The Forgotten College Student Auto Discount

It is no myth that adding a young driver to an auto insurance policy can be expensive. According to MSN Money adding a teen driver will increase your auto insurance by an average of 156%! One of the factors driving this shocking auto insurance increase for young drivers is, not only who is driving the car but how they are using it.

This fall many families will be sending “young drivers” away to school and many of the students will not be taking cars that are insured on their parent’s auto insurance policy. For these families, the young drivers will not have regular access to that car and many insurance companies may offer a significant discount for the reduced car use by your young driver.

One thing to keep in mind is this discount usually has a distance requirement. The insurance company assumes if your child is attending college within a few miles from home, they will most likely still have regular use of that vehicle and the discount may not apply. However, other discounts like “good student” may still be available for college students that live close to home.

Are My College Student’s Belongings Covered?

The short answer is it depends. To have any coverage for liability or their belongings at school they must first qualify as an “insured” on your homeowner or renter insurance policy. According to the PA Insurance Service Office’s (ISO) homeowner insurance policy, an “insured” on a homeowner insurance policy includes a student enrolled in school who meet all the following:

1. Enrolled as a “full time” student defined by the school

2. Who was a resident of your household before moving out to attend school

3. Under the age of 24 and your relative

Thus, if a student is not enrolled full time or is over the age of 23 attending school, they may not have homeowner insurance coverage from your policy. The good news for families in this situation is that endorsement HO 05 27 “Student Living Away From the Residence Premises” may be used to extend coverage from the parent’s homeowner insurance for a student who is 24 or older.

If a student is an “insured” on the parent’s homeowner insurance policy they should have coverage for their “stuff” at school – laptops, books, TVs, ipods, ect. However, the standard ISO homeowner policy has a limitation of 10% for personal property located off the insured’s “residence premises”. This means if your homeowner insurance policy has $100,000 of personal property coverage, student(s) at college would only have $10,000 of coverage for their “stuff”.

This may sound like more than enough coverage but $10,000 can go quickly depending whether you have multiple college students or just one student with some really nice “stuff”. Again there is an ISO endorsement to provide extra coverage beyond the 10% if needed. It is HO 04 50 “Personal Property at Other Residences” endorsement and it allows you to purchase additional coverage above the 10 percent limitation found on most policies.

I always use the phrase “you don’t know what you don’t know” and for many families sending students off to college this fall they don’t know how their insurance works for this major life event. Take five minutes to ask your agent if any additional auto insurance discounts apply and how your homeowner insurance covers or doesn’t cover your college student. The answer could be a very big surprise!

Caution: Many insurance companies have their homeowner policy forms and their provision may be different than the standard ISO form I outlined above. Always consult your insurance company to verify their specific requirements for definitions of “insured” and coverages.

Gold Prices July 2009 - July 2011

Let’s say you bought a $5,000 ring when you got engaged in 2009. Since you read our prior blog “Jewerly Insurance: You May Have Less than You Think!”, you already knew that a standard PA homeowner or renter insurance policy only has a $1,500 theft limitation on jewelry and you chose to buy a personal articles policy to insure the ring for the full $5,000. Your thinking this is great news, because if the ring gets lost or stolen you get another $5,000 to buy the same ring. No damage done.

Now fast forward two years where the price of gold and many other precious metals have skyrocketed and the same ring is worth $8,000. Guess what happens if the engagement ring is lost or stolen now? You get a “smaller” ring because the maximum your policy will pay is $5,000. I know that is not news I would be happy to hear or deliver to my wife!

What should I Do?

If you currently have jewelry scheduled or on a personal article policy, like in the example above, call your agent and get an updated appraisal. Having jewelry insured for an appraised value from just a year or two ago could leave you very disappointed if you need to file a claim today.

Even if you do not have any scheduled jewelry, make sure your total amount of jewelry does not exceed the standard PA homeowner and renter insurance policy theft limit of $1,500. If it does, look into raising the theft limit above $1,500 on your homeowner or renter policy or place some of the jewelry on a personal articles policy.

Overall, this is just another example of why it is important to review your insurance on an annual basis with an agent. Things change in life, like the price of gold, and most people don’t even realize it actually impacts their insurance.

Now with social media we are expressing our thoughts and opinions more freely than ever before. However, unlike traditional one-on-one conversations, social media conversations can be visible to all our “friends” and “followers” and our words spread much more quickly. In addition, what we say online is much more permanent and documented. Thus, something we may regret saying or posting online can quickly spiral out of something we can’t control.

So what does this have to do with insurance? Actually it is a lot more than most people think. The standard PA homeowner or renter insurance policy does protect you when you are liable for causing “Bodily Injury” or “Property Damage” to someone else. However, the standard homeowner or renter insurance policy in PA does not protect you for harm arising from acts such as libel or slander.

This means if you unintentionally say or post something on social media and a person or business files a lawsuit for defamation, you have no coverage to pay a claim, court costs, time off work or lawyer fees. To fix this coverage gap you need to add HO 24 82 “Personal Injury” coverage to your homeowner or renter policy.

“Personal Injury” broadens your personal liability coverage on a homeowner or renter insurance policy to include injury arising out of the following

1. False arrest, detention, or imprisonment

2. Malicious prosecution

3. Wrongful eviction, entry into or invasion of the right of private occupancy room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor

4. Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services

5. Oral or written publication of material that violates a person’s right of privacy

“Personal Injury” coverage also provides you defense even if a defamation lawsuit is groundless. In addition, the coverage extends to your children if they are residents of the household.

There are several exclusions to the “Personal Injury” coverage, including acts that are intentional, acts arising out of or in connection with a business and acts performed out of civic or public activities.

“Personal Injury” is a coverage that everyone needs and in many circumstances there is little to no cost for adding to a homeowner or renter insurance policy. Ask your agent, make sure you have it and always think before you post!

As we enter the summer vacation months, many families will be renting cars and unexpectedly dealing with the same rental car insurance question as I did a few years ago. Faced with a number of choices, families will either purchase all the coverage or they will decline the insurance without knowing if they are covered by other policies. This can lead to either wasting money by purchasing coverage you already have or leave you dangerously uninsured or underinsured.

Homework Before the Rental Car Counter

The first thing you should do if are planning to rent a car is call your insurance agent before getting to the rental counter. In most cases, whatever coverage and deductibles you have on your own car would apply when you rent a car, assuming you are renting car for pleasure and not for business. This means if have comprehensive and collision coverage on your vehicle, the rental car will likely also be covered if it is stolen or damaged in an accident.

Another potential source of existing insurance coverage for rental cars is your credit card. To find out what type and how much coverage a credit card company offers call the 800 number on the back of the card. The Insurance Information Institute (III) recommends, “If you are depending on a credit card for insurance protection, ask the card company or bank to send you their coverage information in writing. In most instances, credit card benefits are secondary to either your personal insurance protection or the insurance offered by the rental car company.”

At the Rental Car Counter

Contacting your agent prior to getting to the counter is going to make reviewing these common rental car insurance coverages much easier and avoid the panic and uniformed decision I made when trying to get that convertible.

1. Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW): This is the rental company’s version of comprehensive and collision coverage insurance. If you do not have comprehensive or collision on your own vehicle this coverage is recommended in case the car is vandalized, stolen or damaged.  But be careful. According to III, your coverage may become void if the accident was caused because you were speeding, driving under the influence or some other reckless error on your part.

However, you may still want to buy this coverage even if you have comprehensive and collision on your own vehicle. Yes, there is some double coverage by doing this but a rental car company may charge for something called “loss of use”. Let’s say you get into an accident with your rental car and it causes $5000 of damage to the rental car. Since you have collision coverage on your own car your insurance pays the $5000 damage minus your deductible. Then the rental car company sends you a bill because they cannot rent the car to someone else (loss or use) for 2 weeks. Your car insurance company may not pay this expense and you could be left picking up this expense unless you purchased this waiver. If you have comprehensive and collision on your vehicle ask your agent if your policy covers “loss of use” and find out from the rental company if they would charge for “loss of use” to determine if buying this option makes sense.

2. Liability Insurance: Rental companies are required by law to make sure all rented cars have at least the state required amount of liability insurance. If you do not have any auto insurance you will be required to buy this coverage. Remember that state minimums do not offer much protection and it is recommended to buy additional liability insurance above the state minimums. 

If you already have auto insurance rental car company will ask you to purchase additional liability insurance. According to III, “You should probably only forgo the additional liability protection if you have adequate amounts of liability protection on your own car.” If you are interested in additional liability insurance it may be a better option to talk to your agent about an umbrella liability policy versus getting through the rental car company. 

3. Personal Accident Insurance: This offers you and your passengers coverage for medical and ambulance bills for injuries caused in a car crash. According to III, “If you have adequate health insurance or are covered by personal injury protection under your own car insurance, you may not need this additional insurance.”

4. Personal Effects Coverage: This provides coverage for stolen items in your car while on vacation. If you have a home or renters insurance policy, you are already covered for theft of your belongings away from home, minus the deductible. However, the amount of coverage away from home could be limited so tell your insurance agent if you are planning to take valuable items on the road.

In hind sight, the coverage I had on my own auto and renter insurance for our Everglades trip probably would have been adequate even if something did happen after I declined the car rental insurance coverage.  However, I would not of known it was adequate after it was too late and that is never the time to hope you have the right insurance. Take 5 minutes call your agent, be prepared and happy renting!

What Jewelry Coverage Do I Have?

If you have a home or renter insurance policy, jewelry is covered but there are a few important exceptions and limitations that could leave you very disappointed if you had a claim.

A standard PA home or renter insurance policy has a $1,500 limit for theft on jewelry and no coverage if it is lost or misplaced. This means if all your combined jewelry value is worth more than $1,500 or if you own any one item is worth more than $1,500, you will want to call your insurance agent and talk about purchasing additional insurance.

Additional Insurance Options

Increase Theft Limitation – For an additional premium, you can buy extra jewelry theft coverage on your home or renter insurance policy. However, many home and renter insurance policies do have maximum theft coverage limitations of around $5,000 and the home or renter insurance deductible still applies for any jewelry loss.

Add Coverage for Losing and Misplacing – The standard PA home or renter insurance policy covers your personal property, including jewelry, on a “named perils” basis. Theft is one of these named perils or causes of loss; however, losing or misplacing jewelry is not a named peril. This means if the diamond in an engagement ring falls out or you lose the ring on your honeymoon it would not be covered!

To include coverage for misplacement or losing jewelry, you must add an endorsement to make the coverage on all your personal property “open perils”.  The major advantage to adding this endorsement is all your personal property, not just your jewelry, has much broader coverage and the examples above would be covered. However, the same maximum theft limitation probably applies to losing or misplacing jewelry and that could leave you without enough coverage for more expensive items.

Personal Articles Floater – A personal articles policy could be a great option because it generally includes the “open perils” coverage including theft, losing and misplacement, it can have a zero dollar deductible and it has no value limitations on the jewelry. The floater can be added to an existing home or renter policy or it can be written as a separate policy. The only disadvantage to a personal articles floater is that you may be required to have an appraisal within the last 3-5 years or a receipt for more expensive jewelry.

If you recently got engaged or received a new Valentine’s Day jewelry gift, make sure you have the necessary insurance. While no one can put a price on sentimental value, insuring your jewelry can keep it financially protected if it is lost or stolen.

Note that home and renter policy coverages and limitations vary by state, insurance company and policy type. Any coverages, limitations or values listed in this article are general guidelines and may not be the same as your specific policy. Check with a licensed insurance agent before making any insurance decision.

This is why it is important to understand the full extent of the protection provided when you purchase a Tenants or Homeowners Insurance policy.  These policies protect not only your home and the things in it, but also protect you and your assets when you are found liable, or legally obligated and responsible, for injury or property damage to someone else.  While a homeowners policy doesn’t cover any business or work related pursuits or, naturally, intentional or criminal acts, it very broadly protects you from many incidents you could be held liable for. 

Here are just a few examples:

- The lights on your Christmas Tree short out, and the resulting fire damages not only your home, but also your neighbor’s home.

- Your dog bites a Christmas Caroler who has come to your door.

- A neighbor child falls from a tree on your property and breaks an arm.

- Your teen is playing Wii Sport at a friend’s house and accidentally throws the controller through the friend’s new plasma TV screen.

- Your 4 year old takes a candle and sets fire to the draperies at your favorite restaurant. Seriously, my nephew was caught doing this at my wedding reception!

These and many other minor and major catastrophes happen to regular people every day, and could happen to you, which is why having enough liability insurance is so important.  Most homeowners liability insurance follows you wherever you are in the US and Canada, so if you happen to be a world traveler, you may want to consider purchasing a Personal Catastrophe Liability policy, which gives you world-wide liability protection.

Overall, the liability coverage on your Homeowner and Renter Insurance provides a lot more protection than just at your home. The coverage follows you when you leave your home and it even extends coverage to accidents caused by your children who are residents of your household. So don’t underestimate the importance of good liability insurance and make sure to speak with your insurance agent on what amount of coverage fits your situation and family.

Photo taken by Kim Smoker

Recent heavy rains in Lancaster and surrounding PA counties have left many homeowners and renters with significant water damage. However, many homeowners and renters are finding out the hard way that most homeowner and renter insurance policies not only exclude coverage for a flood but many policies do not cover sewer, drain or sump pump back ups without an endorsement. If you are one of the fortunate people who did not experience a “denied” insurance claim for flood or back up, take time to understand how these 2 important coverages could protect your family before the next storm.

Flood Insurance Is Available to Everyone

According to the FloodSmart.gov, your home has a greater chance of being damaged by a flood than by fire. However, your homeowner or renter insurance policy does not cover damage to your home or property for a flood. The only way to have coverage for a flood is to buy flood insurance from an insurance agent.

One common myth about flood insurance is that it is only available to homeowners who live in high risk flood areas with mortgages. Actually, any homeowner, renter or condo owner can buy flood insurance. According to FloodSmart.gov, those in low risk areas are also eligible for flood coverage on their building and contents which can start as low as $119 per year. With the average flood claim for 1 inch of water in a 2000 square foot home costing $21,000, the benefits of having flood insurance can add up quickly for any renter or homeowner. Click here to find out how much a flood may cost for your home.

Flood insurance is not designed to be as comprehensive as a homeowner insurance policy but it is simply designed to get you back on your feet. For example, flood insurance is very limited for damage to basements, walkout basements and crawl spaces and the property that is stored in them. Most flood insurance also has a 30 day waiting period before the policy takes effect. So it is a good idea to start the process early because you will not be able to get coverage the week prior to the next big Lancaster storm.

For more information on the details of flood prevention and flood insurance visit www.fema.gov or www.FloodSmart.gov

Sewer, Drain and Sump Pump Backup Coverage

The Backup of sewer, drain and sump pump coverage provides protection when heavy rains overburden sewer systems and sump pumps causing unwelcomed water to enter the home. Not only does a backup cause thousands of dollars of damage but it also can create a major health hazard if raw sewage is involved.

A recent study by Zogby International shows that 67 percent of homeowners believe water damage from a sewer, drain or sump-pump back up would be covered. However, most homeowner and renter polices do not cover this type of loss without specifically adding it to your policy by endorsement. The good news is that this coverage can be added to most homeowner or renter insurance policies for $20-$75 per year and it can give you $2,500 to $50,000 of protection.

Do not assume you have this coverage today and make sure to ask your agent about your specific policy and need for this coverage. If you are shopping homeowner insurance make sure to find out if this coverage is included in your quote. This is great example how buying based on the lowest price and not knowing the details of the policy can leave you with some unexpected surprises at claim time.

Are college students covered on their parents’ Homeowner insurance policy?

The short answer is it depends. Based on the PA Insurance Service Office’s (ISO) homeowner insurance policy, an “insured” on a homeowner insurance policy includes a student enrolled in school who meet all the following:

1. Enrolled as a “full time” student defined by the school

2. Who was a resident of your household before moving out to attend school

3. Under the age of 24 and your relative

Thus, if a student is not enrolled full time or is over the age of 23 attending school, they would not have homeowner insurance coverage from their parents’ policy. The good news for families in this situation is that endorsement HO 05 27 “Student Living Away From the Residence Premises” may be used to extend coverage from the parents’ homeowner insurance for a student who is 24 or older.

What coverage do college students have?

If a student is an “insured” on the parents’ homeowner insurance policy they would have liability coverage for injury or damage caused to another person and coverage for their “stuff” – laptops, books, TVs, Ipods, ect. However, the standard ISO homeowner policy has a limitation of 10% for personal property located off the insured’s “residence premises”. This means if your homeowner insurance policy has $100,000 of personal property coverage, the student(s) at college would only have $10,000 of coverage for their “stuff”.

This may sound like more than enough coverage but $10,000 can go quickly depending whether you have multiple college students or just one student with some really nice “stuff”. Again there is an ISO endorsement to provide extra coverage if needed. It is HO 04 50 “Personal Property at Other Residences” endorsement and it allows you to purchase additional coverage above the 10 percent limitation found on most policies.

Caution that many insurance companies have their homeowner policy forms and their provision may be different than the standard ISO form. Always consult your insurance company to verify their specific requirements for definitions of “insured” and coverages.

Do college students need renters insurance?

Renters Insurance is always a good idea especially when a student lives off campus. As we mentioned in our prior blog post “The Truth About Renting and Insurance” it costs as little as $50 per year and it helps eliminates all the questions related to whether a college student is covered on a parents’ homeowner insurance policy.

Insurance coverage is an important but overlooked issue facing families and college students. Talk with your insurance agent and make sure your family has the appropriately coverage before your child has the car packed for college too.

What Does Renter Insurance Cover?

Coverage for your Personal Belongings

Whether the contents of your home – furniture, clothing and other items – are stolen or destroyed in an insured disaster, such as a fire, they are covered under this part of the policy. However, just like a homeowner insurance policy, most renters insurance policies have special limitations for certain types of property.

Buy the replacement cost option. This will help ensure you get what it costs to “replace” your belongings at claim time and it only costs a few extra dollars per year.

Liability Protection

When most people think of buying renters insurance they want to protect their belongings, but the most valuable part of a renters policy is the liability coverage. Liability protection covers you against claims or lawsuits for bodily injury or property damage that you or your family members negligently cause to other people or property. It also pays for injury or damage caused by pets.

So if your son, daughter or dog accidentally ruins your neighbor’s valuable rug, you’re covered. But if they destroy your rug, your liability coverage does not provide compensation.

Your policy also provides medical coverage up to a specified limit. In the event a friend or neighbor is injured in your home, he or she can submit the medical bills to your insurance company. Expenses are paid without the injured party filing a liability claim against you.

Coverage for Additional Living Expenses

If you lose the ability to live in your apartment because of a covered loss this coverage pays for additional living expenses you incur due to temporary relocation. Note that it does not pay for the total expense, just the expenses due to the vacating of your home.

How Much Does Renters Insurance Cost?

Renters insurance is one of the best insurance buys on the market. Most policies in the Lancaster, PA area range between $50-$250 per year depending on the amount of personal property and the deductible on the policy.

Sometimes renters insurance can even be free! When renters insurance is also placed with the same company as your auto insurance, you can get a new discount on your auto insurance that can completely offset the cost of the renter insurance.

Although renter’s insurance is usually not required, it is just as necessary to have. It is a great example of using the philosophy of getting a lot for a little.