I was running through Wal-Mart yesterday to pick up a few things and noticed several aisles stocked with back to school supplies. There were notebooks, pens, paper, computer keyboards and mice in an assortment of colors, calculators, etc. Moms and dads were comparing available supplies with lists from schools and loading up their shopping carts.
I was reminded that college classes would start in the next few weeks. In addition to the supplies parents would get for their university bound son or daughter, many would also be buying laptops, iPads, e-readers, and new smart phones. There would also be sheets and bedding items, pictures, decorative accessories, clothes, mini fridges, microwaves, coffee pots, game consoles, and a host of items to outfit the new dorm room or apartment.
Every August, one of the questions I’m asked by parents is what kind of insurance is needed for college students personal property? There are actually two ways to do insure it:
- The parents’ home insurance policy
- A renters policy
What I recommend depends on where their son or daughter lives in the fall; dorm room or fraternity / sorority house versus apartment or rental home.
Dorm Room: If your son or daughter will be living on-campus in either a dormitory or in a sorority or fraternity house, I recommend using the parent’s home insurance policy. Most home insurance policies will cover up to 10% of the personal property or contents amount off-premises. Off-premises can be contents in your car, a storage facility, a dorm room or room in a Greek house. For example:
- A home valued at $200,000 will have contents coverage ranging from 60% to 75% of the home’s value or $120,000 to $150,000
- Off-premises contents coverage will range from $12,000 to $15,000
- This should be more than enough coverage for the typical dorm room
The only caveat is anything lost or stolen of your student’s personal property will be subject to the home insurance policy’s deductible. For Texas home insurance policies, the deductible will range from $1,000 to 1% of the home’s dwelling value. In the above example, the home policy deductible will be $2,000 if there’s a 1% deductible.
In instances where the student is taking electronics, smart phones, or musical instruments (these are items that can easily grow legs and walk away), I recommend scheduling them. Scheduling an item on a home policy simply means listing them for their stated value under the scheduled items portion of the policy. Most home insurance policies will schedule electronics, smart phones and musical instruments so if they are damaged, lost or stolen you’re only facing a $0 to $100 deductible instead of a $2,000 deductible or more. The cost to schedule such items is typically nominal for electronics and musical instruments. Be sure to include printers, accessories, and software costs with scheduled laptops and tablets.
Apartments & Rental Homes: Many students move into an apartment or rent a home after the first or second year at school. When that happens, I recommend a renter’s policy because the student will have more stuff than they would in a dorm room. In addition to the electronics and decorative accessories, there’s furniture and possibly appliances such as a washer and dryer.
Renter’s policy rates are determined by the amount of the contents coverage, what type of home the student is living in (apartment or home, brick or wood exterior, etc.), where the home is located (large city such as Dallas, Fort Worth, Houston, Austin or a smaller town such as College Station, Lubbock, Abilene, etc.) and protective devices such as fire and burglar alarms. Mix all these factors together and the cost of a renter’s policy will range from $150 to $300. Common deductibles are $250, $500, and $1,000 depending on the insurance company
If your son or daughter is going to school out of state and you pursue a renter’s policy, you’ll need to get one that’s specific to that state and from an agent that’s licensed in that state. For instance, if you have a child attending the University of Oklahoma, they’ll need an Oklahoma renter’s policy written by an agent that’s licensed to write insurance in Oklahoma. If you elect to simply have your home insurance cover your student’s property, there’s no need to have a state specific alteration to your home policy. Your student’s property will be covered in any state in the US. If they are attending school out of the country, then seek coverage that’s written in that country.
What did you do for your college student? Share your experiences, comments, advice, and questions with us in the comments section of our blog or on our Facebook page. I’ll answer all questions and our readers will appreciate the advice of those that have gone before them!