I shared this post recently with for the March edition of URMIA Insights - (University Risk Management and Insurance Association). The message, however, is important for other leaders in higher education and particularly for those in student housing and student financial services.
Just last year, a Georgia College & State University student set off an automatic fire sprinkler system, causing more than $100,000 of damage to the property of students and the university. If this scenario hasn’t occurred at your campus yet, then consider that 2015 Clery Act data indicated that 1,926 fires occurred within on-campus student housing. In addition, FBI crime reports for 2015 documented more than 69,502 campus property crimes and thefts.
Current practices in campus renters insurance
In January 2017, URMIA surveyed its members to assess current practices in higher education regarding the handling of property damage to student personal property and university property caused by students. The URMIA Student Personal Property Survey 2017 elicited 132 responses and is a useful resource for this discussion. Its key findings were:
- Colleges and universities generally do not pay for damage to student property.
- Institutions may hold the student responsible for damage to the property of other students, but are much more likely to do so for damage to institutional property.
- Colleges and universities are reluctant to involve their property insurance companies when students and students' property are involved.
But as author Glenn Klinksiek explained, “Relying on homeowners insurance to pay for damage caused by students or for damage to student property can be problematic. Homeowners insurance coverage is variable and subject to the insurer’s claims adjustment practices. Some campuses have large portions of their residents whose families may not own a home and therefore have no insurance. Or some institutions may require insurance of students in the housing system but students who live outside the system escape the requirement.”
The process of change
The old passive approaches to on-campus property damage – brochures, online links to resources beyond the institution, a brief mention of the issue during new student orientation, vague text within a housing contract about the limits of institutional liability or protection – are under review on many campuses. Recent postings on the URMIA discussion board confirm that many schools are evaluating how to handle their growing losses and are actively seeking to improve their liability disclosures while also transferring risk to the student population through a renters insurance policy.
One might start by asking student housing leadership these questions regarding resident liability and their approach to renters insurance:
- How are campus residents actively notified of their liability and the limits of liability of the college or university for losses they may experience due to theft or damages to their personal property?
- How can schools transfer the risk caused by students to a renters insurance policy? Note: For about 50 cents a day, a student can purchase a true renters insurance program that includes both personal liability and personal property coverage.
- If your institution will not replace stolen or damaged property, do you proactively identify an alternative convenient source where students can purchase renters insurance protection from a financial loss?
Although insurers have seen an increase in the number of schools mandating renters insurance coverage, the most common approach that schools take at present to deal with the growing cost of losses is to implement a "policy acknowledgment and mandatory consideration" program that features a preferred (non-exclusive) insurance provider. This occurs within the leasing process at more than 100 colleges and provides each resident with the ability to voluntarily enroll in a renters insurance program. This approach provides direct access for risk managers who want their institution to be a beneficiary of the policy, and it gives institutions access to a list of insureds.
If your institution is not going to replace stolen or damaged student property, then it is useful to have an electronic verification that you have disclosed the limits of institutional liability. In addition, if you seek to collect for damages caused by students, it greatly helps to verify that the liability disclosure made by the institution isn’t just in the small print of the lease or housing contract.
If your institution is ready to take a more proactive approach to transferring risk to the student while protecting both the student and the institution, then you might want to consider these practices:
- Provide an opportunity for students to easily enroll in a renters insurance program during the leasing process.
- Identify a preferred renters insurance policy provider just like your institution does with a health insurance plan. Otherwise, students might choose a policy via the internet that would be subject to coverage limitations that limit eligibility (e.g., property-only coverage, high deductibles, credit score requirements) and likely not name your institution as a beneficiary of the policy.
- Implement a renters liability insurance requirement that is similar to one required by off-campus housing operators. Note: Multi-Family Housing Association research shows that 84 percent of off-campus property owners require each resident to provide proof of coverage. This may become an important factor for institutions that enter into public-private partnerships to build student housing.
It is in the best financial interest of institutions to pay attention to this issue. In particular, it is prudent for schools that require students to live on campus or provide housing for graduate students, student families or international students to assess their institution's policy disclosure language and identify if these students have the capacity to pay for losses.
Finally, keep in mind that institutional financial liability is not the only consideration. Although most college students are not likely to experience significant property loss while in college, for the thousands who do experience a loss of clothing and electronics it can be disruptive to their academic performance or, in the worst case, create a financial loss that they may not be able to pay. This negative experience can end up being reflected in student graduation rates and satisfaction surveys, which ultimately may impact the reputation of the institution.
We appreciate the opportunity to contribute our insights to the URMIA and higher education community. Please contact us if you are curious about how GradGuard's Renters Insurance programs work to benefit your school and the students you serve.