Coverage for your kid while away at school

Last week I had a conversation with a friend about his son going off to college and if his insurance would cover him while away at school. The answer is jaw droppingly simple – yes, no and maybe! Let me explain the important points to consider:

1. Regarding his stuff, most possessions of students who live in an on-campus dormitory are covered under their parents’ homeowners or renters insurance policy. there are some variations to the automatic coverage. According to the Insurance Information Institute, some policies limit such coverage to 10 percent of the total amount of a policy’s coverage for personal possessions. In addition, some standard policies may also limit coverage for more expensive possessions like computers and electronics; full coverage could require the purchase of floaters or stand-alone insurance. Your policy most likely also doesn’t cover your child’s possessions if your child lives off-campus. As a result, you’ll have to check with your agent to determine exactly what your policy covers.

2. Regarding his car – being away at school, he may be able to save some money on auto-insurance premiums. If his college is at least 100 or 150 miles away and he leaves the car at home, the insurer could rate him “restricted,” which reduces your rates but still provides coverage when he comes home to visit or if he drives someone else’s car that has lower coverage limits.

3. Regarding his grades - the insurer’s good-student discount may apply. Many insurers will give you a price break if your child maintains at least a B average in college

4. Regarding his health care options – typically his son will have 5 options regarding health insurance coverage while away at school, they are:

1. Parents’ health insurance plans. A provision of health reform law that becomes effective in 2010 allows adult children to keep their coverage under a parent’s health insurance policy until age 26, whether or not they are currently enrolled in college. The parent’s policy might be group coverage sponsored through an employer or an individual or family policy purchased by the parent. Some employer-based plans are accepting students now while others may wait until January 1, 2011 before allowing student to re-enroll.

2. Individually-purchased health insurance plans. Many students purchase coverage on their own in the form of an individual, non-group policy. There is a broad variety of individual coverage options to choose from nationwide. However, until 2014, in most states it is still possible to be declined for individual coverage based on pre-existing medical conditions.

3. School-sponsored health plans. Many colleges and universities offer their own health insurance plans to students. Some of these plans place strict limits on the range of benefits covered and may limit access to only those doctors and services available through an on-campus student health center. As regulations for health reform laws continue to be written, the future of school-sponsored plans is uncertain.

4. Individually-purchased student health plans. These plans may resemble school-sponsored plans by placing specific limits on certain benefits, but they typically offer more freedom in obtaining medical care away from campus. Student health plans may be especially valuable for those going to school in a different state. While the post-reform future of these products is also uncertain, new and innovative student health plans with richer benefits are being introduced to the market.

5. Government insurance options. These may include state or federal insurance programs such as Medicaid or high risk pools. In order to qualify for some of these products you must have a diagnosis for a pre-existing medical condition on file with your doctor. You may also need to have been previously uninsured for a minimum of six months.

Again, I urge every with concerns regarding this topic to do some research and/or contact their insurance agent. Different companies vary when it comes to coverage for kids who live in the household and insurance coverage while they are away at school

ITV, Coinsurance & More

My experience with insurance to value has taught me that this is not an area that should go ignored by commercial as well as homeowner policyholders. Initially, I took a contrarian view as I thought it was the agents job to monitor and maintain the insurance to value on an insured property. Although it is the professional responsibility of the insurance sales professional to meaningfully participate, the main impetus is on the policy holder to make sure the (ITV) is accurate, current and relevant.

What is (ITV)?
Insurance written in an amount approximating the value of the property insured. In other words, the property for various reasons could increase in value and as it does, so should the amount of coverage on the property. A replacement cost (replacement cost is very important when it comes to addressing ITV) calculation (physical inspection in most cases) is the means by which the (ITV) is determined.

(ITV) is important for several reasons:
The insured: Many insurers of homeowners offer "Guaranteed Replacement Cost" coverage--but generally it is only provided in their "preferred" programs and it is limited to a modest amount (usually 20 percent to 25 percent) above the actual amount of coverage purchased. Home improvement a national pastime and construction costs rising, it’s a good idea to check your policy limits once a year. Planning to remodel your home? Just finished adding that new deck or garage or fence in your front yard? It could be time to review your limits.
Therefore, many homeowners may find that their policies will not cover the replacement of their homes, if they face a total loss. So what could happen in the event of a claim wherein the (ITV) is not up to current? The policy holders claim settlement could be reduced for not having the accurate (ITV) and corresponding coverage on the property.

The Insurance company:
When underwriting insured properties, insurers need to obtain accurate insurance-to-value ((ITV)) calculations so they can charge the right premiums for the risks they assume. Adequate (ITV) is not an issue to be taken lightly. If insurers do not receive accurate values for the properties they insure, their premium pricing is based on faulty data and their long-term financial stability could be at risk. In layman’s term’s they need make sure that they are collecting enough many to fully insure the risk.

One of the principle tenants of (ITV) is coinsurance. Simply put, coinsurance is the amount of self insurance you assume per policy agreement. Property coinsurance obligates the insured to keep a specific amount of insurance in force on the insured property, or else face penalties in the event of loss. Typically, the policyholder is regarded as a joint insurer only when insuring property for less than the required portion of its full value; only then does the insured become jointly and proportionately responsible for losses. The required level of insurance may be a stated amount or a percentage of the property value. In the event the insured purchases a policy with a face value equal to or greater than the required amount, coinsurance does not play any role in calculating indemnity on insured losses and a covered loss will be fully insured beyond the deductible.

Next up: The coinsurance clause defined