By Barbara Marquand
Saying the last goodbye in the dorm parking lot, you realize more than ever that you can't protect your child from every risk. It's time to let go.
But back at home, you can assemble a strong financial safety net. Knowing what your current insurance will pay for -- and whether you need to buy extra coverage -- is a good first step.
Here's how to evaluate your auto, homeowners, life and health insurance needs as your kid heads to college.
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If your kid doesn't take a car to school:
- Ask your insurer about an away-at-school discount. Some companies offer a price break if the college is at least 100 miles away from your home.
- Keep the student listed on your policy, so your son or daughter has coverage at home on breaks, says Scott Johnson, manager of Marindependent Insurance Services LLC in Mill Valley, California. Maintaining continuous auto liability insurance also keeps rates down over the long haul.
If your kid asks to take a car:
- Consider the risks. "It's the first time away from home. Why throw a vehicle into the mix?" Johnson says.
- Let your insurer know if your child takes a car. Some insurers might reprice the policy based on the school's location, Johnson says. Your coverage price might go up or down.
Car or no car, don't forget about the good-student discount. Many insurers offer one for maintaining at least a B average.
Homeowners or renters insurance
Your child's stuff will be covered under your homeowners or renters insurance in a campus dorm. Check your policy for details. Some policies limit coverage for belongings away from home to a percentage of the total amount of coverage for all possessions, according to the Insurance Information Institute. Typically there are also coverage limits on expensive items such as computers. Talk to your insurer about buying extra coverage for these items if necessary.
Students who live in off-campus apartments will need their own renters insurance policies. Renters insurance covers belongings and, like homeowners insurance, provides liability coverage if your kid inadvertently harms someone and is held responsible.
Make sure your liability insurance includes personal injury coverage, Johnson says. If not, you can add it for a small price, he says. Among other things, personal injury coverage would pay for legal defense and settlement costs if your son or daughter were sued for posting something objectionable on social media.
If you don't have life insurance and your income is crucial for paying the college tuition bills, then shop for a term life insurance policy to cover you at least until the youngest child graduates from college, says Garrett Prom, a financial planner and founder of Prominent Financial Planning LLC in Austin, Texas.
"Ideally you already have the coverage you need and have all your ducks in a row, but that isn't always the case," he says.
Check whether your health plan's provider network includes doctors and hospitals where your child will attend school, says Elizabeth Hagan, senior policy analyst for Families USA, a national consumer advocacy group. You'll pay a larger portion of the medical bills for treatment outside the network with a preferred provider organization, or PPO. With a health maintenance organization, or HMO, you may have no coverage outside the network, except in emergencies.
If your kid will be uninsured or will move outside the plan's network, check the following:
- The college's student health plan: Most student health plans offer comprehensive coverage. Make sure you understand any limitations, Hagan says.
- The government-sponsored health insurance marketplace: If the college town is outside the provider network, your child will be eligible to sign up for a health plan outside the regular open enrollment period. Time the purchase so coverage can begin when the student starts school. Then sign up for a 2017 plan during the annual open enrollment period, which will run from Nov. 1, 2016, to Jan. 31, 2017.
- Health insurers outside the marketplace: Consider this only if you're not eligible for income-based subsidies that would lower the price through the marketplace.
You're not alone if you find health insurance confusing. "It's very complicated, and a lot of times, people are left with questions about what to do," Hagan says. She recommends getting help sorting out the options. Contact your health plan or health benefits adminstrator at work. For help finding a marketplace plan, log onto Healthcare.gov to get contact information for free, in-person assistance.
More changes are ahead as your child gains independence. Review your insurance policies annually to make sure you have the right coverage.