Whether you have a child going off to college to live in a dorm or an apartment, you should determine if he needs his own insurance to cover losses from theft or property damage or if your homeowners policy is enough. Here are some of the risks and options to help you decide.
What are The Risks
If you rely on homeowners insurance to cover a student in a dorm room, note that most policies will limit coverage to 10% of the coverage of your home. So if your policy covers up to $50,000 in losses, your student's belongings will be covered for only up to $5,000. In many cases, this will be adequate for many students.
But is added insurance really needed where your student is going?
The number of on-campus burglaries and robberies is pretty low according to the National Center for Education Statistics at a rate of seven property crimes per 10,000 full-time students. Every campus is different, however, and you can gauge the risks at any school by visiting the FBI's Offenses Known to Law Enforcement by University and College site.
While considering the likelihood of a crime occurring where your student is attending school, you should also think about his maturity and responsibility. Is he too trusting, street smart, a bit of a prankster, careless with his belongings, or mindful of their value and careful with them? You may feel your student is very responsible and won't need the extra coverage of dorm insurance, or you may want to get the coverage for the devil-may-care student who loses his phone once a month.
Choice of Major Can Make a Difference
If a student is majoring in art or photography, he will have more expensive equipment and supplies than other majors have. A computer science major may need extra monitors, and even history majors may have a gaming system that could get stolen or damaged. A parent's homeowners policy would not cover the whole cost of replacing the damaged or stolen items. If a student does not require expensive equipment, their parents’ homeowners insurance will suffice if the focus is only on personal belongings.
The Pitfalls of Relying on Parents’ Policies
In addition to the limited coverage offered to students living in a dorm, the deductible on a homeowners policy is usually much higher than with dorm insurance. You may not want to make a claim for a stolen wireless speaker on your homeowners policy, but it would be reasonable on a dorm insurance policy.
Dorm insurance will cover everything, such as laptops, smartphones, wireless speakers, digital cameras, bicycles, sports equipment, and musical instruments. It usually comes with low deductibles ($25 vs. those on home insurance policies) and is very affordable at an average $160 a year for a $5,000 policy with a $50 deductible.
Depending on the student, personal liability may be another reason a college student should have his own policy. If a prank, such as pulling a fire alarm in a dorm results in property damage, or a social media post results in a defamation suit, a separate policy would cover the student without impacting the parents' coverage.
If you do opt to use your homeowners policy, you should check with your provider to see if a floater or endorsement is needed to list high-value items like computers to ensure they are covered.
Off-Campus Living
If your student will be living in an apartment, renters insurance is highly recommended by most insurance experts and often required in renters agreements. The risk of theft and damage is also greater in off-campus housing. If renters insurance is not required by the lessor, it is still a better option to secure the added insurance in most cases than relying on your homeowners policy.
Federal Flood Insurance
Students living in basement apartments or dorm rooms, and those attending colleges located near rivers and large bodies of water could be vulnerable to flooding. Homeowners and renters insurance policies do not cover flood damage, so purchasing federal flood insurance may be a good idea.
Teaching young adults about insurance
Parents are always looking for valuable teaching moments so their children can be well-prepared for life down the road. As they start to spread their wings, this is an ideal time to teach them about protecting their belongings from theft and damage, as well as themselves from liability.
While you're at it, you can include health, life and auto insurance policies as well in your discussions. Most colleges and universities offer student health insurance though may not explain how it works as well as you would.
Send your student off well-protected and informed, and you'll rest easier knowing you've taken all the steps needed to help ensure a great college experience.
Sources: Insurance Quotes, Consumer Reports, Business Insider
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