McGill University (Photo credit: caribb)
I received an inquiry today from someone who was looking for a quote on insurance to cover their son while they were away at college. Although oftentimes the first response to this may be to simply do the quote and write a new policy (a quick and easy sale), I personally feel that a big part of being a broker is offering guidance and not just jumping at a sale.
I thought my answer would be useful to many, so I am sharing it with you here. Before you jump at buying insurance, find out what your existing home policy covers (or does not cover) you could save yourself several hundred dollars a year with a little fact checking.
*Please remember this is simply a guide you must check with your specific home insurer to find out all the details because every policy is different. Knowing the basics can help you direct your questions and help you make an informed purchasing choice.
"I need insurance for my son away at college he is renting an apartment with several roommates"
When you have a student away from home registered in school full time, your insurance policy may provide coverage, before buying anything extra you can use these tips to make an informed decision .
The first step to save you some money is for you to contact your current insurance broker and ask them what the coverage they offer on your home policy is for “Students away from home” . Many of the companies offer full coverage for the students contents, others offer up to a specified amount. If the coverage is already there on your home policy, there is no need for you to spend the extra money to obtain a tenant policy for him. Your insurance provider can guide you on this.
That’s for the contents.
What about Liability? Do they need that?
McGill student vote mob 2011 (Photo credit: Adam Scotti)
Absolutely! Liability is extremely important for people who rent apartments. Liability covers you for anything you might be held responsible for as the lessee of the apartment. If your name is on the lease, then you could be liable for damages arising out of the use/control of the premises.
What could happen?
A number of things, water overflowing damaging the building, or people's property in units below yours. A candle could tip over and cause a fire taking down half the building! And let's not forget that when there are visitors, like, for example when you have a party, someone could trip and fall and hold you responsible! Start to think about it, a lot could happen.
Make sure to protect yourself with liability.
It is very important to make sure that your child has liability covering them. Therefore you would want to ask your current insurer if they can extend liability to the apartment . It may be automatically covered, but you can not take it for granted that it is as various companies have different restrictions and limitations. Often it is not automatically covered, you need to ask for it. If they confirm it can be covered or is already covered then your are well protected and do not need to spend additional money.
If they tell you then need to do an extension of liability, its usually at a minimal cost (ball park $30 per year or less). This would then protect your child's personal liability as the tenant of the apartment. If something should happen which and they are held responsible then it is the liability portion of the insurance that will respond.
Tip: Also find out if the liability they are offering you is limited to the premises, or if it will cover them worldwide.
What about the Roommates?
All the roommates should do the same as suggested above, they may all end up being able to be covered at minimal rates through their parents home insurers if they meet the criteria of a “student away at school”.
If they do not, then to make sure everyone is protected properly, all roommates should have their own policy to cover themselves specifically.
In some cases I have seen we have named roommates on a policy together, but this is a rare exception as it can cause problems in the long term and I do not recommend it. Insurance is a very personal thing that stays with you for several years. When there is a claim, it will remain on their claims record. The relationship between roommates is often fleeting and unpredictable - do you really want the responsibility of an insurance contract shared between people whose relationship is not really known. Insurance is about finances - thinking about it in this way often helps people understand why it is not recommended to take a traditional tenant policy and list a bunch of people who are not necessarily related closely, or who do not know each other very well.
Do you really want to take on shared responsibility for all their actions?
I Still Want to Buy A Separate Policy, Can I? What's the Advantage?
Yes there are some advantages to getting your child their own policy.
The advantage of doing it separately, as opposed to through your own insurance is that if there is a claim, you will keep it separate. In other words: you would not lose a claims free discount on your home, for something that would happen to your child. Claims free discounts can add up, in some cases to 25 or 30 percent discounts on the insurance cost. That’s a big savings.
A General Overview : Why does anyone need tenant or renters insurance anyway?
Still wondering what renters insurance is all about? This video by Chubb Insurance is quite well done, and helps explain it. Keep in mind that Chubb is a high value insurer and their policy is specific to their contracts, for specific information about what your policy covers, remember, you need to contact your own insurance representative because the details do matter and every company is different. If you don't have an adviser, and you're in Quebec or Ontario, then you can always get in touch , I'd be happy to help you figure out exactly what option and what coverage is perfect to fit your needs.
That's really what it's all about - what works for you.
I hope this article has been helpful to shedding some light on cost saving options and strategies behind insuring your kids while away at school.
What option do you think you would choose, or what have you done in your situation?