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Saying the last goodbye in the dorm parking lot, the stark realization dawns that you can’t protect your child from every risk. It’s time to let go.
But back at home, you can assemble a strong financial safety net. Knowing what your current insurance will pay for — and whether you need to buy extra coverage — is a good first step.
Here’s how to evaluate your auto, homeowners, life and health insurance needs as your kid heads to college.
If your child leaves the car at home
- Ask your insurer about an away-at-school discount. Some insurance companies offer a price break if the college is at least 100 miles away from home.
- Keep the student listed on your policy, so your son or daughter has coverage at home on breaks, says Scott Johnson, manager of Marindependent Insurance Services in Mill Valley, California. Maintaining continuous auto liability insurance also keeps rates down over the long haul.
» COMPARE: Car insurance quotes
If your child asks to take a car
- Consider the risks. “It’s the first time away from home. Why throw a vehicle into the mix?” Johnson says.
- Notify the insurance company if your child takes a car. Some insurers might reprice the policy based on the school’s location, Johnson says. The coverage price might go up or down.
Car or no car, don’t forget about the good-student discount. Many insurers offer one for maintaining at least a B average.
Homeowners or renters insurance
For a dorm
Your child’s stuff will be covered under your renters or homeowners insurance in a campus dorm. Check the policy for details. Some policies limit coverage for belongings away from home to a percentage of the total amount of coverage for all possessions, according to the Insurance Information Institute. Typically there are also coverage limits on expensive items such as computers. Consider buying extra coverage for these items if necessary.
For an off-campus apartment
Students who live in off-campus apartments will need their own renters insurance policies. Renters insurance covers belongings and, like homeowners insurance, provides liability coverage. Liability insurance pays legal expenses if anyone covered on the policy inadvertently injures someone else or damages property and is held responsible. It doesn’t cover illegal acts.
Make sure the liability insurance includes personal injury coverage, Johnson says. If it doesn’t, the price to add it is small, he says. Among other things, personal injury coverage would pay for legal defense and settlement costs if your son or daughter were sued for posting something objectionable on social media.
» MORE: Find the best renters insurance
Shop for a term life insurance policy if you don’t have enough coverage and your income is crucial for paying the college bills. Buy enough to cover you at least until the youngest child graduates from college, says Garrett Prom, a certified financial planner and founder of Prominent Financial Planning in Austin, Texas.
“Ideally you already have the coverage you need and have all your ducks in a row, but that isn’t always the case,” he says.
» MORE: A guide to who needs life insurance
Check whether your health plan’s provider network includes doctors and hospitals where your child will attend school, says Elizabeth Hagan, associate director of coverage initiatives for Families USA, a national consumer advocacy group. You’ll pay a larger portion of the medical bills for treatment outside the network with a preferred provider organization, or PPO. With a health maintenance organization, or HMO, there may be no coverage outside the network, except in emergencies.
If your student will be uninsured or will move outside the health plan’s network, check the following:
The college’s student health plan
Many student health plans offer good coverage, but they do vary. Make sure you understand any coverage limits, Hagan says.
The government-sponsored health insurance marketplace
If the college town is outside your plan’s provider network, your child will be eligible to sign up for a health plan outside the regular open enrollment period. Start shopping before the move. The coverage will go into effect:
- the first day of the next month if the plan is selected between the first and 15th of the month.
- the first day of the second month if the plan is picked between the 16th and the last day of the month.
Then sign up for a 2018 plan during the annual open enrollment period, which will run from Nov. 1 to Dec. 15, 2017. Even if the Affordable Care Act is repealed or revised, changes won’t take effect before open enrollment. “Obviously there’s a lot of uncertainty now with the fate of the Affordable Care Act, but consumers will still have the opportunity to enroll at least through the 2018 open enrollment period,” Hagan says.
Health insurance plans offered outside the marketplace
Consider this only if you’re not eligible for income-based subsidies that would lower the price through the marketplace.
Find health insurance confusing? You’re not alone.
“It’s very complicated, and a lot of times, people are left with questions about what to do,” Hagan says. She recommends getting help sorting out the options. Contact your health plan or health benefits administrator at work. For help finding a marketplace plan, log on to Healthcare.gov to get contact information for free, in-person assistance.
» MORE: Your step-by-step guide to choosing a health insurance plan
More changes are ahead as your college student gains independence. Review your insurance policies annually to make sure the right coverage is in place.
Barbara Marquand is a staff writer at NerdWallet, a personal finance website. Email: [email protected] Twitter: @barbaramarquand.