all about How To : What Insurance College Kids Need and Tips to Save

What Insurance College Kids Need and Tips to Save Lynn M. says, “I’m a weekly listener and have learned so much while logging miles on my runs! I love getting financially and physically fit at the same time! I’m a divorced mom and my three children will all be in college starting in the fall. Ouch! Fortunately, I’ve saved in a 529 plan, have liquid savings earmarked for college, and will split tuition with their dad. But when it comes to cars for the children, how should I handle titles, insurance, and shopping for competitive rates when they go to school out of state?”

Thanks so much for your question, Lynn. You get the mom-of-the-year award for being financially prepared to send three kids to college with vehicles, and still having time to stay in shape!

Most parents spend a lot of time agonizing about how to pay for a child’s education, but completely overlook their insurance needs. In some cases, your existing policies won’t give your family enough protection after a kid goes off to college.

In this post, I’ll review a variety of factors that affect the additional insurance your college-bound kid needs. Plus, you’ll get tips to cut insurance costs and make college more affordable.

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Auto Insurance Rate Increases for Teen Drivers

If your student is already driving, I don’t have to tell you that your auto insurance rate goes through the roof after you add a teen driver to your policy. Young drivers are extremely expensive to insure because statistics show that they get into accidents more frequently than older drivers.

A study I helped created about how much auto insurance rates go up when you add a 16- to 19-year old driver to a policy revealed that rates rise 78% on average nationwide! Rhode Island residents see the highest spike, with a 153% increase, and Hawaii has the lowest increase at 8%.

Yup, one more reason moving to Hawaii might seem like a really good idea. It’s the only state where insurers are banned from using a driver’s age or years of driving experience as a rating factor. So that small increase is the same as adding an adult driver to an auto insurance policy.

The good news for residents of the other 49 states is that girls cost less to insure than boys, and both get less expensive every year, if they keep a clean driving record with no moving violations or accidents. If you don’t see your rates for a young driver come down, be sure your auto insurer knows when your teen celebrates a birthday.

Insuring Your College Kid

Unlike other types of insurance, there’s no rule that you must take your child off a family auto policy at a certain age. Parents can keep a child on their insurance for as long as they like.

College students are typically covered under their parents’ car insurance, as long as they live at the same address as their parents when not at school. Esurance says, “If a student starts out listed on a policy and will be temporarily attending school at another address, we allow them to remain on the original policy as long as their vehicle is still registered at the original address.”

Unlike other types of insurance, there’s no rule that you must take your child off a family auto policy at a certain age. Parents can keep a child on their insurance for as long as they like.

Assuming you want to maintain coverage for your college student, you need to let your insurer know. If he or she will be driving out of state, your policy may need to be adjusted because auto insurance varies dramatically from state to state.

For instance, if you live in Florida, where the state minimum liability limit is $10,000 and your student attends school in Texas where the limit is $30,000, your policy won’t meet the requirement.

Auto insurance rates even differ down to the ZIP code, so the address of the college or the location where a car is typically parked is important. Rates for city drivers tend to be higher than for those in rural areas.

So, depending on where your college kid lives, having an insured vehicle in a different location could cause your rate to go up or down. But don’t be tempted to avoid telling your insurer. They can deny claims or cancel your policy if they discover that you misrepresented where an insured car is garaged.

You don’t need to notify your insurer when a student makes a short trip home for school breaks or between semesters, just when he or she moves to a new location for most the year.

Another consideration is how your child plans to use a vehicle while at college. If he or she has a job, such as delivering pizza or groceries, make sure it’s covered for commercial auto activities. Some auto policies won’t cover claims for accidents that happen while you’re driving for any business use, other than commuting to work.

Auto Insurance Discounts for Teen Drivers

While young drivers are expensive to insure, the good news is that insurers offer different types of discounts. Here are some popular discounts to ask for:

Distant student discount – could save up to 30% when your student doesn’t have a family car at a school and lives more than 100 miles away from home (even if the school is in the same state).
Good student discount – could save up to 35% when your high school or college student has a “B” average or better. Parents do have to submit report cards to qualify, but it’s well worth the hassle and another great reason to make sure your student stays focused on getting good grades.
Driver safety course – offered by some insurers if your young driver completes an approved driver education or defensive driving course.
Bundling discounts – could save an average of 16% nationwide when you combine your auto insurance with a home or renter’s policy. Checkout state-by-state bundling savings data.
Pay-as-you-drive programs – use technology to monitor how you drive and reward you for safe behavior. You may also hear these programs called usage-based insurance, telematics (a hybrid of telecommunications and informatics), and pay-as-you-go insurance. Each insurer’s program is different and may not be offered in every state. They may collect data including how fast you drive, how hard you hit the brakes, where you drive, the times of day you drive, and mileage driven. Enrolling one or all your vehicles allows you to qualify for discounts when the driver stays within safe ranges set by the insurance company. But if not, your rate doesn’t go up, you just don’t get the benefit of a safe driver discount.

Should You Title a Vehicle in Your College Kid’s Name?

State laws vary, but parents can be held liable for injuries or other damage a child causes in an auto accident when driving a vehicle registered in a parent’s name.

A question that Lynn brought up is how to title a vehicle that a child takes to college. If a vehicle and the insurance is in a child’s name only, is it less expensive or give parents more legal protection?

The answer is that state laws vary, but parents can be held liable for injuries or other damage a child causes in an auto accident when driving a vehicle registered in a parent’s name. If your son or daughter is over 18 years old, he or she can register a car in his or her own name. That’s one way to limit your liability if your child accidentally hurts someone.

In some states, you can purchase auto insurance for someone else, even if your name is not on the car’s title. So, it may be possible to keep a vehicle that’s titled in your student’s name on your family policy.

In general, it’s more expensive for a young person to have their own insurance compared to staying on a parent’s auto policy. That’s because they don’t have the benefit of a higher credit rating or various discounts that parents might enjoy, such as loyalty, multiple vehicles, and bundling with a home or renter’s policy.

However, it’s always worth shopping since there are so many variables at play. Lynn, if you have lots of assets to protect, then registering a vehicle in a child’s name may be a wise idea. But insurance premiums on the vehicle may or may not be higher, depending on what insurers in your state will allow.

How to Protect Liability When You Have a College Kid

If you don’t have many assets or can’t afford higher insurance premiums, another option for parents of young drivers to limit liability is to purchase an umbrella liability policy. These policies supplement the liability coverage you may already have on auto, home and renter’s insurance.

Umbrella policies are sold in million-dollar increments and typically cost less than $300 per year for $1 million of coverage, which is an extremely inexpensive safety net.

If you don’t have many assets or can’t afford higher insurance premiums, another option for parents of young drivers to limit liability is to purchase an umbrella liability policy.

Let’s say you get sued for medical bills after your child accidentally injures a pedestrian while driving. If you have $100,000 in liability coverage, but are found guilty for $500,000 in damages, an umbrella policy kicks in providing the additional $400,000 in protection.

Parents should also warn kids about lending their car to friends or roommates because insurance follows the car, not the driver. That means when you lend someone your car, you’re also lending them insurance to cover any damages they cause.

If a friend drives your car and causes a serious accident, your insurance would pay up to your coverage limits, and then the injured party would turn to the driver’s insurance for the rest. But if the driver doesn’t have insurance, you could be fully responsible as the car’s owner.

Having a claim or at-fault accident on your record causes your insurance rate to increase dramatically, even if you had nothing to do with the accident. Due to this huge financial risk, I don’t recommend lending your car to anyone except drivers who are specifically named on your insurance policy.

Likewise, if your child drives someone else’s car that isn’t insured or is underinsured, getting into an accident could mean trouble. Even if your student doesn’t take a vehicle to school, consider getting him or her a non-owner auto policy. That would protect you if your child borrows a friend’s car or gets into an accident as a passenger and the car owner’s policy falls short.

Does a College Kid Need Renter’s Insurance?

Now that you know the most important considerations for auto insurance, let’s review what to do about home or renter’s insurance before your child goes off to school.

Some policies provide a percentage of the family’s personal property limit for registered students. For example, if you have $50,000 in personal belongings coverage on a home or renter’s policy, your student may have 10% or $5,000 in off-premises insurance.

However, many categories of home and renter’s insurance—such as computers, electronics, sports equipment, and jewelry—come with coverage caps. And some policies won’t cover a student in certain cases, such as when they reach a certain age or move to off-campus housing.

If your student lives on campus in a dormitory, they’re usually covered by your home or renter’s policy (assuming you have one) for disasters like theft, fire, or storm damage. But if he or she moves out of student housing, they’re no longer covered under your home or renter’s policy, and needs their own coverage.

Having a renter’s policy for your off-campus student is inexpensive and would help pay to repair or replace any expensive items—such as computers, phones, furniture, bikes, musical instruments, and clothes—if they were destroyed, lost, or stolen.

Renter’s insurance also gives your college kid liability coverage if a visitor gets hurt or a party guest has a little too much fun and gets hurt. It also provides funds for living expenses if a student’s off-campus apartment or rental home becomes uninhabitable while repairs are made after a natural disaster.

How to Shop Insurance for Your College Kid

Shopping for insurance takes a little time, but can really pay off. I always recommend getting at least three quotes so you can make an apples-to-apples comparison of different insurers.

Check out sites like insuranceQuotes.com and netQuote.com for auto, home, renters, health, and life insurance policies. These companies match you with a network of nationwide insurers, agents, and brokers who do business where you live and give quotes and advice for free.

Insurers evaluate you differently and offer different discounts, so no two policy quotes will ever be the same. So, the best way parents of a teen driver or college student can save on insurance is to make sure they understand how insurance works, have the skills to stay safe, and shop around every year to compare multiple quotes.

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all about How To

Selasa, 24 Juli 2018

What Insurance College Kids Need and Tips to Save