Home Insurance for the Crowded Home

Extended family enjoying at home with their pets.Many factors in American society are changing the way we live and one of the results is a more complicated scenario when it comes to home insurance. The recent economic downturn has caused some adult children to move in with their parents. In some cultures, it’s also very common for multiple generations of families to live under one roof purely for the social benefit of being together and not economic reasons. In either event, the merging of multiple parties under one roof can definitely lead to some confusion when it comes to the home insurance policy.

When you consider your home insurance, two main types of coverage are available: property and liability. The property coverage reimburses you for damage to your home (also known as the “dwelling” in the policy) and your personal property. The liability coverage protects you from claims when you cause injury or damage to others. Let’s review each of these coverages and see how they may be impacted by varying groups of people sharing your home with you.

When it comes to coverage for the dwelling, you should generally be in good shape with most policies. If you are the legal owner of your home, you’ll want to make sure that you are the first named insured on the policy. This ensures that your dwelling will be covered and that you are entitled to the insurance proceeds in the event of a claim that damages your home.

As to personal property, this is where things can become a bit more complicated. The usual wording in policies state that the personal property of an “insured” is covered while it is owned or used by the insured, anywhere in the world. However, the definition of an insured is something that you’ll want to pay close attention to in your policy. In many policies, the insured is you, your relatives residing in your home, and anyone under the age of 21 while in your care or the care of your relatives residing in your home. What this means is that anyone who lives in your home but is not a relative and is over the age of 21 may have some issues when dealing with personal property coverage.

Thankfully, all hope is not lost when it comes to this personal property as the policy will sometimes allow you to add property that is not owned by an insured but is located within your premises. This clause of the policy helps you to cover those items belonging to non-relatives in your home. However, if you noticed, it only provides coverage while those items are in your home whereas an insured’s personal property is covered anywhere in the world. That does become a potentially significant difference. If these other members of your household wish to have worldwide personal property coverage, they may have to look elsewhere and secure their own policy.

The liability coverage is even more restrictive than the personal property coverage when it comes to various members of your household. Unlike the ability to provide some limited personal property coverage to non-insureds, the liability section is clear to only offer protection for insureds. Therefore, anyone not meeting the definition of an insured per the policy will not be afforded any coverage. As described above, this means anyone living in your home who is not a relative will not have the benefit of any liability coverage. As with personal property, these individuals might have to buy a separate policy.

While the insurance policy isn’t designed to discriminate against different family types, it also has not evolved as quickly as the world has changed. A good idea would be to check with your insurance company before making any decisions to purchase separate policies. You might find that your insurer has encountered a similar situation and may already have a solution.


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