Here's how to know if your college kid actually needs ‘dorm insurance'

• Dorm insurance is a personal property insurance for college students who live on campus.
• But you might actually need renters insurance, or be able to cover dorm contents under a parent's homeowners insurance policy.
• Here's what to consider before taking on dorm insurance.

As "DormTok" social media posts entice college students to design elaborate dorm rooms — "the stakes of dorm decor have never been higher," according to House Beautiful — parents may be wondering if they have the right insurance coverage to protect all those purchases.

Enter: "dorm insurance." Before signing up, first consider your child's specific needs to see if it is worth the purchase, experts say.

Dorm insurance is a personal property insurance for college students who live on campus, explained Loretta Worters, vice president of media relations of the Insurance Information Institute.

It tends to include coverage for accidental and water damage, and can cost up to $20 a month, according to marketplace site ValuePenguin.

However, taking on the dorm insurance might not be necessary. In some cases, what your college student really needs is renters insurance, experts say. In others, parents' homeowners insurance may be enough.

"People tend to buy insurance when it's not always warranted," said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida.

Here's how to know if you need to tack on an additional insurance policy for your college student's dorm room, according to experts. 

How dorm insurance compares to other options

Colleges and universities will often partner with different insurers to offer dorm insurance, Worters said.

Using the partner may come with a price break, but parents could also shop around with other insurers to compare terms.

If parents decide to take on a dorm insurance policy, it would be billed separately from the room and board, said Worters.

Also, expect to pay out-of-pocket. To that point, money from 529 college savings plans cannot pay for dorm insurance because it is not a qualified educational expense, said McClanahan, who is a member of the CNBC Financial Advisor Council.

Whether you sign up for dorm insurance or not, your child's dorm possessions will likely be covered under your home insurance plan, according to experts.

A parent's homeowners insurance will typically cover a college student if they live on campus and are under age 26, according to the National Association of Insurance Commissioners.

The limits are typically 10% of the contents in their dorm, "which may be enough, depending on the needs," Worters said.

For example, if your homeowners personal property is $100,000, the college student would be covered for $10,000. The coverage often includes computers, TVs, electronics, bicycles, furniture, and clothing, said Worters.

But keep in mind that dorm-specific insurance policies tend to have lower deductibles than home insurance policies, Worters said.

It doesn't matter if the child attends university in a different city or state, said McClanahan. The home insurance policy will often stretch over, so long as the kid lives in a dorm, she said.

4 questions to ask before insuring dorm contents

1. How safe is your campus? A parent may want to consider dorm insurance if the university's location has high criminal activity or if they have reason to worry about things being stolen, said McClanahan. "But if you look at statistics, most campuses are actually very, very safe, and there's very little crime on campus," she said.

The number of on-campus reported burglaries have been declining since 2011, according to data from the National Center for Education Statistics. In 2011, roughly 12.8 on campus burglaries were reported per 10,000 full-time students. The number fell to 4.7 per 10,000 in 2021, NCES found.

2. What high-value items are in the dorm room? In general, most of the things in a student's dorm room are not high cost items, said McClanahan. Even so, a parent's homeowners policy might only pay up to a specified amount, according to NAIC. It will be important to check what the limits are with the insurance agent or insurance company. 

3. Can you afford to replace stolen items yourself? Deductibles for homeowners insurance may be high enough that you'd have a significant outlay before coverage kicks in. Plus, making a claim can be a "ding" on your insurance, leading to higher rates in the future, said McClanahan.

4. Is your student living off campus? In that case, they may need renters insurance, which covers both personal property and certain liabilities. The premiums for renters insurance average between $15 and $30 per month depending on the location and size of the rental unit and the policyholder's possessions, according to the NAIC.

"If the student lives off-campus, they may be required by the landlord to carry renter's insurance," said Worters. "More and more landlords are insisting on coverage before they will rent to a student."