Keep Your College Student Covered

My son will be starting college in the fall. Does my homeowners insurance cover his belongings while he’s at school? Also, what happens to his car insurance?

If your son lives in a dorm, then your homeowners insurance should cover his property, up to a certain limit. Allstate, for example, will extend 10% of your home’s total contents coverage to dorm-room possessions. Allstate’s policies typically cover possessions in your own home up to 70% of the dwelling coverage. So if you have a $100,000 policy, it will cover up to $100,000 for the building and $70,000 for possessions. In that case, you’d have $7,000 in possessions’ coverage for your son’s dorm room.

The rules vary from company to company, so ask your insurer about its limits and add up the value of your son’s stuff to see if you have sufficient coverage. If your son has a particularly valuable computer or stereo system, you may need to boost the limits.

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Your homeowners-insurance policy, however, will likely not cover your son’s possessions if he lives in an off-campus apartment. In that case, he would need to buy a separate renters policy. The average renters policy costs about $16 per month ($192 per year) and provides about $30,000 worth of coverage for possessions and $100,000 of liability coverage.

Because your son is going away to school, you may be able to save some money on auto-insurance premiums. If his college is at least 100 or 150 miles away and he leaves the car at home, the insurer could rate him “restricted,” which reduces your rates but still provides coverage when he comes home to visit or if he drives someone else’s car that has lower coverage limits, says Raleigh Floyd, an Allstate spokesperson. “We don’t recommend taking children off or excluding them from the policy while away at school unless they are no longer dependents and no longer in the household,” he says.

If he takes a car with him, the premiums may rise or fall, depending on the location of the school (assuming the car is at school for at least 30 consecutive days). If the college is in, say, a high-risk area, your premiums will probably rise. Keep your child on your own policy rather than trying to get a separate policy because he may benefit from multicar or multipolicy discounts, as well as any breaks you’ve accumulated for being a longtime customer.

Keep in mind, too, that the insurer’s good-student discount may apply. Many insurers will give you a price break if your child maintains at least a B average in college.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.