The time of year has come when summer light fades earlier in the day and children prepare to return to school. For families whose children attend boarding school or a college away from home, the bittersweet feelings produced by their absence should be mingled with concerns over their safety and well-being — and the family's financial security.
An extraordinary array of property and liability risks confronts the parents of children away at school. In some cases, but not all, a parent's insurance policies will provide financial protection. The greater dilemma is that the activities of children are beyond the supervision of parents. Unacceptable behaviors that would be observed and corrected at home may go unnoticed at school.
It's not just a student's actions that may result in significant financial costs for parents. A case in point is Hurricane Katrina, which resulted in the closing of Tulane University, Loyola University and the University of New Orleans for several months. While the universities quickly established the means for students to attend other schools, the additional living expenses of commuting to these institutions, in addition to the housing costs for students who previously lived in a dormitory on campus, were substantial. Until recently, these additional living expenses were not covered by insurance. Such polices are now available.
Pearls and Porsches
The threats posed by extreme weather are just one of the many financial losses that can occur while a child is away at school. There is the risk of damaged, destroyed or stolen personal property like automobiles, electronic equipment, jewelry and expensive clothing. In addition to property-related financial losses, families are also exposed to liability-related risks. To learn more about the liability trends involving students away at school, I contacted Colleen Signorelli, vice president of personal insurance services at The Daniel and Henry Company, a St. Louis-based independent insurance broker that serves a high-net-worth clientele. She spoke to the risks facing HNW individuals and their families.
One such risk is when young adults head to campus with their car and allow their friends to borrow it. As Signorelli rightly pointed out, if there is an accident, the owner of the vehicle, who is often the parent, is held liable for the property damage to the other person's car; if there are injuries, the vehicle's owner is also liable to those injured.
In the reverse scenario, where a client's child is borrowing a friend's car, Signorelli advises parents to have proper coverage in place to protect their young adult driver, including an umbrella policy with limits that protect their assets. She also recommends that parents caution their children to limit the use of their vehicle by others.
Electronic Toys and Social Media Mayhem
For younger children in boarding school, such catastrophic risks are less likely. Still, there are other financial threats that warrant strict parental attention. All children nowadays have an array of electronic devices — a mix of smartphones, laptops, tablets and personal computers. Children from wealthier homes may own all these devices, as well as other expensive personal property like high-end luggage, watches and clothing. If all this property was stolen, damaged or destroyed in one fell swoop, the cumulative costs would likely consume the parent-paid deductible of the boarding school's insurance policy.
