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Sending students to college? Insurance and other important issues

July 13, 2018

Sending a student away to college is the bridge between childhood and independence. I need to avoid being the cobbler with no shoes,  because for the first time I will have a child in college.  As I  prepare myself for the transition I have complied a list of important issues to consider beyond course selection, checking accounts and living arrangements. Even if the student had previously been away at boarding school, these issues are relevant, because being away at college is very different from boarding school. At Chartwell Insurance Services we call these the “quiet” issues that don’t always make the standard recommendations sent by the welcoming colleges or the farewell messages from high schools.

Insuring the possessions of college students

The homeowners insurance policy of the parents will typically extend to the possessions of their students while in a college residence hall,  however the deductible on the parents’ insurance policy will likely exceed the value of their student’s “stuff”; if it doesn’t then either the deductible is probably too low, or the student has too much “stuff.” Parents should be discouraged from filing a claim on their policy for items that are lost or stolen from the residence hall. Such claims will adhere to the policy, and could compromise future renewals.  We often recommend the purchase of  College Student Renters Insurance .   This is a low-cost policy underwritten by Allianz Insurance that protects most possessions, and covers them against the perils of flood, earthquake, theft and burglary and fire.  There is also $5,000 identity theft expense included with no deductible applied.

Off-campus housing and liability to parents

If the student moves out of the college residence hall and into off-campus housing, a new set of issues arises:

  1. Parents are often required to cosign leases for off-campus housing.   Whether or not a parent cosigns the lease, the location should be added to the parents’ residence policy to ensure there is liability coverage.  Advise students of the perils of serving alcohol and of illegal substances used or sold at parties, especially if minors will be present.  If anyone is seriously hurt or injured, the parents of the student hosts will likely be included in a plaintiff’s lawsuit.

 

  1. Obtain renters insurance.  A good renters policy will provide a primary layer of defense costs,  coverage for possessions, and additional living expenses if there is a fire, a leak or a burst pipe which makes the apartment uninhabitable. Each roommate should purchase their own policy to ensure they each have adequate liability, and are not forced to share the contents coverage limit.  Roommates without a policy may not be entitled to any coverage or additional living expenses.

Power of attorney for health care and financial needs

Students over the age of 18, even though unable to legally drink in the United States, have the exclusive right to privacy over their health care, their grades and their financial records.  What many parents often don’t realize is that if their student is injured or taken ill while away at school, hospitals and doctors are legally prevented from sharing health information to anyone without a medical power of attorney.  Usually a power of attorney naming the parents and signed in the home state will apply even if the student is away in another state but there are exceptions, so parents should check on this. A durable power of attorney is necessary for access to bank records, grades, social media, and email accounts. Without this, parents may have to resort to the courts for access to these records, a time-consuming exercise that may be overwhelming in an already stressful situation. Sitting down with your student to discuss the reasons why assigning parents or a trusted adult the power of attorney is also an occasion for a life lesson.  At some point in the future the roles may be reversed and the parents may be asking their student to be their power of attorney.  See the article from Financial Advisor for more information.  

Vehicles

  1. Vehicle usage.  Inform your insurance agent when your student is more than  50 miles away from home if they are taking a family vehicle with them, or if they should be classified as away at school without a vehicle.
  2. Grade report credits.  There are often discounts on the parents’ automobile policy if the student maintains a “B” average or better.  Colleges only release transcripts to students, even though parents pay the bills, so parents need to ask students to send a screen shot or copies of their grades to send to the insurance agent.
  3. Driving vehicles of roommates.  It is our recommendation that roommates not share vehicles although we realize that this may not be the most welcome advice. A roommate’s policy may not cover your student to drive their vehicle.  Be sure the roommate obtains this information in writing.  Parents should ask their insurance agent if roommates are covered to occasionally drive their students’ vehicle.  Many, but not all insurers will consider this permissive use and will allow this without adding the additional operator to the policy.
  4. Title new cars in the name of your student.  Students in college will soon be 21 and often fully independent at that time.  It is best to title newly acquired vehicles designated for the student in the name of the student. This saves the trouble of having to transfer the title to the student later on when they are fully independent and living out of the house.  As long as the student is a member of the household the car may be included in the family policy even if titled in the name of the student.   At that point the student may be living in another state and busy with work and unable to find the time to complete the sometimes labor-intensive steps. Parents should encourage newly independent children to be on their own policies to limit the parental liability incurred if there is a serious accident and to ensure the adult child has the full policy protections for rented and borrowed vehicles.  Adult children are technically only covered to drive the vehicles on the family policy if they are insured on the family policy and no longer live in the household.