Advertisement
insurance

Kids, College and Insurance

You may need to make adjustments to your policies to make sure your child is covered when he or she goes to school.

My daughter will start college in a few weeks and I'm wondering what I need to do about insurance for her.

You should contact your insurer before your child goes to college. You may need to make a few adjustments to protect her and her belongings while she's away -- and you could save some money in the process.

Advertisement - Article continues below

Car insurance. If your daughter moves 100 to 150 miles away for college and leaves the family car at home, your car-insurance premiums could be trimmed by up to 30%. And she'll still be covered when she's home on vacation.

If she takes one of the family's cars with her to college, your premiums will rise or fall depending on the type of car and the location of the school (if it's in an area with higher insurance costs). Contact your insurance company or agent for your best option. It's usually a good idea to keep your child on the family policy so she can benefit from any multicar (or multipolicy) discounts, as well as any breaks you've accumulated for being a longtime customer.

This might also be a good time to shop around to see if you can get a better deal. The companies that offer the best rates for empty-nesters with children at college may not be the same as the ones that offer the best deals for young families. You can find rates from many companies at InsWeb.com or find an agent in your area at the Independent Insurance Agents & Brokers of America. Also see What You Need to Know About Auto Insurance and How to Trim Your Car Insurance Bill for more information about shopping for the best deal.

Advertisement
Advertisement - Article continues below
Advertisement - Article continues below

Renters insurance. If your daughter is living in a dorm, then your own homeowners insurance may cover her stuff. But ask your agent or insurer about the rules and limitations. Some policies, for example, cap dorm-room protection to 10% of your total coverage for possessions. Your daughter's computer, electronics and other items could be surprisingly expensive to replace, so do a quick calculation to make sure you have enough coverage.

If your daughter lives off-campus, however, you probably need to buy renters policy, which will cover her possessions and provide liability coverage if anyone is injured in her apartment. Policies tend to be just $200 to $300 per year, and buying renters insurance through the company that provides your homeowners and auto coverage could get you a discount on all of the policies. Be sure to tell the insurer whether your child's name is on the lease.

Health insurance. Even though most children can stay on their parents' policies while they're full-time students, find out what coverage the policy will provide if she's moving out of town. If you have an HMO that lets you use doctors and hospitals only in your area, your child could end up with big expenses for any visits to a doctor or hospital while away at school.

Advertisement - Article continues below

College health-insurance policies are one alternative, but be careful before signing up. Some policies have low deductibles but also very low coverage maximums -- as little as $50,000 per accident or illness, with limits of just a few thousand dollars for each kind of surgery or care. That could leave you and your child with tens of thousands of dollars in uninsured expenses.

Advertisement
Advertisement - Article continues below

If your daughter is healthy, she may do better to buy her own policy (go to eHealthInsurance.com or find a local health insurance agent at The National Association for Health Underwriters). Premiums for healthy people in their late teens and early twenties run as little as $50 to $100 per month in most states (except New York and New Jersey, where premiums for young people are much higher because insurers must cover everyone and generally charge the same rates).

She could save even more money by buying a policy that has a high deductible -- and high coverage limits -- which will protect her against major medical expenses. Many high-deductible policies now cover preventive care, which may be all she needs if she's healthy. And if her policy has a deductible of at least $1,150, she can open a health savings account and make a tax-deductible contribution of up to $3,000 in 2009, which she can use tax-free for medical expenses in any year. Most college students are unlikely to have an extra $3,000, but you could give her the money to contribute to the account. That would help her build up a stash to cover deductibles and co-payments in the future, when she may have more medical expenses.

See Score Big Savings on Health Coverage and Your Path to Cheaper Insurance for more information about shopping for coverage on your own.

Advertisement

Most Popular

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)
tax deadline

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)

Between due dates for IRA or HSA contributions, paying estimated taxes and other deadlines, there's more to do by July 15 than just filing your federa…
July 10, 2020
Know Why Your Credit Score Changes: 9 Money Moves to Consider
credit & debt

Know Why Your Credit Score Changes: 9 Money Moves to Consider

Your credit score is a key indicator of your financial well-being and of the risk you pose to lenders. How good is yours?
July 10, 2020
65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020

Recommended

HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
Applying for Disability Benefits During a Global Pandemic
insurance

Applying for Disability Benefits During a Global Pandemic

It can take months or even years to get approved for Social Security Disability Insurance (SSDI) benefits in the best of times. Needless to say, now i…
June 24, 2020
Pass Along Life Lessons With an Ethical Will
retirement

Pass Along Life Lessons With an Ethical Will

Create a legacy letter to communicate values, experiences and life lessons to your family.
June 9, 2020
13 Reasons You Will Regret an RV in Retirement
retirement

13 Reasons You Will Regret an RV in Retirement

RV-loving retirees talk about the downsides of spending retirement in a motorhome, travel trailer, fifth wheel or other recreational vehicle.
June 8, 2020