Insights

By John P. Carr, Area Executive Vice President, Arthur J. Gallagher Risk Management Services, Inc.

Amidst the hubbub and whirl of installing sons and daughters in residence halls on campus, one of the last things on the minds of most parents is insurance and protection for their student’s personal property. But neglecting this topic would be an oversight that could lead to expensive losses. The most important thing parents need to know is that students are fully responsible for the safety of their own property. Colleges and universities specifically spell out in their housing contracts and other publications that they are “not responsible for loss or damage to student property.” In addition, students are actually responsible for institutional property entrusted to their care.

So students are responsible for the furnishings in their college housing units, as well as other college or university property they may be using, such as computers, photo gear, musical equipment, sporting gear or any other property provided for their use. The combined value of their own property, plus the property in their care, can amount to a substantial financial responsibility. It is not uncommon for a student to have property loss exposure in the range of $6,000-$10,000 or more in his or her residence hall room alone.

There are a variety of causes of loss to student property. The most common include theft and accidental damage or breakage. But there are also some less frequent but more serious causes of loss, such as student-caused accidental discharge of building sprinkler systems, fire and smoke damage, storms, tornadoes, hurricanes, earthquakes and flooding. These types of events can result in damage to or even total loss of all personal property.

Preparing for possible loss

To protect a student’s property, the first step is to prevent a loss. The student and parents should also consider the options available to insure the property, as a way not only to minimize out-of-pocket costs, but also to make certain the property can be replaced as quickly as possible. Being without certain items of personal property, such as laptops, tablets, clothing, phones and other equipment needed for school, can have an adverse effect on academic performance.

Before a student departs home, it is a good idea to place together all the personal items he or she will be taking to school and to take pictures of it all together. Then take close-up pictures of the more expensive items, in order to capture make and model information and other distinguishing marks. Make a list of the property and, if known, add the date and place of purchase, as well as the purchase price. Keep the list and pictures at home. This will help establish the value of the property that is going off to college with the student and will provide valuable supporting documentation in the sad event of a property loss and the need to file an insurance claim.

Insurance options

Given the small sizes and high values of certain property items—laptops, smart phones, iPads, digital cameras and the like—students not infrequently travel with the equivalent of $5,000 or more in their backpacks or shoulder bags. Some form of insurance coverage is likely to be helpful for financing losses at this level. Homeowners’ insurance policies typically provide a small level of coverage for personal property away from the permanent home. But this policy was designed primarily to protect the home and its contents, so claim deductibles tend to be at least $500 and more commonly $1,000 or more. These policies also typically do not cover certain causes of loss, such as breakage or accidental damage, flood, earthquake and water or sewer backup—many of the most common causes of loss to items away at college. Such policies also usually have coverage limitations or restrictions on certain types of property, such as computers, other electronics, jewelry and similar items that are frequently targets for theft. Generally speaking, out-of-pocket costs may be surprisingly high if the student relies only on the Homeowners’ policy to cover personal property losses. Notably, these policies may not offer coverage for losses of or damage to institutional property in the student’s custody.

Certain insurance companies have developed policies designed specifically to cover Student Personal Property. They offer claim deductibles as low as $25 and coverage limits suitable for student property values. These policies have fewer exclusions than a standard Homeowners’ policy, and with the low claim deductible, will offer significantly greater recovery of a student’s property loss. Average premium for these policies runs about $120 a year for replacement cost coverage. In addition, some of these policies may extend coverage to institutional property in the student’s custody.

Because of their specialized nature, these policies may not be known by or available through most independent insurance agencies. They are typically made available to students through the college or university, generally through the Student Housing, Student Affairs or Risk Management Departments. A Google search for “College Student Insurance” will also provide information about companies providing this special coverage. Students and parents should review, or have their insurance agent review, a copy of the actual policy language. The sample policy can usually be found in the FAQ section of the provider’s website.

While serious events like fires, floods and storms may not be considered common occurrences, they do happen more often than most people think. Here are a few reference websites that may be helpful if a student is attending a school in an unfamiliar location:

• NOAA's Storm Prediction Center: Tornado facts from the National Oceanic and Atmospheric Association (NOAA) indicate an average of 1,122 tornadoes per year occurring at one time or another in every state.
• Campus Fire Safety Outreach Materials: The US Fire Administration indicates that, from January 2000 to May 2015, there were 85 fatal fires in dormitories, fraternities, sororities, and off-campus housing, resulting in 118 fatalities — an average of approximately seven per school year. Stats from FEMA indicate an estimated 3,800 university housing fires occur each year.
• Hurricaneville: A website devoted to hurricane facts indicate, on average, there are 9 to 10 named storms each year with 5 to 6 becoming hurricanes.
• Crime Reports: This website shows crimes in your neighborhood that were reported to police, as well as sex offenders.
• FBI Crime in the United States 2014 - Property Crime: Over 8.2 million property crimes were reported to police in 2014, the latest data available.

In addition to the general information provided by the above noted sources, students and parents can obtain specific information about reported crimes at a specific school directly through the institution’s campus security department. Look for the Clery Act Report for that college or university.

The majority of the more than 19 million college students in the United States will not experience significant property loss while away at school, but every year hundreds of thousands will. Parents should take measures to protect their student's property (sometimes it’s the parents’ property anyway, “borrowed” for the year!), and if their son or daughter suffers a property loss, make sure there is appropriate insurance protection in place to help the student return to normal as quickly as possible.

For more information, email info@CollegeStudentInsurance.com or call (888) 411-4911.