Last Updated: September 6, 2023
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A Guide to Insurance Basics for College Students
You have notebooks and a laptop for your power lectures, a futon for the dorm room, and snacks (nutritious, of course) for late-night studying. Everything is set as you embark on your college journey. But hold on - you might be forgetting something. Although it may not seem like a top priority right now,
insurance is a concern all college students need to think about. Having the right type of automobile, renters, and health insurance can provide vital protection during years when most people can ill-afford any major financial setbacks.
You Want to Take Your Car to School
Driving is nothing new to you as you go away to college, but how you pay for automobile insurance may be. In high school, chances are you were covered under your parents’ automobile insurance policy, and if you drive a car owned by them at college, you likely will still be covered under their policy. But if you own your own vehicle, you will need an individual automobile insurance policy.
In Wisconsin, automobile insurance is mandatory. Also, Wisconsin has a financial responsibility law requiring all licensed motorists be able to pay for damages to others caused in an accident. This can be met through
insurance, a surety bond, or self-insurance.
If you decide to meet the financial responsibility requirements through automobile insurance, it can cover these areas:
For injuries you cause to other drivers and damage you cause to their property when you hit them.
For treatment of your injuries from being hit by an uninsured motorist or in a hit-and-run accident. Uninsured Motorists
coverage has nothing to do with property damage; it only involves bodily injury.
For treatment of your injuries when a driver causing an accident has lower bodily injury liability limits than your Underinsured Motorists limits. Insurers are required to notify you of the availability of this
coverage, although buying it is optional. Underinsured Motorists coverage has nothing to do with property damage; it only involves bodily injury.
For treatment of bodily injury you or your passengers suffer in an accident. It usually covers only medical expenses not covered by health insurance, such as
copayments and
deductibles. Companies must offer you this
coverage with a limit of at least $1,000 per person but you do not have to buy it.
Wisconsin law requires you to carry liability
coverage limits of at least $25,000 for the injury or death of one person, $50,000 for the injury or death of two or more people and $10,000 for property damage. The law also requires uninsured motorist coverage limits of at least $25,000/$50,000 for bodily injury only.
Drivers make choices about what types of coverage they will purchase. Liability
claims can easily exceed the minimum dollar amount required by the law. Higher limits are available. Ask your insurance agent for more information about the cost of higher limits.
Other coverages to consider:
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Collision - Collision covers damage to your vehicle caused in an accident, even if the collision was your fault or was due to a hit-and-run accident.
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Comprehensive - Comprehensive covers damage from other causes including theft, vandalism, fire, falling objects, or hitting an animal, such as a deer.
Auto Insurance Costs
Many factors determine how much auto insurance costs, including the following:
Insurance companies may charge an extra fee, or surcharge, if you are involved in a chargeable accident or were ticketed for a serious traffic violation.
Young, single, male drivers generally pay more than any other group.
Young drivers are often considered to be a higher insurance risk than older, more experienced drivers.
Generally, people in metropolitan areas pay more than those in less congested places.
Newer, sportier vehicles cost more to insure. The less it would cost to repair or replace your vehicle, the lower the cost of your
premium.
Ways to Lower Your Auto Insurance Premium
Many insurers offer discounts for good grades in school, often for maintaining a grade of B or better. Taking an approved driver safety class can also result in a discount.
If you increase your
deductible and pay for small losses yourself, your insurer may charge you less. This way you can cut your insurance
premium costs and still be protected against large losses.
Not only is it illegal and unwise, but a conviction for drunk driving can wreak havoc on your insurance
premiums. And remember, if you are under 21, Wisconsin’s Absolute Sobriety law means you cannot have a single drop of alcohol in your system when driving.
Mopeds & Scooters
Due to limited parking space and the inconvenience of driving a car to class, mopeds and scooters have become more popular on college campuses.
Wisconsin's mandatory
insurance law also applies to mopeds and scooters. Any insurer offering motorcycle
coverage likely offers moped coverage as well. Ask your insurance agent for more information about moped insurance.
Have You Thought About Renters Insurance?
If you live on campus in a dorm, your parents’ homeowners
policy may still cover your belongings, although they should check with their insurance agent to make sure. If you rent an off-campus apartment, you will probably not be covered by your parents’ homeowners insurance policy. Your landlord’s insurance will only cover the building, not your possessions.
Consider purchasing renters insurance to protect your personal belongings in case they are destroyed by a fire, stolen, or damaged by a tornado. Renters insurance also protects you for liability
coverage in case someone is injured while on your property. Many building owners require tenants to have renters insurance to ensure liability coverage protecting the building owners’ interests.
When you are deciding how much coverage to buy, there are a couple of terms you should know - Actual Cash Value and Replacement Cost. Say your five-year-old TV is stolen from your apartment.
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An actual cash value policy would give you what a five-year-old TV is worth today.
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A
replacement cost policy would
reimburse you the difference between the Actual Cash Value and the price of a new TV of the same kind and quality. Typically, you first receive the Actual Cash Value and then you submit the receipt for your new TV to receive the reimbursement. Or you may choose not to replace the TV and just keep the Actual Cash Value amount.
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Premiums are higher for replacement cost coverage.
Renters Insurance Costs
The cost of renters insurance varies based on several factors, including:
A fire-resistant apartment equipped with safety features like smoke detectors and deadbolt locks will get better rates.
High-crime areas with a greater chance of theft will lead to higher
premiums. Same is true for areas prone to natural disasters.
The type of
coverage (actual cash value versus replacement cost) and the amount of
deductible you choose will affect the cost of your premium.
Other things to keep in mind:
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You can purchase a
rider to extend your
coverage to include expensive items like jewelry, computers, and other electronic equipment.
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Prepare a property inventory before you have a loss. Write down all your major possessions and keep all receipts of your purchases. Taking pictures or video of your belongings is a good idea. Keep your inventory record in a safe place, like a fireproof safe, or give it to your parents to keep off-premises.
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Flood damage is not covered by basic renter’s insurance. To protect against damage caused by flooding, you need to buy a flood insurance
policy. The agent who sold you your renter’s insurance policy should be able to assist you.
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Some companies allow roommates to purchase a policy together. Check with your insurance agent to determine what options are available.
Are You Still Covered Under Your Parents’ Health Insurance?
A parent can keep an adult child on the family’s health insurance plan until the child turns 26. This applies to individual and group health insurance plans, vision plans, dental plans, and self-insured plans of the state, county, city, village, town, or school district.
Coverage must also be provided to a child who was called to federal active duty in the National Guard or in a reserve component of the U.S. Armed Forces if the child was under 27 when they were called to duty and was attending an institution of higher learning on a full-time basis. The child must also return to school within 12 months of fulfilling active duty obligations. Some
policies known as ‘grandfathered plans,’ may have additional limitations relating to dependent coverage.
Check with your family’s health insurance company to see if you are still covered under your parents’ policy.
If your parents are covered by a
managed care plan (and most insurance plans are managed care plans), you will also need to verify if any
network providers are located where you attend school.
If you are going to a school in an area with no
network providers, call your insurance company and find out what is covered when you are out of network. Most plans provide coverage for
emergency care while you are out of the network, but NOT routine and follow-up care. These are only covered in the plan’s network service area.
Be sure you have a copy of the relevant health insurance cards and know how to obtain any required approvals before seeking treatment.
If you do not have health insurance through your parents…
If you do not have health insurance through your parents’ health insurance policy or have limited
coverage due to
network service areas, you may want to buy a student health insurance plan. Student plans are sold by an insurer who has contracted with a college to offer coverage to its students. In general, these plans have more limited benefits and more
exclusions than traditional health insurance plans.
If you are dropped from your parents’ group health insurance, you may have the right to continue health insurance
coverage if
COBRA applies to your plan.
If you are eligible for COBRA, you will be notified of your rights under the law and be given a limited window of time to opt for continued coverage. This coverage may be expensive as you must pay the full cost of the COBRA coverage.
If neither a family plan nor a school-sponsored plan is available, you should seriously consider buying an individual plan. Beginning in 2014, health care reform legislation provides most individuals eligibility for comprehensive individual health insurance
coverage without any
preexisting condition limitations or
waiting periods.
If you are losing existing coverage, you may qualify for a 60-day
special enrollment period. Otherwise, you must wait to enroll until the next
open enrollment period, which begins November 1 of each year.
You can apply for individual health coverage by contacting an insurance agent or by accessing the federal website
healthcare.gov. Both insurance agents and the
HealthCare.gov
website can explain your coverage options, premiums you will be required to pay, and any advanced premium tax credit subsidies or cost-sharing reductions for which you may be eligible.
Studying Abroad?
If you participate in an international study program through the University of Wisconsin System or the Wisconsin Association of Independent Colleges and Universities you will be required to purchase medical
insurance. You should contact the study abroad coordinator for more information about the health insurance plan offered through the program.
What About Life Insurance?
If you are single and do not have dependents, you may not consider life
insurance a priority. But taking out a life insurance policy with a guaranteed issue benefit when you are young is inexpensive and may protect you from being uninsurable in the future should you develop a debilitating illness or disabling injury.
Insurance and Your Credit Score
It is important to remember automobile and homeowners
insurance companies may use consumer credit information in deciding whether to issue or renew
policies.
Although companies cannot use credit information as the sole reason to refuse an application, cancel a new insurance policy in its first 60 days of coverage, or nonrenew an existing policy, insurers may use this information as one of the criteria they consider as part of the
underwriting process in Wisconsin.
Since your credit score can impact the cost of insurance, it is vital to maintain a good credit score. There are several steps you can take to maintain a good credit score:
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Pay monthly credit card bills on time and as agreed.
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If you have previously missed payments, get current and stay current.
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Maintain a low credit card balance. Don't max out your accounts.
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Avoid signing up for new credit cards you do not need.
Under federal law, an insurance company must tell you if it takes an “adverse action” against you due to your credit history. This would include refusing to offer a policy or charging a higher rate. If this happens, you are entitled to receive a free copy of your
credit report from the credit bureau used to obtain your information. The notice of adverse action must provide information about how to obtain the free copy of your report.
Additionally, consumers can request a free copy of their credit report once per year from
AnnualCreditReport.com
. It is a good idea to take advantage of this offer to ensure information in your credit report is accurate.
Final Review
Lastly, a few other things to keep in mind:
An insurance
policy is a legal contract. It is written so your rights and responsibilities as well as those of the
insurance company are clearly stated.
All
insurance companies and agents doing business in Wisconsin are licensed by the Office of the Commissioner of Insurance (OCI). Before signing an application for any insurance coverage, verify the company and the agent you are dealing with are licensed in Wisconsin. Licensing information about agents and companies can be found at oci.wi.gov/Consumers.
If you are having a problem with your insurance, you should first contact your agent or the insurance company who sold you the policy. If you do not get satisfactory answers from the agent or company, you may file a complaint (oci.wi.gov/complaints) with OCI. OCI will investigate the complaint to see if any insurance laws or rules have been violated.
OCI Publications
The Office of the Commissioner of Insurance produces and updates a variety of consumer publications. Among the publications you may find helpful are: