Help your child ace insurance literacy

BY ANDREW STEWART

I can’t speak from experience as a parent yet, because my daughters haven’t reached the age to need or understand insurance, but I can speak from my own personal experience. By the time I was ready to attend post-secondary and needed to take on the responsibility of paying for my own insurance, I had very little knowledge, due to the lack of preparation by my parents, school or even older siblings. It’s no secret that many post-secondary students have a poor level of knowledge about auto, home, health and life insurance.

So, who is responsible for educating our children? Where will we find reliable information to properly prepare them? Are parents still mainly responsible or have we come to a point where information is so readily available and free that it’s now our children’s responsibility? If you were to test your child’s knowledge about car insurance would they know which types of car insurance come into play for common situations? Gone are the days when parents would add licensed teenage kids to their own policy so they could gain insurance experience, pay the extra premiums with the plan of having the  lower rates later on. Its quite concerning that most students will select coverage and buy an auto policy online, on their own without their parents help or even speaking to an agent.

I know some adults who would have a difficult time answering questions about car insurance coverage types, such as liability, comprehensive and collision. If you are questioning your own knowledge about these topics, then how can we expect our children not to make poor decisions that could have them paying huge amounts of wasted money on insurance premiums. Take for example liability coverage, which is considered the core of any car insurance policy. How would you answer this question, in what situations will liability coverage cover you?

• All incidents with my vehicle
• Injuries to passengers in my car
• Damage to my vehicle in a crash
• Damage to my vehicle if an object falls on it, such as a tree
• Damage to my vehicle from a flood, hail or other severe weather
• Damage to my vehicle if I hit an animal, such as a deer
• Theft of my vehicle

Knowledge about rental insurance isn’t any better than car insurance. A majority of kids will understand that renters insurance covers their personal possessions. However, do they know that it also covers items stolen from their car, that a guest injured at one of their crazy basement parties is covered? Even that it will pay for additional living expenses if the apartment is damaged. Sometimes we can get a better result by asking what wrong information might be stuck in their heads. Such as does it cover:

• Structural damage to the apartment or other rented space
• Your roommates’ belongings
• If you are injured
• Back rent due

It’s critical that post-secondary students read and ask questions about insurance now because that knowledge can help them through a lifetime of major financial decisions. As parents we are supposed to leverage our experiences and pass down that knowledge. We know insurance is not a one-time thing. Our needs evolve and change over time. Major life events such as graduating, living independently, getting married, having kids, buying a home and hopefully one day retiring all take planning and making smart decisions. So give your child the ammunition of knowledge!