09 Aug Kids Going Off to College – Any Insurance Issues?
In some of the most recent E&O Plus reviews, I have discussed with some agency staff how they have kids going off to college this month. In some of those discussions, I gleaned that not much consideration had been given to insurance. If insurance people haven’t thought much about this issue, how much have non-insurance folks considered it?
For virtually all parents (and kids), this can be a very emotional time. I can attest to the concept of “stuff happens” firsthand. During the summer between my freshman and sophomore years, the fraternity house I was moving into in the fall suffered a major fire and had to be demolished. Everything I had left there over the summer was gone. Fortunately, my parents had the proper coverage. If that were to happen to you (or one of your clients), there is the possibility that without the proper coverage, there could be tremendous ramifications. What are some of those issues?
Most insurance professionals know the homeowners’ policy typically provides 10% of coverage away from the main premises. Based on the parents’ coverage, this may or may not be enough. When you factor in clothes, a stereo, iPad, computers, musical instruments, etc., the values can be higher than one initially thought. Will the 10% be enough?
Another significant issue deals with exactly where the child is living. Coverage under the parents’ homeowners’ policy will typically apply if they live in a dorm or other college housing. But if a child lives off-campus in an apartment, fraternity, or sorority house (approximately 20% of all college students), most insurance companies consider these arrangements permanent residences. This living situation would preclude coverage from applying under the homeowners’ policy. This scenario means no property or liability protection. The child should then consider securing a renters’ policy (and possibly a personal article floater) to cover their possessions and liability exposures.
Generally, the person who signs the lease is held liable if someone is injured on their leased premises. Do the parents know who is signing the lease?
When it comes to auto insurance, if the student is taking a car to college, the goal is to ensure that the car is properly insured. If the child is taking one of the family cars, be sure they are listed as a driver on the policy. Another key issue is ensuring the insurance carrier is notified of the “new” garaging location. While this may result in a higher premium, the insured can also feel confident that the car is properly covered. I have heard many stories where auto carriers deny claims when they find out the car is not where they thought it was.
Since the student is ultimately responsible for the car and what happens with it, a good best practice is for parents to advise their kids not to let anyone else drive the car. If a major accident were to occur, the parents’ underlying limits might not be enough.
Fully document all of these discussions in the agency system with a memo to the parents memorializing the conversation.
These are just some of the insurance issues that come into play when kids go to college. Unfortunately, fires and car accidents leading to liability issues arise from college students. How confident are you that most parents know these issues? Consider dedicating a newsletter/blog/social media message/e-mail blast, etc., to your customers to educate them and encourage them to contact the agency for further discussion.