A question parents and their college-aged children don’t ask, but we need to ask, is, “Will these college students be covered under their parents’ Homeowners and Personal Auto policies while they’re living away from home and attending school?” The answer may be, “Yes.” However, the answer may be, “No.” And, sometimes the answer could be, “Maybe.”
The Millers’ 21-year old son, Buster, and their 18-year old daughter, Princess, have loaded their cars and are headed to college. Buster is entering his junior year, and Princess will be a freshman. Buster is sharing an apartment with three of his fraternity brothers, and Princess will live in the dormitory. Will their “stuff” – clothes, computers, TVs, music systems, books, etc. – be covered under their parents’ Homeowners policy? Will they have liability coverage if they cause injury or damage to another person? The Homeowners definition of “insured” includes “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.” Therefore, as long as Buster and Princess satisfy three requirements – full-time student, resided at home before attending school, and under the age of 24 – they’re considered an insured under their parents’ Homeowners policy.
If Buster and Princess are considered insureds, their “stuff” will be covered for the same perils as the personal property located in their parents’ home. However, it could be limited. The Homeowners policy’s limit of liability for “personal property usually located at an ‘insureds’ residence, other than the ‘residence premises’, is 10 percent of the limit of liability for personal property, or $1,000, whichever is greater.” Therefore, if the Millers’ home is insured for $200,000 and they have a personal property limit of $100,000, the “stuff” belonging to Buster and Princess is limited to $10,000. This may be enough for Buster, but probably not for Princess. (I’ve raised a son and a daughter!). Again, there is an endorsement to address this problem.
One last comment on Homeowners coverage for college students. If they’re living in an apartment rather than a dormitory or a fraternity or sorority house, and qualify, purchase a Tenant Homeowners policy (HO-4). It’s worth the few extra dollars. I’ve been there too!
Buster and Princess probably have their own cars. After all it would be un-American to send a child off to college today without their own automobile. Are there any concerns here? Could be.
Who owns the cars? If titled in the kids’ names, then they need their own Personal Auto policies. What limits will they buy? Probably minimum. Since they’re “family members”, will they have any coverage under their parent’s Personal Auto policy? No. The Personal Auto policy excludes liability for “the ownership, maintenance or use of any vehicle, other than ‘your covered auto’, which is owned by any ‘family member’.” What if the cars driven by Buster and Princess are owned by the parents? No problem as long as they keep those cars listed on the Millers’ Personal Auto policy. Too often parents of college kids think if they transfer the auto insurance to the kids, they’re getting rid of the exposure. Not true. In order to transfer the auto risk, you have to transfer the title.
Let’s wrap this up…
• Make sure your insureds’ children who are away at college are still considered “insureds” in the Homeowners policies you write.
• Increase the 10 percent of Coverage C limitation on the student’s personal property, if necessary.
• Write a Tenant Homeowners policy for the student, if possible.
• If the parents still own the car being driven by the student, that car should be insured under the parents’ Personal Auto policy.
• If the parents want to take the student off of their Personal Auto policy to save money and have the student purchase the insurance, they should transfer the car to the student.
Will those college students be covered under their parents’ policies? That’s up to you!
Jerry Milton, CIC, contributed this resource. The legal profession recognizes him as an expert on insurance coverages. He is also an education consultant for IA&B, working with CISR, CIC and continuing education programs.