I had a friend email me last week about tenants insurance for his son who is just starting university this week for the first time. Like him, most people who have a homeowners policy don't realize that there is some type of coverage for students living away from home that are attending a full time post secondary program. Shortly after receiving the inquiry I stumbled on this article from money sense magazine. It explains it well!

Full-time post secondary students are often covered under their parent’s home insurance plan.

By Stefania Moretti | Online only, 29/08/12

Students moving away from home for the first time need renter’s insurance, experts say, but in many cases it doesn’t have to cost them a thing.

Full-time post secondary students are often covered under their parent’s home insurance plan, according to John McClelland of Toronto-based McClelland Insurance brokerage. The key is double-checking with your provider and notifying them of the new address.

A simple phone call can protect students from all kinds of mishaps in and around campus.
“There’s the obvious— fire, water damage and theft—concerns but there are also liability concerns,” McClelland said.

If someone is injured on the premises or a toilet floods over and causes water damage to a few floors below, it can hugely expensive and time consuming without insurance.

Not every rental unit problem is the landlord’s responsibility either.

“There can be a lot of misconceptions out there,” McClelland said. “It depends who was found to be negligent. Tenants can be held responsible.” Without proper insurance, tenants who are found to be at-fault are on the hook for damages.

“Everyone who is on their own should have a tenant’s package and a lot of people don’t realize the importance of this,” McClelland said. A recent poll commissioned by TD Insurance found 47% of Canadian tenants under 35 do not have renter’s insurance and 32% incorrectly believe they are covered under their landlord’s insurance policy.

Tenant insurance is especially important for students because student housing can be more risky than single-family homes thanks to high turnover rates—not to mention the parties.

Protecting possessions from theft is reason enough to seek out coverage. Students may not have accumulated many material possessions but the stuff they do have is usually pretty valuable like laptops, TVs, textbooks and musical instruments.

Students who are covered under a parent’s plan should read the policy carefully to ensure there are no gaps in coverage.

“All companies have different wording on their habitational policies,” McClelland said.

For example, some companies only cover students staying in residence as opposed to just off-campus.

Others will limit student coverage to $10,000 in valuable regardless of the contents limit their parents enjoy.

“For a lot of students who are moving into residences that’s probably sufficient,” McClelland said. But tenants buying their own furniture to live in non-student housing might want to consider additional coverage.

Luckily, the average renter’s insurance plan is pretty reasonable, costing roughly $500 a year. Plus, tenant insurance can be bundled with car insurance for additional savings.

Tenant insurance can also help 20-somethings establish an insurance history that should help lower their insurance costs in the long run. A clean record can earn you free claims, loyalty discounts and lower deductibles on all types of insurance in the future.

There’s more for young scholars and their parents to consider when it comes to insurance. Living with a roommate that has insurance doesn’t mean you’re covered as well.

Students covered under their parent’s policy are typically subject to their parents’ deductible if and when a claim is made.

“In a lot of cases that’s going to be higher than a student might be comfortable with,” McClelland said.
And parents should keep in mind that any claims made by their child will affect their own claims history and could result in higher premiums.

“We’ve had some parents say, we know that they can be covered under our plan but we think it would be a good stepping stone toward responsibility but also protect our insurance if they had their own policy,” McClelland said.

It’s really about what you’re comfortable with and practicing preventative maintenance such as locking windows and doors while you’re out and even turning off the water if you’re away over the holidays to ensure the pipes don’t burst.

“Moving out of your parents’ home for the first time can be very liberating, but it also comes with a lot of financial responsibilities,” said Dave Minor, Vice President, TD Insurance.

“For those trying to make ends meet, tenants may be tempted to forgo renter’s insurance to try to cut costs. But consider the cost of replacing your laptop or smartphone if you were robbed. Before moving out, it’s important to understand the basics of renter’s insurance and ensure you have the right coverage in place to protect yourself.”