College students are typically young enough to still believe they are invincible and rarely plan for “what if.” Parents understand the unexpected can happen, but often believe either their college student is covered under their homeowner’s policy, or the school somehow provides protection. And everybody believes the college student doesn’t have much that needs insuring, anyway. None of this is necessarily true.
Just like in any other home, college dorms and apartments are subject to potential fire, burglary, vandalism and just plain accidents. Most college students today have thousands of dollars worth of electronics, including laptops, cell phones and mp3 players in their rooms. Add to that clothes, textbooks and other essentials and the cost to replace it all adds up fast.
* The parent’s homeowner’s policy: Many policies will cover the contents of a dependent student’s dorm room or on-campus apartment up to 10% of the homeowner’s policy. A $100,000 homeowner’s policy will cover the student’s possessions up to $10,000.
* A renter’s insurance policy just for the student
Advantages and Disadvantages of Each Option
For cash-strapped students and their parents, the biggest advantage of adding the student to an existing policy is that it usually does not cost extra. There are, however, three potential disadvantages to this option:
1. Claims made by the student count against the policy, and repeated claims can raise rates or even make it difficult to keep the policy or get another.
2. If the policy carries a high deductible, it can significantly reduce the payout for a student’s loss. Claiming a stolen $2500 laptop on a policy with a $1000 deductible means you will get only $1500 toward a new laptop.
3. Most policies will not cover a student that moves off-campus.
The biggest advantage to a separate renter’s policy is it can be tailored specifically to the student’s needs, ensuring adequate coverage.
The extra cost may initially be a deterrent, but renter’s insurance is not that expensive in relation to replacing thousands of dollars worth of possessions. Depending on location and the value of the student’s possessions, renter’s insurance can be as low as $10 to $30 per month. Deductibles can also be as low as $25.
In the event of a loss, a renter’s policy will likely restore the student’s possessions at a lower out-of-pocket cost than the parent’s homeowner’s policy will.
Additional Factors to Consider
Sometimes a group of students sharing an off-campus rental can purchase one policy together. If they split the cost equally, the cost per person may be lower than with individual policies.
As with any property insurance, a replacement cost policy offers the most peace of mind.
Pay attention to what exactly is included and excluded. If the school is located in an area prone to an excluded type of loss, purchase that coverage separately.
Finally, remember liability coverage. College parties are not known for being tame, and a hurt guest could cost more than just a friendship.