Students heading off to college, especially for the first time, face many insurance issues that they or you may not have considered. Here’s our quick look at some of the key issues and considerations.
First, trust the experts
During such a key time, it’s wise to look over what insurance coverage the National Association of Insurance Commissioners (NAIC) recommends for college students and families.
The NAIC recommends evaluating all student insurance needs. In their 2012 Consumer Alert concerning college student insurance needs, the major recommended products are health insurance, renters insurance, auto insurance and identity theft protection. NAIC recommends taking stock of any current coverage and making sure that the student is covered at a level in accordance with family coverage needs.
Why should you trust the NAIC? It’s “the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories.” In addition, it’s basically the common insurance regulation group that makes reliable recommendations for consumer insurance needs.
Products Recommended for Evaluation by the NAIC
One of the major benefits for college students under the Affordable Care Act is the ability to remain on parents’ plans until age 26, regardless of financial dependency.
Sometimes, notes the NAIC, healthcare coverage can be limited by network area. Should your student face such a limitation, you may want to consider insurance designed for students. The NAIC does point out that, “in general, these plans have more limited benefits and more exclusions than traditional health insurance plans. Many policies also will exclude routine examinations and injuries sustained while under the influence of alcohol or drugs.”
Probably the most overlooked form of insurance coverage when a student heads for college is property insurance. Students today tend to own more valuable personal items in their dorm or off-campus apartment than in the past, and campuses are not immune to theft or damage. The Independent Insurance Agents of America estimates 100,000 property crimes occur on campuses annually (that doesn’t count off-campus crimes). Beyond clothing and bedding, a student’s room may contain a DVD player, television, computer and stereo equipment. Students in apartments will likely have additional items such as kitchenware and furnishings.
The school or landlord will probably not cover loss of these contents in such events as fire or theft and the parent’s homeowner’s policy may or may not cover the items. For students living in college housing, policies usually cover contents up to ten percent of the contents coverage of the parent’s policy. For example, if the parents are covered for $75,000, their student is covered up to $7,500. See whether your policy will cover contents and to what dollar maximum. You may need to buy extra coverage through your carrier or even buy a separate renter’s policy.
One major misconception about homeowners insurance, however, is that dependent college students living away from home are automatically and always covered by their parents’ policy. While the NAIC notes that dependent students under 26 who live on campus are likely to have their belongings covered, it is worth checking your policy. However, if your student lives off-campus, the NAIC recommends talking with your insurance agent about whether the homeowners insurance coverage extends to rental property.
Should the coverage not extend, the NAIC states “you might want to consider renter’s insurance to protect your student’s personal property in the event that it is damaged, destroyed or stolen.” Considering that “many students bring thousands of dollars worth of personal items — such as electronics, a computer, textbooks, clothes, furniture or a bicycle — with them to school,” it’s worth a few minutes of work to make sure your student is covered.
This recommendation for checking student insurance needs (and college renters insurance in particular) not only comes from the NAIC at the national level, but also at the state level. Our senior researcher looked into how many state regulators or state insurance departments either made such a recommendation or used the text of the NAIC Consumer Alert recommendation. Through a quick web search, he found that no fewer than 29 states and the District of Columbia suggest that college parents evaluate their student property insurance needs and supplement any gaps in coverage with a renters insurance or student property insurance product.
Seven in ten students have cars at school, according to the Independent Insurance Agents of America. What impact having a family car at college will have on premiums depends in part on where your student goes to school. In some cases, coverage could go up, in other cases it could go down. Regardless, failure to tell the carrier that your child has a car at school could jeopardize subsequent claims. Students earning good grades may actually find their premium reduced.
If your child lives out of the house and doesn’t have a car at school, talk to your insurance agent to see if you can get a premium reduction now that the child isn’t a regular user. You could save hundreds of dollars or more, particularly if you’ve been paying high premiums for teenage drivers and the student is going to school far from home.
Identity Theft Protection
A couple of key facts about identity theft:
- The Federal Trade Commission listed identity theft as the top consumer complaint for thirteen years in a row. [http://ftc.gov/sentinel/reports/sentinel-annual-reports/sentinel-cy2011.pdf]
- Those aged 16-24 experience attempted or successful identity theft at a rate higher than all other age groups. [http://bjs.ojp.usdoj.gov/content/pub/pdf/vit08.pdf]
Identity theft is a serious problem for many young people. The NAIC suggests consideration of identity theft insurance. While it doesn’t protect against identity theft or insurance against losses, identity theft insurance helps cover “the cost of reclaiming your or your student’s financial identity.”
Also recommended for consideration by College Parents of America:
Life and Disability Insurance
Ideally, you should already have sufficient coverage to ensure that your student will be able to finish college should you die or be disabled. However, let this column serve as a reminder in the event you haven’t looked at those policies lately.
Tuition Refund Insurance
$5,000 of coverage ($2,500/semester) is included with every College Parents of America purchase. Such coverage protects student academic costs for a student withdrawal from school due to an unforeseen illness or injury or the death of a tuition payer. As some schools refund little after the first few weeks of classes, this can be valuable coverage for students and families that cannot afford to pay for another semester out of pocket.
Following the lead of the NAIC, College Parents of America suggests evaluating your insurance needs for your student–whatever they may be. To make your evaluation a bit easier, College Parents of America has made a couple of checklists available: Student Personal Property Inventory & Protecting your Investment in Education.