Graduation & Insurance

Parents: Graduation might bring insurance changes

Graduation is both an exciting and anxious time for high-school and college seniors - and their parents – as they prepare to begin a new stage of their lives.  Whether graduation means preparing for the move to college, finding a job or moving to a new residence, these big changes also mean potential changes to home, renters and auto insurance policies, for graduates and parents alike.

The changes that come with graduation bring the need to review home, renters and auto insurance policies to make sure they will meet your family’s changing needs, and might even reduce costs. In fact, a family might not need additional coverage in every case; rather, they may just need to consider changes in the way coverage is set up. NW Insurance Council encourages teens and parents to contact their insurance company or agent to discuss their insurance needs after graduation day.

Here are a few scenarios that should alert graduates and parents to review their insurance policies:  

• A high school or college graduate permanently moves away from home.  This creates a possible coverage gap for personal property, since a child must reside in the parent’s household for the child’s personal property to be covered under the parent’s policy.  If the graduate permanently relocates, he or she may need an affordable Renters Insurance policy.  However, if the student moves from home into a school dormitory, he or she and their personal property are covered under their parents’ homeowners or renters policy.
• A high school or college graduate takes a summer job as a delivery person for a pizza parlor or a delivery app (like UberEATS, which hires drivers ages 19 and older) and uses his or her own car (or one owned by parents) to make deliveries.  Because many personal automobile insurance policies exclude deliveries, this creates a coverage problem for damage caused in an accident that happens while making a delivery. Similarly, anyone who drives a personal vehicle to drive passengers in exchange for compensation using an online platform need to be aware that their personal auto policy (their own or their parents’) likely will not cover damage or liability that occurs while the vehicle is in use for these commercial activities. Ask your agent or company about a commercial policy or endorsement to protect your vehicle and finances.
• A high school or college graduate gets involved in a volunteer program transporting young people, homeless people or elderly people from one place to another and uses his or her own car (or one owned by their parents). The insured vehicle’s policyholder could be liable for injuries or property damage that occurs while their son or daughter is driving.
• A graduate gets a job and starts driving a family car much more frequently.  If the car is insured through the parents, this could create a need for coverage adjustment because some policy options specify that the car will not be driven to work or will only be driven a limited number of miles per day.
• A college freshman drives their car far less after starting school. A student who leaves his/her car behind at home while attending school in another location – or, in some cases, has access to the car while at school but drives fewer miles - may be listed on the parents’ auto policy as a “student living away,” dramatically reducing the insurance premium for that vehicle while maintaining coverage if the vehicle is still used occasionally.

It’s important that families check with their insurance company or agent to understand how coverage may need to be updated.  A few minutes adjusting coverage can prevent long-term headaches for parents and graduates alike.

For more information, contact NW Insurance Council at (800) 664-4942.