I’ve been to my fair share of high school graduation parties this year. I know many parents, grandparents, and loved ones are seeing someone off to college in a few short weeks. This usually means a van, pickup truck, or car full of belongings are going as well. Televisions, computers, clothing, mini-fridges are now somewhere other than your home. So, are they covered by your insurance policy?
Assuming you have a Homeowners, Condo, or Renters Insurance policy, you are covered, BUT with a limitation. Most insurance policies state, “We cover personal property owned by and ‘insured’ while it is anywhere in the world”.
So far, so good; except most policies include a sentence a line or two later, which reads, “Our limit of liability for personal property usually located at an ‘insureds’ residence, other than the ‘residence premises’ is 10% of the limit of liability for Coverage C (personal property), or $1,000, whichever is greater”.
Okay, now we know there is coverage, but is it enough? Simply look at your policy, and find the limit of Personal Property. If the limit is $150,000 then you have $15,000 of coverage in this case. As another example, a Condo,or Renters Insurance Policy may have a limit of $50,000 for personal property. This means your child’s limit for belongings in a dormitory is only $5,000.
Great, now we know how much is potentially covered, but does your college student meet the definition of an “insured”? In most cases, this means residents of your household who are your relatives, or other persons under the age of 21 in your care. Some companies will limit this definition when it comes to students living away. One of our carriers includes the following definition: “A student enrolled in school full time, as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of 24 and your relative; or 21 and in your care…”.
That limits things a little bit. What if you have a son or daughter who is attending graduate school and just turned 25? Or, maybe your son or daughter is living off campus and has taken a break for a semester (or year)? In these cases, coverage could be denied.
There is something else to consider; “Loss of Use”. What if a covered loss makes their residence at school unfit to live in until repairs are made? If the loss occurred in a dormitory, hopefully the college will make arrangements for them to be housed elsewhere.
However, this is usually not the case if they are renting off-campus. Unfortunately, your property policy may limit “loss of use” coverage to your “residence premises”, not an “insured location”. “Residence premises” typically means the dwelling where you reside and is shown in the Declarations on your policy. In other words; your home.
Here’s my advice: Your homeowners (condo, or rental) policy is a good option if your child is a full-time student living on campus, as long as our personal property limits are sufficient. However, a renter’s insurance policy in the student’s name may be a better choice if they are renting off campus. It will give them the exact coverage they need along with “Loss of Use”, and “Liability” coverage that the landlord may require in their name. This also means fewer claims on your own policy.
This article is a reprint from the August 2017 edition of our newsletter: Insurance Insights