Proper insurance coverage for college-bound children

Many parents mistakenly believe their children are automatically covered under their insurance until they graduate college — when they traditionally get a job and move out.

But it’s a good idea to review your insurance policies when your child first starts college. College students encounter numerous risks that often aren’t issues when they live under your roof.

An uninsured loss such as theft of a laptop or a sudden illness can deal a devastating blow to a college student’s limited bank account or the finances of a parent already struggling with tuition bills.

Below are common insurance scenarios encountered by college students.

Car insurance for college students

Let’s say your college-bound daughter wants to take the family car with her to school, which is out of state. Before you make this decision, know how it may impact your car insurance.

It’s likely that your daughter is already listed as an additional driver on your policy. However, you must notify your insurance company if the car will be garaged at another location. This could alter your premium, forcing it either up or down. Failure to reveal such a change can jeopardize your next claim.

If your daughter holds the title to the car, she can no longer be insured under your policy. Hopefully, she already has her own car insurance.

You’re likely to see a dramatic drop in your car insurance rates if you remove her from your policy. But she’s likely to face high premiums on her own because insurance companies consider young drivers “high risk.”

If your daughter doesn’t take the car with her to college but remains on your policy (to be able to drive the car while she’s visiting home), your premiums will decrease if you notify your insurer that your daughter is driving the car only certain times of the year. 

Health insurance for college students

Health insurance companies must allow your dependents to remain on your plan until age 26.

However, your children could still find themselves without health insurance coverage — even if they are below the cut-off age.

If you have a managed care plan, such as an HMO, it will have geographical doctor-network limits. That means the health plan might be worthless far away from home and away from the plan’s network of providers.

If the doctor is not in the HMO network, routine office visits will not be covered. When you are outside your HMO’s network, the only medical care likely covered is emergency room treatment.

Another option is student health insurance offered through your child’s college or university. See health plans for college students.

While college health plans are generally affordable, the benefits vary greatly among schools. In addition, there are plans that will not cover students who are injured while playing college sports and others require supplementary insurance specific to college athletes.

Property insurance

Check with your home insurer to see if you have adequate coverage for property in a student’s dorm — especially if your child has an expensive computer and other costly electronics.

According to the Insurance Information Institute (III), some home insurance policies limit the amount of insurance for off-premises belongings to 10 percent of the total amount of coverage for personal possessions. This means that if the parents have $70,000 worth of insurance for their belongings, only $7,000 is applicable to possessions in the dorm.

Also, expensive computer and electronic equipment and items such as jewelry may also be subject to coverage limits under a standard homeowners policy. If the limits are too low, you can consider buying a special personal property floater or an endorsement for these items. There are also stand-alone insurance policies for computers and cell phones, according to III.

However, your child must be a full-time student, live on-campus and be considered your dependent for your home insurance to apply. Coverage does not extend to an off-campus apartment rented by your child; for that you’ll need renters insurance.

A renters insurance policy would cover the student’s personal property (from fire, theft, etc.) and provide liability coverage for the student. It is also affordable insurance.

Bob Klein, director of the Center for Risk Management and Insurance Research in Atlanta, says, “The only catch would be that the student must have spent some time in their college residence within the 60 days preceding a theft for the stolen property to be covered. In other words, if the student had property in a rented apartment and for some reason had not been in the apartment at all for more than two months prior to a theft, then the theft would not be covered,” he says, adding that it’s important to review the language of any policy to determine the extent of coverage for your child’s living situation.

Does your child have a roommate? Some insurers will allow roommates to share a renters policy — and the premiums. Take a detailed inventory of your children’s belongings to estimate how much coverage is needed.

Consider buying a term life insurance policy for the duration of your child’s college education.

Life insurance

In the event of your death, would your child be able to afford to stay in college? If you’re paying for your child’s education and want to make certain the money tree won’t die with you, review your financial situation. If you don’t have a sufficient amount of money in savings or other assets, consider buying a term life insurance policy for the duration of your child’s college education.