Insurance Coverage for Your College Student

My son is going away to college this fall. Does our homeowners insurance cover his stuff while he’s at school? And what should we do about car insurance?

Your homeowners insurance will generally cover him if he’s living in a dorm. He’ll have the same liability limits as if he were in your home, but the coverage for his belongings may be limited to 10% of your total possessions coverage (the rules vary by insurer). Many homeowners insurance policies cover possessions up to 70% of the home-coverage limits -- so if you have a $200,000 homeowners insurance policy, you’d have up to $140,000 in coverage for your possessions in your home, and up to $14,000 in coverage for items that are off-premises, such as in a dorm room. Add up the value of your son’s stuff and make sure you have enough coverage -- you may want to buy some extra coverage if he has an expensive computer system and other valuable electronics.

Your home insurance policy may not cover your son if he is living in an off-campus apartment with a 12-month lease, however. In that case, it’s a good idea to buy a separate renters’ insurance policy. Renters’ coverage is surprisingly inexpensive -- generally just $125 to $200 per year, which would cover all of the student’s possessions and provide $100,000 to $300,000 in liability coverage, says Ed Charlebois, vice-president of personal insurance for Travelers. If your son has roommates, each one should get his own renters’ insurance policy, which will cover his own possessions and liability, says Charlebois.

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Most renters’ policies will also pay the extra cost to live somewhere else temporarily if your student needs to move out for a while if the apartment is damaged. And both homeowners and renters’ policies will cover your son’s laptop or other items if they are stolen while he is away from his dorm or apartment. For example, a laptop stolen at the school library would be covered. Also ask about any coverage limits if your student is traveling abroad -- some companies, such as Chubb, provide worldwide coverage, but some others do not.

Some policies extend coverage even further -- USAA’s renters’ policies provide coverage for earthquake and flood, which aren’t covered by homeowners insurance. Chubb’s homeowners insurance policies, which cover students up to age 25 who are considered part of your household, can also reimburse policyholders for additional tuition, room and board and other fees if your student lives in school-administered housing and needs to transfer to another school because the school is closed due to a hurricane, flood, fire or other covered event.

It’s a good idea to take an inventory of your child’s stuff as he is moving into the dorm or apartment, recommends June Walbert, a certified financial planner with USAA. That’s an easy time to list all of his possessions and any special information (and keep a copy of the receipts for any valuable items), which can make the claims process go more smoothly if anything does happen. The Insurance Information Institute’s Know Your Stuff Home Inventory can help you get started.

Let your auto insurer know that your son is going away to college even if he does not take a car to school. If he goes to school more than 100 or 150 miles away from your home and doesn’t take a car, you could get a big discount on your auto insurance premiums but still have coverage for him when he comes home for holidays and vacations, or if he borrows a car while away at school. If he does take a car, his premiums may rise or fall depending on the location of the college, where he’s parking his car, and how many claims the insurer has had to pay in that area. Either way, be sure to let your insurer know if your son gets good grades -- many insurers continue to offer a discount on car insurance premiums for students who maintain a B average or better in college.

See 4 Reasons to Reshop Your Auto Insurance for more information about saving money on car insurance, and The Basics of Homeowners Insurance for details about buying homeowners insurance and making sure you have the right amount of coverage.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.