In today’s society of long-term college careers and high-debt range after graduation, there’s been a drastic increase in the age to which a child attends college or is being financially helped or supported by the parents. Unfortunately, this can create insurance coverage gaps for the adult child that parents may not realize and can jeopardize the child’s financial wellbeing.
When it comes to personal contents and the larger personal liability exposures on the homeowners’ policy, the age of the child, the full- or part-time student status, and where the child lives are all very critical for obtaining accurate insurance coverage.
The definition of who has coverage under a homeowners policy as an “insured” is limited to “residents of your household who are your relative” and further extends away from the home for “a student enrolled in school full time, as defined by the school, and is under the age of ___” (varies by carrier from 24 to 29 years old).
Many children now attend college beyond the ages of 24-29 years. Sometimes it’s because the child is working toward additional degrees. Maybe the child is working while going to school so it may take longer to graduate. Regardless of the reason, if a child is beyond that age, doesn’t have FULL-TIME student status, or is living away from home, it can instantly create a gap in their coverage for all their contents and personal liability insurance.
In more and more cases, parents are renting an apartment or purchasing a condominium or home for their child to live in. Although the parents purchase that dwelling, it’s not THEIR residence and they don’t live there. In many cases, the coverage that had been extended to the child on their parent’s policy is no longer available because the child now lives at this rented/purchased location and no longer resides with the parents.
As for the auto exposure, who the car is titled to, who’s listed on the policy as a Named Insured or Additional Insured, and where the child is living are all very critical in determining if the child has appropriate insurance coverage.
Under a personal auto policy, the definition of who has coverage includes "family members." Family members are limited to “a person related to you by blood, marriage or adoption who is a resident of your household.”
So a vehicle titled and insured by the parents, but in possession of a child who isn’t a resident of the parents’ household, creates a gap in coverage for a child who rents or borrows a vehicle, as well one who’s injured while a pedestrian or while a passenger in another vehicle that has no or not enough insurance coverage. If a vehicle is co-titled or titled solely to the child, but the child isn’t properly listed as an Additional Insured or Named Insured, that can create a gap in coverage.
Here are some examples where adult children would NOT have coverage because the definitions, as stated above, don’t apply:
• Your child borrows a friend's truck to pick up furniture they purchased and causes injuries to someone crossing the street. Your child didn’t know the friend had no insurance on the truck. Now your child has no liability coverage for the injuries they caused.
• Your child rents a vehicle while on vacation and doesn't buy the insurance offered by the rental car company. Again, there’s no coverage for property damage to the rented vehicle or bodily injury to others if there’s an accident.
• Your child is hit by an uninsured motorist while walking across the street. There are no medical payments or uninsured motorist's coverage for his or her own injuries.
• Your child is at a concert and accidentally bumps someone off the edge of the stadium bleachers causing severe injuries. There’s no coverage for the injuries caused to that person.
So always be sure to contact your insurance agent with current information about your child’s age, student status, and address to determine if they have the coverage they need. This will ensure, at the necessary time, that your child will avoid these insurance gaps and have the proper coverage in his or her own name. Without the proper insurance protection for injuries and damages, they risk personal financial devastation for many years to come.
This blog was written by Joyce Schuett, senior Personal Lines underwriter and trainer with West Bend.
This article is intended for general educational and illustrative purposes only and should not be construed to communicate legal or professional advice. Further, this article is not an offer to sell insurance. Please consult with your licensed insurance agent for specific coverage details and your insurance eligibility. All policies are subject to the terms, conditions, limitations, definitions, and exclusions contained therein.
