03 Jun Kids and College – Do Insureds Have Any Idea What Their Policies Say?
According to Forbes Advisor, roughly 10 million university students returned to campus in the fall of 2024, and an additional 3.2 million were enrolled as graduate students.
Preparing for college is an exciting yet challenging milestone for parents and their kids. They focus on navigating the admissions process, choosing the right fit for their child, and planning for their future. So many important factors must be considered before sending them off.
I wonder if insurance is one of the factors on the minds of parents, guardians, and kids. Probably not, but “check insurance“ should also be on the to-do list. Parents and guardians often overlook the details of their insurance policies, unaware of the specific coverages and limitations that may apply when a child is away at college. This lack of understanding can lead to unexpected financial burdens in situations where insurance could have provided some relief.
As college students move into their dorms or off-campus apartments, they bring a lot of stuff — clothing, furniture, books, sports equipment, musical instruments, laptops, smartphones, bicycles, and sometimes even cars. These items are essential for their academic and daily life, but also represent significant financial investments that must be protected. For students who live in an on-campus dormitory, most of their possessions should be covered under their parents’ homeowners ‘ insurance. The limits and conditions can vary widely. Some homeowners’ policies may limit the amount of coverage to 10% of the full coverage C or $1,500, whichever is greater. This limitation applies to the personal property a student might take to their dormitory or an off-campus apartment.
There may be endorsements available that would increase coverage for their contents or a standalone policy for computers and cellphones. In addition, there may be a policy specifically designed for students living away from home at college.
Insureds also want to ensure that not only the student’s “stuff“ is protected, but if their student accidentally damages property or causes injury, the liability coverage in the parent’s policy can be crucial in mitigating any financial repercussions. Both personal property and liability should be in place as long as the student remains an “insured“ on parents’ or guardians’ policies.
Off-campus housing gets a little more complicated. I am sure that most underwriters would suggest that students living in an off-campus apartment should have their own tenants’ policy.
The issue occurs in a dorm or off-campus housing if the student changes their legal residency. One of the main reasons a student would do this is to qualify for in-state tuition. Many colleges offer this type of benefit starting with their sophomore year. The rules at the two colleges we were looking at gave us the out-of-state packet, which contained information on how to get in-state tuition starting with the sophomore year. The rules are simple: change your legal residency, get a summer job (many are at the college), and only go home for two weeks during the summer break (need to work and establish residency). What parent would not want the savings? During orientation, the audience was asked two questions. How many of you are out of state, and how many of you will have your students become Missouri residents during their sophomore year? All the hands stayed up.
As we toured the Journalism School at Mizzou, a young girl from Texas was our guide. I asked her why she didn’t go home for the summer. Her reasons were the above list. My first thought was not, “Wow, she will save a lot of money by having in-state tuition,” but I was wondering if her parents/guardians asked their insurance agent, “We are doing this; do I need to do anything to make sure she is still protected?”
We do protect students, but part of the “Insured“ definition is “You and residents of your household who are – A student enrolled in school full-time, as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of; 24 and your relative (ISO).” There is an endorsement that can provide coverage for older or part-time students, but residency is still required. As I always say when teaching homeowners, they are always your relatives, and the non-residency causes them to lose their personal property and liability coverage. What about the excess/umbrella? I doubt it, but most follow the underlying policies. You must read the form to verify “covered or not covered.”
This is not just a personal property and liability issue. If the student has a car at college that is titled and covered under their parents/guardian policy, they are covered as a “family member.” To qualify as a family member, a relative must legally reside in the named insured’s household. The parent’s car remains covered, but when the student changes their legal residency, they are no longer a family member by definition. They are now “any person using the named insured’s covered auto,” which means they will lose their “non-owned“ coverage. The big question is, “Do kids ever borrow someone’s car?”
The goal: Help insureds understand the details of their specific coverages and where some additional protection may be needed. Preventative measures, safety precautions, and the right insurance policies may bring peace of mind to your insureds.