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Several years ago we wrote about insurance issues that should be considered when students are away at college.  Following the publication of that E&O Report we received a great deal of feedback from agents and brokers on the various issues we raised. Since it is that time of year when students are headed off to college, we are once again revisiting this issue.

When children leave home for college every parent wants to do everything that they can to make sure that they are as safe and well protected as possible.  Unfortunately, insurance coverage to protect the college student living away from home may not always be at the forefront of what is addressed by parents.  In this issue of the E&O Report we will review some of the insurance considerations that insurance agents and brokers should discuss with customers who have a student away at college.

The Insurance Services Office homeowner's insurance policy HO-3 form, HO 00 03 03 22, provides coverage for children who are away attending college full-time (as defined by the college) and who are under the age of 24.  Insurance companies consider full-time college students to be children who are residents of their parent's home who are temporarily residing away at school.  Therefore, these students are provided with coverage under their parent's homeowner's policy.  The policy will provide coverage for personal property, personal liability, and medical payments.

Regarding 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 $40,000 in total coverage for personal property, the total amount of coverage available to cover the personal property in a student's dorm room would be $4,000.  Since many students take expensive belongings 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 or change it in any way. 

The typical homeowner's policy form also provides personal liability insurance coverage for the student under their parent's policy.  This will provide coverage for the student for legal defense costs or coverage for an accident that causes bodily injury or property damage.  The coverage does not apply to 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.  Accordingly, if damage occurs to the student's dorm room, 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 remains at home and 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. Another issue to consider is that if the student is regularly allowed to use a car owned by someone else while they are away at college, they would not be covered under their parent's auto policy for an accident that occurs while they are driving that car.  There would be coverage under the policy maintained by the car owner, but there would be no excess coverage available under their own parent's policy.  ISO offers an endorsement, PP 03 06 09 18, Extended Non-Owned Coverage – Vehicles Furnished or available for Regular Use, that would add excess coverage for a student who has access to a car. The parents of a student away at college may want to consider adding this coverage to their insurance.

Health insurance coverage for a college student is another area that should certainly be discussed. If a student attending college is younger than 26 years old, they should 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. It is a good idea for parents to check the availability of physicians and pharmacies under their health insurance plan in the area where the student will be attending college before an injury or illness happens.  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. Many colleges will require that a student who is not covered under their parent's health insurance plan must participate in, and pay additional for, a student health insurance plan at the college.

Another 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 is the most common crime that takes place on college campuses. It only takes seconds for thieves to grab a computer or mobile device off a table or a library desk. So, while not giving the thieves the chance is always the first line of defense, being properly insured for the device and the data is also 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 electronic 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 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.

One final thing that parents and students may wish to consider is the purchase of tuition insurance.  We all know that the cost of attending college is very significant.  Tuition insurance can provide coverage for tuition, fees, and room and board if a student needs to withdraw due to an illness, mental health condition, or an injury.  It also can provide coverage in the event of the death of the student or the death of the person (if other than the student) who is paying for college.  In most cases tuition insurance must be purchased before the first day of classes.  Many tuition insurance policies contain standard exclusions for students who voluntarily withdraw or get expelled, must leave due to drug use, or are injured or die while taking part in risky activities such as sky diving or bungee jumping.

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Raising the above issues with customers who have a college student living away at school has benefits for student, parents and the insurance agency or brokerage.  Having the student and parent think about these coverage issues prior to the time when their child goes off to school will help protect them from potential insurance problems that may arise during the school year. 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 also help protect the agency or brokerage from a potential E&O claim or lawsuit.