Your child left for college? Take Insurance Tips 101

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Your student has already started the fall college semester. You’ve paid the tuition (whew!), and your eager Einstein has even selected a major.

Now, what about insurance?

Insurance isn’t an obvious concern when planning for college — though it should be. Once they go to college, students’ health-, auto- and property-insurance needs change radically, and you’ll need to take the right steps to make sure they’re fully protected.

In some cases, moving to college might leave them without sufficient coverage to protect their health or property. Insurers need to know when kids go to school, too. Failing to notify them could put certain family policies at risk. On the other hand, a student’s departure might present opportunities to save on existing insurance premiums.

So while your student takes classes in her new field of interest, let’s take a quick refresher course on Insurance Tips 101.

Health coverage: It’s a requirement

Students at Emory University this year face a new requirement — and it’s not a mandatory course in science. Rather, the historic Atlanta school requires its students to have medical coverage. Those who are uninsured, or those whose insurance doesn’t meet the college’s requirements, are automatically enrolled in the Emory Student Health Insurance Plan, underwritten by Aetna. Premiums run about $1,800 for a year of coverage. This year, roughly 37 percent of the school’s 11,700 graduate and undergraduates are enrolling and paying for coverage, says Dr. Michael Huey, executive director of Emory’s health care services.

“We need students to be healthy to complete their academic career,” says Huey, who notes that prior to this year, just select groups of students (such as those in the medical school) had to be insured.

It turns out Emory’s not alone. Other colleges are mandating that their students get medical insurance, too, and some states are getting into the act as well. In Massachusetts, for example, all college students must be medically insured.

Officials aren’t simply concerned about maintaining overall campus health. Economics is driving the trend, too. Specifically, when uninsured students get sick, and they need laboratory tests, medical treatment, mental health counseling or other treatments, they either do without, get stuck with bills they can’t pay — or sometimes leave universities to shoulder their unpaid tabs.

The good news is that school-sponsored insurance, while not free, is usually a good deal. Colleges invite insurance companies to design plans for their schools and bid on winning a contract. Prices and the specific benefits of school-sponsored plans vary from campus to campus, of course, with some available for as little as $1,200 a year. The competition to win school contracts, among insurers, helps keep prices in line for plans that might offer more comprehensive services. At Emory, for example, the Aetna plan gives students access to some 3,700 hospitals and a choice of some 750,000 physicians worldwide, says Huey.

So, is college-sponsored insurance right for your student? First, you’ll need to determine if you have to buy it.

Review your health policy and ask yourself the following:
  • Has your child outgrown the plan? Typically, a family’s insurance plan (through a parent’s workplace) covers full-time students, but only up to age 21, though the age limit can vary between 18 and 24.

    That was the case for Dee Lee, a Certified Financial Planner and co-author of “Let’s Talk Money” who has evaluated college-sponsored insurance as a professional. Lee also purchased college-backed insurance when her own policy stopped covering her kids on their 18th birthdays. Lee says she was more than impressed with the policies, especially when her daughter was injured one summer, and her insurance through Tufts University covered the tab.

    “She got whacked on the head and needed stitches,” says Lee. “But what I liked about the Tufts plan is that it extended from September to September, so she was covered even though she wasn’t at school.”

  • Do you have an HMO? If your child attends school as an out-of-state student, he might have to go outside the network to see health professionals. Not only will that cost you more, he’ll likely face the hassle of obtaining referrals to see an out-of-network doctor.

  • Does your policy meet school standards? Some colleges might require students’ health insurance plans to meet their criteria in order for the students to opt out of the campus-sponsored varieties. At Emory, for example, a student has to have a policy with a deductible of $500 or less. An exception is made if a student’s family has a health-care savings account to ensure that they can pay the unpaid portion of their bills before the deductible kicks in. If they don’t meet those standards, then students must buy the Emory plan through Aetna. No exceptions are made, even if a family insists they can afford to pay high out-of-pocket costs.

If you do need to buy medical coverage for a student, always shop carefully — even when looking at a school plan. Points to consider include the deductible, access to care throughout the U.S. and year-round coverage. Also, you don’t want a plan that can exclude treatment for pre-existing conditions. Finally, check to see if it has prescription drug coverage for any medications the student might be taking.

Renters insurance: Protect students’ property

So you’ve kicked off your kid’s college career with a snazzy new laptop and some other expensive high-tech gadgets. Now it’s time for to follow up to ensure his or her property is safe in the event of theft, fire or other mishap.

In general, protecting a student’s personal property boils down to a simple rule: If your child is living on campus and going to school full time, your homeowners, renters or condo insurance policy (including liability protection) will cover his or her gear. But if he or she moves off campus, your policy most likely won’t protect his or her assets. Ditto if your students starts taking fewer classes.

“If someone’s going part-time, they probably need to buy renters insurance,” says Jack Hungelmann, author of “Insurance for Dummies.”

That said, there are other times when students need to strike out on their own, insurancewise.

Kids who change their permanent home addresses on such legal documents as driver’s licenses or tax returns (say, to qualify for in-state tuition at a public university) are no longer considered official parts of your household. They’ll need their own renters insurance.

Students who rent a shared apartment will need insurance, too, but be aware that they might have a tough time getting it. That’s because insurers might not sell a policy to a student unless everyone in the household has his or her own policy, too.

Shopping around for renters insurance? Consider the following:
  • Cost. The good news? Renters insurance is cheap, generally $140 to $200 annually. Shop around for the best prices.

  • Extend of coverage. Even including their computers, televisions, stereos or other technology, most students don’t have that many assets. So there’s no need to waste money on more insurance than what is needed. Opt for rental policies with the minimum coverage — say, up to $10,000 or $15,000 worth of personal property protection.

  • Liability. On the other hand, there’s one place you never, ever want to skimp: liability. If someone is hurt in your son’s rental apartment, for example, and he’s sued, he’ll need liability coverage. Hungelmann urges students to buy $300,000 worth of liability protection versus the usual $100,000. “The price difference is about $10 a year,” he says.

  • Type of coverage.You’ve got two flavors from which to choose: replacement value or cash value coverage (though the terminology could vary slightly from one insurance company to the next). Replacement value policies generally reimburse you for the amount of money it would cost to replace the item brand new. A cash value policy will pay out the value of your depreciated goods when they are lost, stolen or destroyed. Replacement-value policies will cost about $60 more per year than the typical $140 annual cash value premium.

  • Special riders. The basic renters policy includes protection from theft, fire or windstorms. That means students will be out of luck if, oh, they accidentally spill soda, drop or otherwise accidentally break their computers. Since it’s far more likely sodas spill will wipe out their laptops than windstorms, Hungelmann urges students to increase coverage on certain items by getting riders. For the cost of about $5 per $1,000 worth of coverage, or $10 for that $2,000 laptop, you’ll get insurance against wayward drinks and accidental drops, he says.

Auto coverage: Steer toward price breaks

Congratulations if your college student left the car at home. You might have some savings coming to you. But to get it, your student’s school needs to be at least 100 miles away. If you meet this criterion, give your insurer a call. You’ll generally get about 10 percent off your premium.

Did your kid leave with the car? Then be forewarned, says Jim MacPherson, spokesman for AAA Allied Group, a chapter of the Automobile Association of America. “Insurance companies generally don’t like students to take the car. They could conceivably raise your rates if the vehicle’s moved to a different location. It’s best to check with your insurer ahead of time.”

What if you don’t bother telling your insurer? Then you place your family’s auto insurance at peril, and you risk losing coverage altogether.

“The first thing insurers ask when someone files a claim is ‘Are we really on the hook for the claim? Is this policy valid?’ You could complicate matters in a very serious situation if you’ve been suggesting that the car is being used by a student in rural Indiana when in fact it’s been driven in downtown Boston,” says MacPherson.

To simplify matters, it’s often best to re-register and insure the car in the student’s name so the location of the policy is accurate. If your son or daughter does opt for his or her own insurance, shop carefully to get the best deal.

Getting the best auto coverage for less:
  • Ask for a discount. It pays to boast about academic achievements. You could snag a “good-student discount” — usually worth 5 percent off annual premiums — given to those who maintain a 3.0 grade point average. (That’s a solid B on a 4.0 grading scale.) Also, if you’re in the market for renters insurance, as well, consider buying it from the same company that insures your vehicle. You could get a multiple policy discount of 5 percent to 10 percent.

  • Skimp on collision coverage. if your student drives a clunker. Look at your insurance policy. Up to 50 percent of the premium might be for collision coverage. Is it really necessary? If a student is driving the family’s old Buick and you can afford to replace the vehicle in the event that it’s totaled, it might not be worth keeping collision coverage.

  • Load up on liability. Experts universally sound the same warning: It’s not the fender-bender you need to watch out for, it’s the lawsuit. Be sure your student has adequate liability coverage. States mandate a minimum amount of liability drivers need, but even these regulations are “often woefully inadequate because they (lawsuit judgments) can go after a student’s future earnings,” says MacPherson.