More and more people are living together without getting married. Most people don't realize it, but this affects who is covered by any home or auto insurance policy.
Here's what you need to be attentive to, according to the independent insurance agent experts at Trusted Choice.
Most standard home insurance policies restrict coverage to a “named insured”—the individual(s) named on the policy and their resident spouse. The same standard policies often extend coverage to “resident relatives,” including:
However, that applies if any of these people are residents of the named insured’s household.
This means that a home insurance company has no obligation to cover a non-insured’s liability or to defend that person in a lawsuit alleging liability.
Consider this scenario: A woman and her teenage son move in with the woman’s boyfriend. The son seriously injures another child in a tackle football game at the park down the street. That child’s parents file a suit against the mother/girlfriend.
What happens next?
Unless the mother/girlfriend has her own separate insurance policy (such as a renters insurance policy) or has been added as a named insured on the home insurance policy (which most insurance companies won’t do if she isn’t a relative), she has no coverage just because she lives with her boyfriend.
Personal Property Limitations
The problem doesn’t stop with liability.
Chances are the mother/girlfriend and her son will move some of their personal property in with them. However, clothes, electronics, school supplies and whatever else belongs to them may not be covered by the homeowner’s insurance policy, either.
Most policies exclude coverage for personal property that is owned by roommates, boarders or tenants. This personal property exclusion is another reason why a renters insurance policy is essential for non-insured roommates.
Auto policies also have a “named insured.” This means the insurance covers the person named on the policy and their spouse.
Keep in mind that an auto policy varies depending on the coverage. For example, liability, medical payments, and uninsured motorist coverage each have their own definitions of “insured.”
Consider this scenario: An adult boyfriend and girlfriend each have a car and their own personal auto insurance policies:
The liability provisions of a policy cover the “named insured” and “family members” for liability arising out of the use of any auto. They also considers any other person an “insured” while that person is using a car - with permission - that is insured under the policy.
Dig deeper and you’ll see that the policy excludes coverage while the “named insured” or “family member” is operating a vehicle that is furnished or available for regular use.
If the girlfriend is driving the boyfriend’s car and gets into an accident causing injuries, his auto insurer would pay up to the policy limits—in this case, $25,000. Unfortunately this may not be enough to cover the full liability if the injuries are severe.
The liability policy with the $100,000 limit might not be available as a fallback, even though it covers the driver for the use of any auto. That’s because the driver’s insurer can argue that this car is available for the driver’s regular use, since the car owner and driver live together.
Under those circumstances, coverage is excluded by the policy language.
Insurance is already confusing, and gets more confusing if you live with someone but aren't married.
The good news is that these scenarios have solutions that your Trusted Choice insurance agent is ready to discuss with you. Take the guesswork out and let your Trusted Choice agent do the work for you, instead!