What does May bring? Caps, dresses, parties and maybe a few tears. You’re wondering where time went because your baby is a high school graduate!
Your soon-to-be student will have much more independence when the first semester of college begins, so take a break and take a deep breath.
Give yourself and your child extra financial protection with this game plan for college student insurance.
Car insurance for your college student
Should I leave my college student on my car policy?
You have a lot of details to sort out, so let’s start with your family’s car insurance.
You may be thinking: “Paying for car insurance is a great way to learn some responsibility. I will remove my child from our family policy ASAP.”;
Before doing this, you should know when it makes sense to keep your child on the policy.
Keep your child on the policy
If your child will commute to classes or use a vehicle in college, you should keep her on the family policy. This option can offer several benefits, including:
- A potential good student discount on your invoice.
- Continuous coverage when your child really needs to drive a vehicle.
- Coverage as a passenger (in case of accident).
Remove your child from the insurance
If your child lives on campus and will not have a car in college, you may want to consider removing her from your policy.
However, will your child borrow a roommate’s car? And if she does, will that vehicle be insured? Even as a passenger, your child can benefit from having coverage for unforeseen situations.
Read this before changing the limits of your car insurance
Prices for tuition, textbooks and room and board can make you turn around and run. However, we must address it. Sorry!
During 2015-2016 (the most recent year with available data), annual costs for tuition, fees and subsistence were:
- $ 16,757 at public institutions
- $ 43,065 at private, nonprofit institutions
- $ 23,776 at private, for-profit institutions
Did your wallet burn when you read it? We do not hope. But we fully understand why you are looking for ways to save money.
You may be considering lowering your car insurance limits to lower your bill. However, doing this can cost you and your child more money in the long run. We explore this idea in more detail below.
The three main parts of car insurance you need to know
Liability insurance for car insurance begins when a driver is found to be legally responsible for a car accident. It helps to pay for damages caused to the parties injured or affected by the accident.
Liability protection covers two parts: bodily injury and property damage.
Liability for bodily injury:
- Starts working when a driver injures someone in an accident
- Helps pay for:
- The injured party’s healthcare costs.
- The lost wages of the injured.
- Legal costs if you are sued.
- Per person limit: The maximum amount that the cover pays if a single person is injured in an accident
- Limit per accident: The maximum amount that the cover pays if more than one person is injured in an accident.
Damage to property:
- If you are legally responsible for an accident, the liability covers the cost of:
- Vehicle repairs
- Legal costs arising from property damage
- Lost income if damaged property is needed for business purposes
- Repairs of buildings, mailboxes, fences and more
Think about these statistics:
The umbrella gives you extra protection
An umbrella policy adds extra protection for bodily injuries and property damage to your car insurance. An umbrella is a good option if you keep your child on the family policy.
According to the Centers for Disease Control and Prevention (CDC), teens are more likely than any other age group to have motor vehicle accidents. Medical bills, vehicle repairs and legal fees increase rapidly, especially when you or your child can be sued for mental pain and suffering after a car accident.
Rental insurance for your university student
Is your child’s stuff protected?
Think about everything your child will have in college:
- Laptop or tablet
- School materials
Will all this be protected? Depending on where your student lives, she should have rental insurance to replace belongings lost or damaged due to fire or theft. Here’s an easy way to break it down:
- Student living at home while attending college No rental policy needed.
- Student living on campus = Parents’ tenants or homeowner coverage would apply, but only if the student is listed on the policy. There would also be a limit to items covered outside the home.
- Student living off campus (not at home) Need rental insurance.
The landlord’s insurance does not cover everything
When a pipe bursts and floods the kitchen, it is the landlord’s responsibility to repair it. When a neighbor’s light starts to burn and damages the apartment, the landlord needs to take care of the repairs.
The landlord would not be responsible for:
- Properties were destroyed after the pipe burst.
- Clothes, books or electronics have been damaged by smoke and fire.
The rental insurance helps to reimburse belongings, pay living expenses and cover medical expenses as a result of accidents or disasters such as those listed above.
Should every roommate have rental insurance?
The rental insurance covers belongings, but it also starts when your child is responsible for property damage or damage.
Roommates who share rental insurance can save some money, at least in the short term. The premium would be shared with any number of roommates on the insurance.
There is a Big factor to take into account, however. Rental insurance is generally cheap and may not cost more than a few lattes. In the long run, it may not be worth the headache to split the bill and save a few bucks.
It is worth noting that some insurance companies do not allow multiple unrelated roommates to have the same rental policy.
Yes, every roommate should get rent insurance
When roommates share a policy, refund checks are made to the person on the policy. This requires signatures from all named insureds.
Things get messy when it comes to splitting the check. You must determine a percentage breakdown based on compensation values for damaged or stolen items. It is extremely difficult, and it can arouse hostility among roommates.
Given the low cost of rental insurance and the complexity of sharing a policy, we think it makes sense for all roommates to have their own policy.
Tenants Insurance exclusions and restrictions
Your insurance agent will probably review these items with you, but we think you should be aware of some basic exceptions and limitations to most rental insurance policies.
1. Flood damage
Just like home insurance, rental insurance rarely covers flood damage. However, water damage from a cracked pipe or leak can be covered.
Expensive or large collections of jewelry may only be covered up to a certain amount.
There is generally a limit to how much electronic equipment an insurance policy covers. If your college child has multiple TVs, computers, or an expensive stereo system, you may want to consider adding a policy enhancement.
4. Injury due to negligence
Let’s say your prospective student takes out his tablet to read. The sunny day turns into a rainy day. The rainstorm destroys the tablet after your child leaves it sitting on a lawn chair. Unfortunately, a rental insurance policy probably does not cover that damage.
5. Bug attack
These policies generally do not cover insect infestation.
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 option for a moment if you have a college student in your family.
When a student passes away before paying off a federal student loan, all debts at death are canceled. Parents and spouses are free from repayment obligation in this scenario.
Private student loans do not work that way. They generally require a co-signatory 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 claim for immediate full repayment. A life insurance policy can provide money to pay off these loans if the unexpected happens.
Lifetime coverage for your college student has two purposes:
- It is a cheap way to start a future financial plan.
- It can protect you if something unexpected happens to your child, and you have to pay off college loans.