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.
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.”
There
are some common and persistent misconceptions about what insurance companies
do with the money they collect from you and every other policyholder.
Some people think it sits in the bank until someone makes a claim. Not
true. Others believe that premiums go to pay for claims that have already
happened. Not true either.
