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Property insurance options for college students

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Insuring a good college experience

It's that time again, kids are headed back to campus. Squeezed into the trunk along with books and clothes are all of the must-have items of today's college set: a laptop computer, cell phone, MP3 player, television and a top-of-the-line mountain bike.

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That's a lot of expensive stuff. That's why it's not a bad idea to also pack an insurance policy.

"Children take a significant amount of personal property with them at college, and the likelihood of theft or fire loss is increased while they are away at college," says David Thompson, a staff instructor with the Florida Association of Insurance Agents in Tallahassee, Fla.

Parents generally have two choices when insuring the possessions of their college-bound kids. They can get a child covered under their existing homeowners policy, or they can buy renters insurance. Both approaches have advantages and disadvantages.

Adding to an existing policy
The cheaper option is putting your child on your existing homeowner's policy. Parents can do this provided the child's primary residence remains the family home and it usually costs nothing.

Coverage is generally 10 percent of your homeowner's insurance policy, says Jacki Jungsberger, a vice president with Tri-County Agency Inc. of Brick, N.J. For example, if your family has a $200,000 policy for its home, then your college-bound youngster would be covered up to $20,000.

Depending on your existing policy and what sort of property coverage your child may need, you may need to add a rider, which would add to the cost.

The disadvantage of using your insurance to insure your child: Any claims made by your child will be made toward your policy. Repeated claims can raise your rates and can even make it difficult to keep or get another insurance policy.

"The downside is the likelihood of a claim is greater for a child away at college, and if a claim is submitted it goes on the parents' policy and stays on their record for several years," FAIA's Thompson says.

In addition, having your child ride on the coattails of your homeowners policy may not be enough coverage because of caps and high deductibles.

John P. Carr, president of CSI Insurance Agency, a Roswell, Ga.-based insurer that specializes in college insurance, has done the math.

"Most homeowners' policies have a $500 or $1,000 deductible," Carr says. "If I have a $1,000 deductible and lose a laptop valued at $3,000, with my $1,000 deductible I'll only get $2,000. There's no way I can replace the laptop for that kind of money."

When a renter's policy makes sense
If adequate coverage or putting your child on your own homeowner's policy is a concern, the other option is to get renter's insurance for your college-bound child.

The advantage here is that any claims won't affect your homeowners insurance. In addition, the policy can be tailored specifically for your child's situation. A customized insurance policy can ensure that your child's possessions are adequately covered.

Indeed, many college students find that renters insurance is the only way to get property properly insured. According to Carr, approximately 22 percent of college students aren't covered by their parents' property insurance either because they are foreigners or they don't permanently reside with their parents.

The biggest disadvantage of renter's insurance is the higher cost. That said, a renter's policy doesn't have to be overly expensive. CSI Insurance, for example, offers college student policies ranging from $2,000 up to $25,000 in coverage. Carr says the average student buys a $5,000 policy with a deductible of $25 and an annual premium of $126.

What to consider
How do parents decide the right course? Start with what you've got. Ask your own insurance broker exactly what your property insurance covers and whether your child can be added to the policy (and at what cost).

If you determine that renter's insurance is a better choice, again start with recommendations from your insurance agent. You also can compare the offerings from companies that specialize in student policies, such as CSI or National Student Services of Stillwater, Okla.

And check with your child's school. Many universities and colleges strike deals with insurance companies or, at the very least, know what companies offer insurance to college students.

Follow the same steps you'd take when buying any form of insurance, Carr says, including:

  • Get quotes from as many vendors as you can.

  • Check whether the policy covers replacement or the actual value of an item. You'll want a policy that pays replacement costs, that is the cost of getting a new item to replace the lost or stolen one.

  • Find out what's included or excluded from the policy. For example, if the policy excludes fire or flooding, you may want to look for a more inclusive insurance policy.

  • Look for a policy that covers losses not just in living quarters, but for school-sponsored trips.

You'll also want to make sure that coverage for liability claims is included, says FAIA's Thompson, regardless of whether your child is covered on your homeowners policy or a separate policy.

"Homeowners' policies provide liability coverage automatically, but again coverage depends on the specific situation for the child," Thompson notes.

For that reason, Thompson says the best advice he or any insurance professional can give is that a parent with a college-bound child "contact their agent, carefully explain the situation, and allow the agent to explain the coverage under the policy. With so many different companies writing policies and so many different situations with kids at college, giving a generalized answer can be dangerous."

But it could be more dangerous -- and expensive -- to ignore insuring your child's property while he or she is away at college.

Jenny C. McCune is a contributing editor based in Montana.

-- Updated: Jan. 24, 2005




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