What does May & June bring? Caps, gowns, celebrations, and maybe a few tears. You wonder where the time went because your baby is a high school graduate!

Your soon-to-be undergrad will have a lot more independence when the first semester of college starts, so pause and take a deep breath.

Give yourself and your kid extra financial protection with this college student insurance game plan.

Section 1:

Car Insurance For Your College Student

Should I Leave My College Student on My Auto Policy?

You have a lot of details to sort out, so let’s start with your family’s CAR INSURANCE POLICY.

You might think, “Paying for car insurance is a great way to learn some responsibility. I’ll take my kid off our family policy ASAP.”

Before you do this, you should know when it makes sense to keep your child on the policy.

Keeping Your Child on the Policy

If your kid will commute to classes or use a vehicle at college, you should keep her on the family policy. This option could offer several benefits, including:

• A potential good student discount on your bill.
• Continuous coverage when your child really needs to drive a vehicle.
• Coverage as a passenger (in case of an accident).

Dropping Your Child From the Policy

If your kid lives on campus and won’t have a car at college, you could consider dropping her from your policy.

Will your child borrow a roommate’s car, though? And if she does, will that vehicle be insured? Even as a passenger, your child could benefit from having coverage for unforeseen situations.

Read This Before You Change Your Car Insurance Coverage Limits

Tuition, textbook, and room and board prices might make you turn and run. We have to bring it up, though. Sorry!

In 2015-2016 (the most recent year with available data), the ANNUAL COSTS FOR UNDERGRADUATE TUITION, FEES, AND ROOM AND BOARD WERE:

• $16,757 at public institutions
• $43,065 at private, non-profit institutions
• $23,776 at private, for-profit institutions

Did your wallet burn when you read that? We hope not. But we completely understand why you’re looking for ways to save money.

You might think about reducing your car insurance coverage limits to lower your bill. Doing this could cost you and your child more money in the long run, though.  We explore this idea in more detail below.

The 3 Main Parts of Car Insurance You Need to Know

Car insurance liability coverage kicks in when a driver is found legally responsible for an automotive accident. It helps pay for damages done to the parties injured or affected by the accident. 

Liability coverage includes two parts: bodily injury & property damage. 

Bodily injury liability:

• Starts working when a driver injures someone in an accident
• Helps pay for:
  • The injured parties’ medical expenses.
  • The injured parties’ lost wages.
  • Legal fees if you are sued.
• Per person limit: The maximum amount the coverage will pay if a single person is hurt in an accident
• Per accident limit: The maximum amount the coverage will pay if more than one person is hurt in an accident.

Property damage liability:

• If you’re legally responsible for an accident, property damage liability covers the cost of:
  • Vehicle repairs
  • Legal fees stemming from property damage
  • Lost income if damaged property is needed for business purposes
  • Repairs for buildings, mailboxes, fences, and more

Consider these statistics:

• The number of registered vehicles has gone UP EVERY YEAR SINCE 2010.
• Vehicle repairs cost nearly 61% MORE IN 2017 than they did in 2000 thanks to new technology and rising parts expenses.
• The cost of medical services has risen 12% SINCE 2012.
• The average auto fatality costs an average of $1.4 MILLION OVER A LIFETIME.
• A critical injury from a car accident costs an average of $1 million over a lifetime.

The Umbrella Gives You Extra Protection

An umbrella policy adds extra bodily injury and property damage coverage to your car insurance plan. An umbrella is a great option if you keep your child on the family policy.

According to the CENTERS FOR DISEASE CONTROL AND PREVENTION (CDC), teenagers are more likely than any other age group to get in motor vehicle crashes. Medical bills, vehicle repairs, and legal fees add up quickly, especially when you or your child can be sued for mental pain and suffering after an at-fault car crash.
 

Section 2:

Renters Insurance for Your College Student

Is Your Kid’s Stuff Protected?

Think about all the things your child will have at college:

• Laptop or tablet
• Textbooks
• School supplies
• Clothes
• Shoes
• TV

Will all of this be protected? Depending on where your student lives, she should have RENTERS INSURANCE to help replace belongings lost or damaged due to fire or theft. Here’s a simple way to break it down:

• Student living at home while attending college = No renters policy needed.
• Student living on campus = Parents’ renters or homeowners coverage would apply, but only if the student is listed on the policy. There would also be a limit for items covered away from the home.
• Student living off campus (not at home) = Needs renters insurance.

The Landlord’s Insurance Doesn’t Cover Everything

When a pipe bursts and floods the kitchen, it’s the landlord’s responsibility to fix it. When a neighbor’s candle starts a fire and damages the apartment, the landlord needs to cover the repairs.

The landlord wouldn’t be responsible for:

• Possessions destroyed after the pipe bursts.
• Clothes, books, or electronics damaged by smoke and fire.

Renters insurance will help replace belongings, pay living expenses, and cover medical expenses resulting from accidents or disasters like the ones listed above.

Should Every Roommate Have Renters Insurance?

Renters insurance covers belongings, but it also kicks in when your kid is responsible for property damage or an injury.

Roommates sharing renters insurance could save some money, at least in the short term. The premium would be divided by however many roommates are on the policy.

There’s one big factor to consider, though. Renters insurance is generally inexpensive and might not cost more than a few lattes. In the long run, splitting the bill and saving a few bucks might not be worth the headaches it could cause.

It’s worth noting that some insurance companies won’t allow multiple unrelated roommates to be on the same renters policy.

Yes, Every Roommate Should Get Renters Insurance

When roommates do share a policy, reimbursement checks are made out to whoever is on the policy. This requires signatures from every named insured.

Things get messy when it comes to splitting the check. You’d need to determine a percentage split based on replacement values of damaged or stolen items. That’s extremely difficult, and it could stir up hostilities among roommates.

Considering the low cost of renters insurance and the complexities of sharing a policy, we think it makes sense for all roommates to have their own policy.


Renters Insurance Exclusions and Limitations

Beck Insurance Agency will review these items with you, but we think you should know some basics exclusions and limitations of most renters insurance policies.

1. Flood damage
Just like homeowners insurance, renters insurance policies rarely cover FLOOD DAMAGE. Water damage from a burst pipe or leak may be covered, however.

2. Jewelry
Expensive or large collections of jewelry may only be covered up to a certain amount.

3. Electronic Equipment
There is generally a limit on how much electronic equipment an insurance policy will cover. If your college kid has multiple TVs, computers, or an expensive stereo system, you may want to explore adding an enhancement to the policy.

4. Damage Due to Negligence
Let’s say your soon-to-be undergrad takes her tablet outside to read. The sunny day turns into a rainy day. The downpour ruins the tablet after your child leaves it sitting on a lawn chair. Unfortunately, a renters insurance policy probably won’t cover that damage.

5. Bug infestations
These policies generally don’t cover bug infestations.

 

Section 3:
Life Insurance for Your College Student

Who Will Pay the College Loan Debt?

No parent wants to think about losing a child. However, you should consider this possibility for a moment if you have a college student in your family.

Here’s why.

When a student passes away before paying off a federal student loan, any debt owed is cancelled at death. Parents and spouses are free of repayment liability in this scenario.

Private student loans don’t work like that. They generally require a co-signer who assumes responsibility for paying off the debt if the student passes away.

For some loans, the repayment schedule accelerates after a death or triggers a requirement for immediate full repayment. A TERM LIFE INSURANCE POLICY can provide the money to pay off these loans if the unexpected happens.

Term life coverage for your college student serves two purposes:

• It’s an inexpensive way to start a future financial plan.
• It can protect you if something unexpected happens to your child, and you’re left to pay off college loans.