anything beyond the public domain — the residence’s grounds, lobby or corridors. Hence, anything that happens within the premises of the student’s room will not be covered, including damage to the contents and/or incidents that could find the student liable for damages. If the student is sharing a house with others, the risk is even greater and each tenant should get an individual policy. While replacing a computer may not be worth all the trouble or extra costs, leaving out liability coverage could have significant financial implications. Liability coverage, like property coverage, can also be extended from the current home policy so it’s a good idea to start by checking with the parent’s current insurance company.

There are three steps parents can take when considering tenant insurance.

1.    Check with the current broker or agent to see if the personal items are already covered under the existing home insurance policy. The student may still be considered a dependent and since attendance at school is only temporarily moving out, the student’s possessions like their computer, may still be protected despite its relocation. An extension of the home policy to cover the student may also be available for a small fee.

2.    Contact the school to see if they have a preferred insurance company. Much like available auto insurance discounts from group membership, the school may have a preferred company that provides discounted rates. In the unfortunate event of an unexpected incident such as flooding, the school will take care of the room itself, but not any damage done to the student’s property.

3.    Purchasing tenant insurance for the child may seem like an additional cost to an already expensive school year, but as with all insurance, the implications of not having coverage could be substantial if anything does happen. Most tenant insurance policies have similar coverage and the cost will vary among different insurance companies; hence, parents should shop around to find the best rate. Modifying the deductible is another way to manage costs in an effort to decrease current expenses while increasing the cost in the event of a claim.

“Living away from home can be both a challenging and rewarding experience for young adults.” Says Tammy Ezer of InsuranceHoline.com “Taking some time at the start of the year to organize insurance needs will ensure that financial implications and stress levels are minimized in the unfortunate circumstance requiring an insurance claim, whether for personal belongings, or even worse, an injury.”