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Coverage Concerns Insurance coverage for student travel abroad Review what basic homeowners and auto policies provide By Roy C. McCormick “Sending students overseas is ticket to a better image.” That’s the gist of a message delivered recently by Steven Uhlfelder, chairman of the J. William Fulbright Scholarship Board. Citing remarks by Senator Fulbright 50 years ago, he stressed that student ambassadors from our higher education system contribute to a better worldwide image of the United States. A powerful boost for young people who want Mom and Dad to endorse their wish to take such a trip! There is much that their parents should know about the insurance implications pertaining to foreign travel. Risks for Americans abroad are similar to those at home, but there are limitations under basic insurance that must be recognized. College students are insureds under homeowners policies carried by their parents. The protection applies at home, at college and elsewhere. There are exceptions, such as their being married and having residences other than those associated with the college, as well as being insured separately. Coverage limitations There are limitations in basic insurance, however. Significant homeowners coverage limitations apply while students are abroad as they do while the student is in the United States or Canada. It is helpful for parents to discuss this with their insurance agent. A rundown of coverage particulars includes the following: Personal property coverage (C) in homeowners policies in general, including ISO and AAIS forms, protects the covered traveling student anywhere in the world within the limits specified in the policy declarations. Special limits or caps apply to specified types of valuable items or specific kinds of loss. Examples include: $1,500 or $2,500 for theft of jewelry or furs in any one occurrence, regardless of the number of pieces or items involved; $200 or $250 for loss of money; $1,000 or $1,500 in total for letters of credit, passports, manuscripts, tickets, stamps and related items. Because some insurers may apply variations in the special limits, it is important to check the policy. Personal liability coverage, Section II of a homeowners policy, does not set territorial restrictions with regard to claims against insureds while vacationing outside the United States. It is important to stress to the young traveler that details of personal liability claims must be reported to the insurer as promptly as possible in order to comply with policy notice requirements. Young people usually have limited experience with third-party claims other than those arising from the operation of automobiles. Telling them of other occurrences that have resulted in lawsuits will underscore the importance of being careful and avoiding or minimizing problems. Time-honored examples have included the accidental poking of another person’s eye with an umbrella and the resultant serious injury. Another was injury to a woman who tripped over a young man’s legs when he extended them into the aisle of a bus. Others involved property damage to the interior of a hotel, motel or bed and breakfast. Another classic example is fire damage to furnishings and interior walls brought about by smoking in bed. Problems are minimized when claims are reported as promptly as possible to the insurer, if not directly, then by way of the parents. If theft is involved, the insurer will want to know if the incident was reported to the local police. A copy of the police report should be provided to the insurer along with other claim papers. A personal liability claim against the traveler is not as likely to occur as a property loss, but prompt reporting is essential. A suit against an insured for damages must be brought in the United States or the insurer must agree to a settlement. Auto policies Personal auto policies apply only in the United States, its territories and possessions, Puerto Rico, Canada, and while a covered car is being transported between parts thereof. Various policies contain some language variation, but the intent and effect is similar. Automobile insurance must conform to the laws and regulations of the host country. Because automobile insurance is applicable only in the United States, its territories and possessions, and Canada, the best advice for the young traveler is not to operate a vehicle while abroad. The cost of local insurance for a rental car is generally prohibitive and the problems are not worth it. In addition, there is too much uncertainty about the application of insurance carried on a car borrowed from a foreign friend. Better to ride as a passenger or to walk and see the sights. Protecting purchases made abroad Stress the importance of keeping receipts for items of value that are purchased abroad as well as personal items. Not only are they needed for insurance claims for loss of such personal property, but they are also needed to confirm with Customs the value of property purchased abroad and brought into the United States. As valuable and comforting as insurance protection is, simply avoiding loss of property can make the travel experience much more pleasant. Students should keep their rooms locked at all times—both when occupying them or when they are away. Laptop computers are a new target and require special care. Valuable jewelry and the like should not be taken on student trips; however, if a student wishes to do so, it would be wise to place such items in safe deposit boxes provided by many lodging establishments. * The author |
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