Before you cram the last of your freshman’s personal effects into the SUV, it’s important to check whether they have adequate insurance coverage for their personal items, their health and their car whether or not they’re taking it to campus.
It’s not a good idea to assume that all personal coverage will simply travel with your child to school. More than ever, health as well as property and casualty insurers are going through claims with a fine-tooth comb, and the worst time to wonder if they’ll pay is when your student actually has a problem.
So in the weeks before they leave, call your agent and review the following:
Health coverage: If your child is already on the family plan, by all means, keep them there. This is an even better option today because the passage of the Patient Protection and Affordable Care Act – better known as the landmark health reform passed earlier this year – allows children to stay on their parents’ plan until age 26. This provision goes into effect next month and is particularly important for students who have taken time off or are continuing their education in graduate school.
But keep in mind that if your child goes out of state, it’s likely they may not get the coverage they’re enjoying now, particularly if you’re enrolled in a health maintenance organization (HMO) that doesn’t cross state lines. Likewise, if you’re covered by a preferred provider organization (PPO) with the only in-network doctors where you live and nowhere near campus, that could present an expensive problem if your child becomes seriously ill out-of-network.
If for any reason you find that family insurance does not apply, check out various health plans that might be offered on campus. Plans are available that cover everything from accidents to major medical needs, and see what makes sense for you and your child. You can also consult with an independent insurance agent to buy a separate policy for the student, but make sure you compare the cost and coverage with other available options.
Other options include qualifying for Medicaid if your family meets certain income or circumstantial requirements. It also makes sense to investigate your state’s Health Insurance Pool that would cover high-risk conditions for a student not covered by conventional private insurance. Beyond that, there are community-funded health centers and public hospital emergency rooms, which are not the best resources for extensive care.
And while this is not an insurance issue, it’s always a good idea to research the various medical centers near campus to check their size, quality or fit with any chronic treatment issues your student might face. An emergency is no time to wonder if your child is getting the best quality of care.
Property coverage: Check your home insurance policy to see if your coverage extends to a child’s property within a school dormitory. Some insurance policies extend around 10 percent of your total home contents coverage to dorm property. If your child ends up in off-campus housing, consider rental insurance. If your child has a lot of valuable computer equipment or other expensive technology, you might need to pay extra to boost your insurance or acquire a separate rider that might extend to campus. Every insurance company has different rules, so check.
Auto coverage: As long as the car doesn’t travel to campus, you’ll likely save money on your premiums if your child’s campus is more than 100 miles away because he or she will be home on rare occasions to drive the car. If the child takes the car to school, make sure your agent knows exactly where the car will be because location is relevant to premium cost. If the school is in a tough neighborhood, your premiums will likely adjust upward – so it’s worth making that call ahead of time before letting your child to take the car to school in the first place. Above all, keep your child on your policy unless they’re officially on their own, because even though children of driving age are expensive to insure, their portion of the bill will likely be lower based on multi-policy discounts if you keep your car, home and other insurance with the same company.
August 2010 — This column is provided by the Financial Planning Association® (FPA®) of Puget Sound, the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning. FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process. Please credit FPA of Puget Sound if you use this column in whole or in part.
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