4 Tips to Insure Your College Student – and Save

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Classes start soon, so time for a pop quiz: Is your student properly insured? Here's a cheat sheet.

Between admissions, financial aid, back-to-school shopping, and moving in, it’s easy for families of the college-bound to overlook something critical: insurance.

The average student loan debt in 2011 was $23,300, according to the Federal Reserve Bank of New York. The last thing a student – and their parents – need is to add to that burden with losses from serious illness, a car wreck, or stolen property.

Especially if your student is leaving home, it’s not smart to assume they’ll be covered by existing policies. In the video below, Money Talks News founder Stacy Johnson breaks out the cheat sheet for College Insurance 101. Check it out, and then read on for more…

1. Car insurance

If your student leaves their car to gather dust at home while they’re away at college, and campus is at least 100 miles away, they might qualify for a “distant student” discount. Call your company and ask, as well as making sure your student will remain covered as an occasional driver on trips home.

There might also be a separate discount for good grades. The rules and size of these discounts vary by insurer and state, but AutoInsurance.org says they could be worth 15 to 35 percent.

There could also be cost implications for cars on campus. For example, attending college in a state that requires higher coverage levels can raise premiums – so can moving a car from a rural to an urban setting.

In short, when it comes to cars and college, you need to check with your insurer. If you’re shopping for a car to take, a top-rated used vehicle for college students might keep the rate down. And there are lots of ways to save on car insurance that have nothing to do with college.

2. Health insurance

A full-time student may now be covered by her parent’s health plan until age 26, “regardless of where she lives, if she’s married, and whether or not she is financially dependent on you,” thanks to changes from the Patient Protection and Affordable Care Act: so-called “Obamacare.”

But if you’re confined to a group or network plan, your student will still have to find a participating doctor near campus.

If you choose a separate college health plan, Obamacare now means better coverage. According to WebMD, for the 2012-2013 school year, annual limits have been raised to at least $100,000: previously they were as low as $1,500. By 2014-2015, annual limits will be eliminated.  And birth control as well as preventive care (screenings, vaccinations, and check-ups) are now covered.

Additionally, starting in 2013, WebMD says college plans must spend 70 percent of premiums on care instead of administrative overhead or profits. (It can be as little as half that now.) An insurer not meeting this requirement will have to refund the difference.

Finally, vaccinations are often a college admissions requirement. Don’t fork out $200 for a doctor’s visit when your local health department will stick your student for as little as $5 per shot.

3. Property insurance

Students these days have a lot of valuable electronics: laptops, iPads, Blu-Ray players, flat-screen TVs, gaming consoles. And college campuses aren’t immune to fires, burglary, and other tribulations.

If your student is dorm-bound, your homeowner’s policy likely covers their stuff, but you should check, as well as finding out policy limits. Living off-campus in an apartment? That may call for renter’s insurance. The good news: It’s pretty affordable, as little as $12 a month for $30,000 of property coverage and $100,000 of liability coverage.

So call your company and ask if you’re covered, and if not, whether you can get a discounted rate for having multiple policies. And then make sure you and your student take an inventory and photograph everything – because you can’t claim anything you forget about.

4. Tuition insurance?

If your student can’t finish a semester due to illness or injury, you’re possibly out the cost of tuition and housing, a princely sum if the college in question is expensive. Tuition insurance is designed to reimburse those expenses.  It’s not terribly expensive: According to the Wall Street Journal, the cost to cover the $41,000 tuition and fees at USC is only about $123.

But as with many forms of specialty insurance policies, these are often short on coverage and long on exclusions. For example, preexisting conditions, mental health issues and  self-inflicted injuries are often limited or excluded.  In addition, since most colleges offer pro-rated refunds for the first month of each semester and students unable to complete classes near the end of a semester will likely take an incomplete rather than leave school, these policies are really only covering the middle part of a term.

Whether these policies are worth it or not depends on the cost, the hardship that could arise and your aversion to risk. But according to the Journal article referenced above, they’re not very popular.

Bottom line? Insurance is as important on campus as it is everywhere else. Rather than looking at it as a hassle, consider it a learning opportunity. While that student is waiting to hit the books, have them hit the phone and web and check out this stuff themselves. It’s a life lesson that will come in handy before, during, and after college.

Stacy Johnson

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