My oldest daughter will be headed off to college as a freshman in late August.  As we have been going through the checklist of the numerous things to consider before she leaves for school, one issue that we recently discussed was the insurance that would cover both her health and her belongings while she is away.  When children leave home for college, every parent wants to do everything that they can to make sure that they are as safe and protected as possible.  Unfortunately, insurance coverage to protect the college student living away from home may not always be addressed by parents.  In this issue of the E&O Report, we will review some of the coverage considerations that insurance agents and brokers should discuss with customers who have a child away at college.

The Insurance Services Office homeowner’s insurance policy HO-3 form, HO 00 03 05 11, provides coverage for children who are away attending college full-time (as defined by the college) and are under the age of 24.  Insurance companies consider full-time college students to be residents of their parent’s home who are temporarily residing away at school, and therefore they are provided with coverage under their parent’s homeowner’s policy.  The policy will provide coverage for personal property, personal liability, and medical payments.

With regard to coverage for personal property, the policy will provide insurance coverage for the personal belongings of college students when they are living in dorms.  Most homeowner’s policies limit the amount of coverage for off-premises personal property to 10% of the total coverage available for personal property under the policy.  Therefore, for example, if a policy provides $50,000 in total coverage for personal property, the amount of coverage available to cover the personal property in a student’s dorm room would be $5,000.  Since many students take expensive belongings away with them when they go away to college, the parents need to consider whether the amount of coverage that they have is adequate or if they may need to increase it.  

The typical homeowner’s form also provides insurance coverage for personal liability for the student under their parent’s policy.  This will provide coverage for the student for legal defense costs or coverage from an accident that causes bodily injury or property damage.  The coverage does not provide coverage for accidents resulting from automobiles, boats, or aircraft.  The typical homeowner’s form will also provide coverage to the student living away at college for the medical expenses of others resulting from injuries that occur while they are at the student’s dwelling.  

The HO-3 form provides limited coverage for damage to property that is in the student’s care, custody, and control.  The form states that the insurance does not apply to property damage to property rented to, occupied by or used by, or in the care of the insured.  This exclusion does not apply to property damage that is caused by fire, smoke, or explosion.  If the student causes water damage to the dorm room or an apartment, the HO-3 would not provide coverage. 

It is very common for college students to move into off-campus housing and not live in the school’s dorms.  This living arrangement may be treated differently by insurance companies than the full-time student who lives in the dorms that are provided by the college.  Students who live in off-campus housing may need to obtain their own rental insurance policies, since their parent’s homeowner’s policies may not cover their personal property that is located there. In this situation, all of the details of the rental need to be explored in order to ensure that the student is adequately insured. This will include such items as the size and location of the apartment, any roommates that they may have, the contents of the apartment and whether the student will return home or reside in the apartment after the school year ends.  The agency can check with the parent’s insurer to find out if there would be coverage for the student living off-campus under the parent’s policy, or if a separate insurance policy should be obtained to provide coverage.  

Another issue to discuss with a customer who has a child away at college is the car that they may have been driving when they were living at home.  Does the parent own the car or is it in the student’s name?  If the student does not take a car with them to college, and they are insured under their parent’s policy, it may not be prudent to take them off the policy to reduce costs. This way the student will be covered if they are going to be using the car when they are home from school or if they drive a friend’s car while they are away. If the car is in the student’s name and it is not taken to college, some insurers will provide a discount if the car is over 100 miles away from the college. If, however, a car is taken to college by the student, the auto insurance company should be notified about the location where the car will be garaged, whether it is titled in the name of the parents or the student. The location where the car is garaged may either increase or decrease the auto insurance premiums.

Health insurance coverage for the college student is another area that should definitely be discussed. If a student attending college is younger than 26 years old, they would be able to maintain health insurance coverage under their parent’s plan. One item to specifically consider if the student is attending college in a different state is whether the network of preferred physicians and hospitals is available under the health insurance plan. If the network does not extend to the location where the student is attending school, the child will probably have coverage for emergency care if needed or they may have to use physicians and hospitals that are treated as out of network by the health insurer.             

An additional issue to consider is insuring against the theft of a student’s laptop or other device with data and personal/school content on it. According to the U.S. Department of Education, theft of personal property was the most common crime that takes place on college campuses. It only takes seconds for thieves to grab a mobile device off a table or a laptop from a library desk. So, while not giving the thieves the chance is the first line of defense, being properly insured for the device and the data is important. In addition to any personal property coverage under the homeowner’s policies, you can also suggest some type of standalone Dorm/Student Personal Property policy, which usually protects the student and their property worldwide. Many insurers provide coverage for laptop computers and other computer devices.  The ISO endorsement for Special Computer Coverage, provides coverage for computer equipment against direct physical loss.  Computer equipment is defined within the endorsement to mean computer hardware, software, operating systems or networks, and also other electronic parts, equipment or systems solely designed for use with or connected to the computer equipment.  The un-endorsed homeowner’s policy provides coverage for theft of a laptop computer, but not for other types of losses, such as dropping, spilled liquids, or power surges.   There is also the issue of insuring the consequences of both identity theft and the loss of the data on any laptop or mobile device. Loss of the data on a laptop is devastating to a student. Coverage for data recreation, cost of retrieval etc., should be discussed, as well as assuring that the limits under any homeowner’s or other insurance policy are sufficient. 

Raising these issues with customers who have a college student living away at school has benefits for the student, the parents and the insurance agency or brokerage.  Having the student and parent think about these coverage questions prior to the time when their child goes off to school will help protect them from potential insurance problems that may arise. The agency or brokerage will also benefit because it will be providing better service to its customers and, in the process, it may also sell more insurance.  In addition, addressing these issues with the customer will help protect the agency or brokerage form a potential errors and omissions claim or lawsuit.