It’s the time of year again when college students are headed back to school. While the main concerns this time of year are class schedule, books, supplies, and roommates, auto insurance should come to mind as well.
A student at college presents possible coverage gaps for car insurance protection that can affect both their financial future and their parent’s.
First, I have to be honest. When I was attending Ball State for my undergraduate degree, I never worried about my auto insurance. I don’t think I ever thought of it beyond putting the Pekin roadside assistance sticker in my front windshield. I didn’t even think about it when my parents bought me my first car. I also never thought twice about letting my roommate borrow my car when needed.
Therefore, I am advising all college students out there to think twice about it. I was lucky – my insurance was taken care of by the best insurance agent (my Dad, Don Killingbeck), so I never had to worry. I was protected by an auto policy and an umbrella policy, with much higher liability coverage than I would have chosen myself as a college student. I also never had to make any decisions about insurance without any knowledge base (as most people do when first charged with buying insurance). I also knew nothing about insurance before working in the field, just like your average person.
No car at school
As a freshman in the dorms at school, you likely wouldn’t have a great parking spot if you did bring your car to school. I had to park my vehicle at the Stadium at Ball State, which was too far for convenience to walk from my dorm room. I had to ride a bus just to get to my car. Because of scenarios like this, where a college student could easily go weeks or months without seeing their car, many college students and their parents choose to not have a car at school.
Keep in mind that even without a car, your college student should still be listed as a driver on your auto policy because a student at college is not the same thing as moving out of the household. Often, college students are still considered a “family member” or “resident” of the household. These are both defined terms, so check with your own policy to make sure.
Even if a student doesn’t have a car at school, it doesn’t mean they won’t be driving or occupying a vehicle. These are both activities they need protection for on an automobile insurance policy.
While listed on their parent’s policy, if considered both a resident and family member, liability coverage should be extended when they drive someone else’s vehicle. Medical and uninsured motorist should also apply.
Non-owned physical damage coverage from the parent’s auto insurance policy
would apply for a student driving a friend’s car, but the coverage is limited.
However, a particular exclusion could create a problem and make this coverage disappear – the “furnished or available exclusion” which is discussed below.
A student driving a friend’s vehicle with permission should be covered by their auto insurance (as long as they are not specifically excluded on the policy). Medical and Uninsured motorist coverage would also be available from the friend’s auto insurance policy while the student is a passenger in their vehicle.
However, it’s not a good idea to count on someone else’s insurance, because the friend may have their own state minimum liability policy. In Indiana, this means bodily injury coverage of $25,000 per person $50,000 per accident. In fact, they could have rejected medical and uninsured/under-insured motorist coverage. In this circumstance, anyone would be taking a huge risk just riding in their car, let alone driving it.
Furnished or Available
Regardless of whether or not the student has their own car at school, their roommate’s vehicle creates a possible problem, or a gap in coverage.
Auto policies tend to exclude any vehicle that is “furnished or available” for use regularly that is not a covered auto. A roommate’s vehicle could possible fit under this exclusion.
This is actually an exclusion that is a subject of litigation, or is legally fought over for the determination of what is considered regular use. This is determined by five factors: 1. unlimited or general permission to use the vehicle; 2. Available of a set of keys for use; 3. Actual usage of the vehicle, whether it is continuous or regularly scheduled (drives every Thursday, for example); 4. Nature of usage (such as if it is used for all purposes or only limited to specific situations); 5. Insured would have expected to pay extra premium for use of the vehicle.
Honestly, this can become a confusing gray area. Is a vehicle available for use because it is sitting in the garage, but no keys are around and no blanket permission to drive has been given? Maybe.
If this situation applies, discuss your options with your insurance agent. We can help advice, but unfortunately cannot guarantee protection, since these kinds of claims are sometimes decided in court.
To learn more, follow in two weeks for part 2 discussing college students with a vehicle at school.
Photo: “Columbia plans to hire new coordinator for East Campus parking” by KOMUnews. Unmodified. Flikr. CC BY 2.0.