Your kid is off to college. The bags are packed. The GPS is set. And you’ve got a fistful of tissues for the drive back home.
Now what?
The moment your child moves out of your house, everything will change with regard to your insurance policies and how you can provide the best protection.
Here are three insurance policies your college-bound child needs:
1. Auto insurance
If your son or daughter is taking a car to school, we usually recommend you choose a vehicle that is not only mechanically sound, but also older, with a low book value. It’s not a matter of IF there is an accident; it’s a matter of WHEN.
(We advise our clients that even prior to college, their teenagers should be driving an older vehicle where physical damage coverage is not needed.)
The parts and labor required to repair a newer car are more expensive, causing higher insurance premiums. With an older vehicle, you can save hundreds of dollars on your auto insurance premium, money that can be better spent on tuition, books, and trips home for the holidays.
You can maintain your child’s vehicle on your existing insurance plan, but the insurance carrier needs to be notified that the vehicle is “away at school” and the location of the school.
Even if a vehicle isn’t critical for your child’s college experience, there’s more to consider when it comes to your auto insurance policy.
If your college student will not be taking a vehicle to school, you should notify your carrier that your child is “away at school.” You may be able to reduce your premium if your child does not have full access to the vehicle. This can also help minimize the increase in your premium from having a teenager driving (listed or rated) on the policy.
2. Homeowner’s or renter’s insurance
If your son or daughter is staying on campus in a dorm room, endorse your existing homeowner’s policy to include an additional location to insure off-premises theft. This will protect the contents of his or her room should something go missing. You will want to schedule valuable items—such as a computer, a bike, and camera equipment—on a personal articles floater to protect them anywhere they are, not just in the dorm room.
If your child is renting an apartment off-campus, consider securing a renter’s policy in your child’s name, in the event that a visitor sustains injuries while on the premises. The policy should also include property coverage to protect your child’s belongings in case of a fire or flood, and it should provide for “loss of use” in the event of a covered peril (fire, wind, pipe burst) so that he or she has financial resources to arrange for alternate living arrangements while the repairs to the apartment are under way.
If you decide to purchase a house or condo for your child to live in while he or she is away at school, you’ll need to look into a homeowners’ insurance policy that will provide enough liability protection and contents coverage. You’ll need to decide whether the property is a second home for you or an investment property – that decision should not be taken lightly and directly affect what kind of insurance policy you buy and how much it will cost. (Consult with your tax advisor or real estate attorney for details.)
3. Health insurance
A college student is permitted to remain on his or her parent’s health insurance plan as a dependent while a full-time college student. If you can’t prove existing health insurance, the college may require automatic enrollment into its plan. Check the college’s guidelines regarding this.
With the changes occurring around health care reform, check with your carrier in your state on its provisions for extending coverage for dependents on your existing plan.
Finally, we strongly recommend letting your children be a part of the insurance process. They will need to know how to buy insurance on their own one day, and this big life transition is the perfect time to start learning how to make these decisions.
What happened when you sent your child off to college?
Linda Rey is a licensed insurance agent at Rey Insurance with a broad spectrum of expertise in life, accident, health, property, and casualty insurance, as well as retirement planning and college funding strategies. Follow her on Twitter: @ReyInsurance
