College-Bound Kids and Insurance ? Part 1: Homeowners and ...

If you have a kid who is about to head off to college then there are some important things you need to be aware of.? There may be discounts available for you as well as some new liability risks that you should know about. In this post we?ll discuss how this relates to homeowners and renters insurance.?

Now having recently put two boys through college I understand this is a busy time of life for both you and your child. So it may be tempting to deal with the ?insurance stuff? later. But I encourage you to take the time and do it now. Once you do, you can check it off your list and sleep well at night knowing you?re prepared.

After reading these two posts you?ll walk away with answers to the following questions:

• How is my kid?s ?stuff? covered at college?
• Does my child need to get renters insurance while at college?
• What discounts are available for college students on my auto policy?
• If my kid throws a party and someone gets hurt could I be held liable?

Ready?? Then, let?s get right into it.

????? How Your Kid?s ?Stuff? Is Covered at College

According to the Insurance Journal, the average college student will bring between $5,000 and $10,000 worth of personal property to college. For many students that amount is much higher.

When you think about the cost of iPhones, laptops (especially Macs), Kindles, and other digital devices it?s easy to see why today?s college student has more reason to be concerned about covering their personal property than when we went to college. Twenty years ago kids didn?t walk around with a $400 phone in their pocket, a $2,000 laptop in their backpack and a $700 ?tablet? in their hands.

Most insurance companies consider college students as residents of their parents? home but temporarily residing elsewhere. Therefore, your child?s dorm-room contents would technically be classified as ?personal property, located off premises.?

And a typical homeowners policy provides coverage for up to 10 percent of personal property, off premises. For example, let?s say you have $100,000 of contents coverage on your homeowners policy. That means you would have $10,000 automatically extended for personal property located off premises.

You may also consider ?scheduling? certain items of high value or purchasing ?special computer coverage? for expensive computer devices. There are two main advantages to doing this. First, you?ll most likely have broader coverage (covers more perils like something being lost or spilling water on the laptop). Secondly, the deductible for special computer coverage is typically much lower than your standard homeowner?s deductible. And for scheduled items there is no deductible.

Another option to consider would be renters insurance. Renters insurance is not right for every college student but some choose to pay the extra $15-30 a month in exchange for the peace of mind they get. Not only does renters insurance provide personal property coverage, it also provides liability coverage which we?ll cover in more detail next.

New Liability Risks Parents Face and How to Prepare

When kids go to college you, as the parent are now exposed to greater liability risks on several fronts. Since most college students are considered dependents of their parents and covered on their home and auto policies there is risk that parents could be on the hook for the negligence of their child.

According to The National Institute on Alcohol Abuse and Alcoholism, an estimated 1,400 to 1,800 students die each year from drinking-related problems. This statistic is certainly alarming and we hope students, colleges and parents take college binge drinking more seriously.

And as insurance advisors we feel it is our responsibility to inform you that if your child chose to host a huge drinking party and someone were to get injured or killed, you as the parent could be on the hook for the damages. This also means your homeowners policy could be tapped.

So what can you do to protect yourself if such an event were to occur? Well, you have a few options. First, you could increase the liability limit on your homeowners policy (i.e. if you currently have $300k you may choose to increase it to $500k).

The second option would be to purchase renters insurance for your child. As mentioned earlier, renters insurance would also provide personal property coverage as well as liability coverage for the student.

????? Is It Time for You To Get an Umbrella Policy?

The third option, which is becoming more popular, is to take out a personal umbrella policy. An umbrella policy provides an additional layer of liability protection (generally starting at $1 million) that goes above and beyond both your homeowners and auto policies. Here?s how it works.

Let?s say an insured has an 18-year-old son who?s away at college with a car. The son throws a wild keg party and one of the kids gets seriously injured after falling off the deck resulting in a $600k medical claim. If the insured only had $500k in liability protection then they would be responsible to pay the remaining $100k out of pocket. However, if they carried an umbrella policy then after the underlying policy (in this case, the auto policy) was exhausted then the umbrella would kick in. So the homeowners or renters policy would cover $500k and the umbrella $100k. Make sense?

An umbrella policy would also extend beyond the liability limit on the auto policy. So if an insured?s child seriously injured or killed someone in an auto accident the umbrella policy would kick in after the underlying auto limit was exhausted.

?????? Still Have Questions?

If you have any questions about steps you should take to prepare for your child going to college feel free to call one of our agents. We?d here to help. You can also leave your question in the comment area below and we?d be happy to answer it for you.

And if you want to find out how college students affect your auto insurance be sure to be on the look out for our next installment.

Source: http://www.lanierupshaw.com/college-bound-kids-and-insurance-part-1-homeowners-and-renters/

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