Students, Protect Your Property

by Anna Thayer

Lost in the mania

There's a lot to do before leaving for college. You need to pack, say good-bye to friends and family, and buy books. And because of the craziness, families often forget to figure out some important details.

One of those details is determining how you are going to protect your property. Many parents, if they even think about it, just assume that your stuff will be covered by their property insurance. But that isn't always true, nor is it always the best idea for your family.

Protection through an existing policy

If your primary residence remains your family home, your parents can put you on their existing homeowners policy, often at no cost.

Coverage is generally 10% of the homeowner's policy. So if your parents have a $200,000 policy on their home, you'll be covered up to $20,000.

But there are always caveats. Here are some disadvantages to using your parents' policy:

Depending on their policy, your parents may need to add a rider to ensure you are properly covered. This will add to the cost.

Thanks to caps and high deductibles, your parents' policy may not be enough coverage. "Most deductibles are capped at about $500 to $1,000," says John Carr, president of CSI Insurance Agency, Inc., a national student personal property insurer based in Roswell, Ga. "But most student property is worth less than $500, so a lot of your stuff may not be covered by homeowners insurance."

While homeowners insurance typically contains "named perils" coverage (defined within your policy), it usually does not cover accidental damage, according to Carr. Accidental damage is any kind of damage you inflict on your property, such as dropping your computer.

If any of your stuff is stolen, that claim counts toward your parents' policy, which could raise their rates or get their policy cancelled completely. Yikes.

This is a big risk because, unfortunately, the likelihood that you will have a claim is high. In fact, according to the U.S. Department of Education's Campus Crime Report, there were approximately 114,444 personal property thefts on college campuses in 2000, the most recent data available.

"This number includes burglary, robbery, arson, and vehicle theft," says Carr. "When you consider unreported crime, particularly off campus, vandalism, and accidental damage, we estimate the total number of property loss incidents to student property at more than 500,000 per year. That's a direct dollar value of approximately $640 million."

To see the crime rate at your school, visit the Office of Postsecondary Education's Web site.

Renters insurance

Another option would be to get renters insurance. Getting one of these policies eliminates concerns about getting enough coverage, or negatively affecting your parents' policy if you file a claim.

The other advantage of getting renters insurance is you generally can customize the policy to fit your needs.

Of course, there are drawbacks:

You'll end up paying more for renters insurance than you would if you use your parents' policy. But if you search, you can find reasonable policies. Or you can look into a "college student" policy.

As with homeowners insurance, the deductibles are generally pretty high, meaning a lot of your stuff may not be covered.

Also similar to homeowners insurance, renters insurance typically does not cover accidental damage.

Student insurance

Another option would be to get a specific college student insurance policy. Most people are not aware of this option, says CSI's Carr.

Student insurance policies are relatively inexpensive, and they cover things not usually covered by homeowners insurance, such as cell phones, wallets (although not the cash and/or credit cards contained within), bags, and so forth. And they offer low deductibles, so most of your property will be protected.

Many of these policies also offer broader protections, such as earthquake, flood, and accidental damage. "Accidental damage is the biggest cause of loss for college kids, so it's important to have a policy that accounts for that," according to Carr.

As with any insurance, there are disadvantages to student insurance policies:

You'll have to pay more than you would if you use your parents' homeowners policy. Remember that your parents often can add you to their policy at no cost, as long as your primary residence remains your parents' home.

You may be getting more than you need. It's nice to have all the protections in place, just in case, but you have to think about whether you're going to need things like earthquake and flood protection. Clearly, you will need accidental damage protection, but if you're going to school in the desert, are you really going to need flood insurance?

Gather information

To help you decide which policy would work best for your situation, you--with your parents--should:

Look at what exactly your parents' existing homeowners insurance will cover. Have them ask their insurer if you can be covered under the policy, what the cost will be, how much coverage you'll have, and so forth.

"Most people ask the wrong question when talking to their insurer," says Carr. "They will ask if their college student will be covered under their homeowners policy. Well, the answer is almost always yes, but you need to also ask if there are exclusions, [what they are], and what the deductible is."

Look into renters insurance policies. Have your parents ask their insurance agent for recommendations.

Consider a policy offered by an agency that specializes in student insurance.

Check with your school. A lot of colleges and universities have a company they work with to offer reasonably priced insurance for their students.

When researching the insurance available through each of the above, you'll want to get quotes from as many different insurers as you can. Be sure to ask each potential insurer if the policy covers the actual price of your stuff or if it covers the replacement value. It's best to have a policy that covers replacement value so you can buy a new copy of anything lost, damaged, or stolen.

Also, find out what exactly is included in the policy. You'll probably want to find one that includes fire protection. It would also be a good idea to find a policy that covers you not only in your dorm/apartment, but also on school-sponsored trips.

Finally, you're going to want to make sure you will have coverage for liability claims.

Have a chat

August 11, 2003