“Whether four years of strenuous attention to football and fraternities is the best preparation for professional work has never been seriously investigated.” – Robert Maynard Hutchins

In a couple of months, hordes of young people will be enrolling or returning to colleges across the country. Have their parents considered the insurance implications of this change?

Recently someone sent me a video clip of a fire at a NY university dormitory/apartment building. Allegedly the fire resulted from cooking in one of the units (grease fire), resulting in a total loss to the building, the evacuation of 13 residents, and loss of personal property, but fortunately no injuries.

If your child negligently caused damage to rented premises and possibly damage to the contents of other residents (creating an additional living expense cost) and, heaven forbid, bodily injury or death, what is the best way to insure this exposure? Should parents extend their own homeowners (ISO HO-3 or 5), and hopefully umbrella, coverage to the student’s dorm room, apartment, rental dwelling, etc. or should a renter’s policy (ISO HO-4) be issued?

Damage to property can be many hundreds of thousands of dollars. The loss exposure is significantly greater for bodily injury and death…just Google “college student deaths” for examples of accidents arising from drinking, hazing, and other activities. Individuals who are renting premises, especially at colleges, often have a far greater exposure (frequency and severity) to lawsuits than resident homeowners.

I’ve heard some underwriters claim that, if the student is living on campus (e.g., in a dormitory), the parents can extend their HO policies, but if the student lives off campus they must have a renters policy. There is nothing in ISO HO forms that supports this position. So, if an underwriter insists on this, the carrier either uses their own forms or this is simply an underwriting preference.

When my son went to college, he lived in a dorm until he was able to move to an apartment as a senior. During this entire time, we insured his exposures under our own HO policy rather than buy an HO-4 renters policy. Why? Given that majority of renters policies are written with about $100K of liability coverage, how far would it go if a student burned down an apartment building or dormitory and/or killed or injured people? Our insurance at the time included $3.5M in coverage. What would it have cost to buy our son an HO-4 and a PUP totaling $3.5M? And the coverage under our policies was far better than anything we could have procured for him.

It just makes sense to extend the parents’ HO and umbrella coverage to college students and this might present an opportunity to sell a family an umbrella policy by explaining what can happen without adequate liability limits.

What do you think? Feel free to start a dialogue below in the Comments section.

Photo by Sean MacEntee

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information

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