As an attorney, let me recommend that you discuss these issues (thoroughly) with your insurance agent. The laws differ in each state. Cadets at all of the Academies borrow cars -- you must be certain that your cadet/the car have adequate coverage when your cadet borrows a car, drives your car, etc. In Colorado, this is an important issue for cadets at USAFA. Many drivers in Colorado are underinsured (as I suspect they are in many states). An at-fault accident can be a tragedy for everyone involved and can ruin your cadet's financial future. There was a recent accident involving three cadets at USAFA -- one died -- an absolute tragedy, legal nightmare and financial nightmare for all involved. I know of another recent roll over accident involving a borrowed USAFA cadet car -- which totaled the borrowed car. Do not take chances with this. Do not take advice from someone who lives in another state -- talk to your agent and be sure what your liability and your cadet's liability is in your state and the state where they are attending school.
These decisions will be different for every family based on your state of residence, the laws in your state and in the state where your cadet is attending school, your cadet's personal assets (some cadets come into an academy with their own assets -- bank account, investments, trust fund, etc. -- be certain that they, you, your assets and their assets are protected), whether your cadet (when able) takes a car to their academy, etc.
One accident can change your cadet's financial future -- be sure you know the possible consequences of what ever insurance decisions you make.