Does a homeowners policy cover a house that you own and let family members live in?
So you have a home, titled in your name, and you let a family member live in the home, while you reside somewhere else. Should you have a homeowners insurance policy on this location? The answer is no.
A homeowner’s insurance policy is written on a property where the titled owner of the property also resides in the property. If you as the owner do not reside there, then it should not be written on a homeowner’s policy.
What if, I come and visit with the grand kids there, or I reside there when I am in town a few weeks a year? Does that count? No it does not count as the premises that you reside, so again it should not be written as a homeowner’s policy.
How should it be insured? It should be written as a dwelling fire insurance policy in the name of the titled owner, to insure the dwelling, out buildings, any contents that belong to the owner of the property and to provide liability insurance coverage.
The family member that resides in the home needs to obtain their own renters insurance policy. Huh? You may be saying to yourself: “A renter’s insurance policy, but they are not renting, I let them live there free of charge.” Even if they are not paying rent, they are not the owner of the property, therefore, they should not be insured on a homeowner’s insurance policy and then need a renter’s insurance policy to cover their contents and their liability.
We recently had a claim, where the mom and dad where living in the home, they moved out and left their son and his family in the home. They never notified us of this lifestyle change, and there was a fire loss. The carrier went ahead and paid the damage to the dwelling but not the contents that belonged to the son and his family because he was no longer an insured, under the definition of the homeowners insurance policy.
When you and your children or family members reside in the same home, they are an insured under the definition in the policy. But the moment that the property owner moves out of the residence they are no longer an insured under the definition
Many times I will have parents tell me, but they do not pay rent. Whether or not money is exchanged has no bearing on the insurance policy.
Another way to get around this issue would be to add the relatives name to the deed of the property and then be sure to let your insurance agent know so that they could endorse the policy to include their name now as an owner. Changing ownership of a property is a huge deal and needs to be thought about with both your accountant and attorney because there could be estate issues, or issues if you decided to sell the property in the future.
This is just another example of how simple life changes, can greatly impact your insurance coverage. When you change something in your life, be sure that you are talking with your Trusted Choice Insurance Agent to be sure that changes do not need to take place with your insurance coverage.
Again, remember a homeowner’s insurance policy should only be in place when you own and reside in the home. If you are not doing both then a homeowner’s policy is not the correct way for the property to be insured.
Nancy Nicklow is the owner President of Huff Insurance,a full service Independent Insurance Agent . We have been dedicated to Protecting Lifestyles™ since 1960. We offer a full array of Personal Insurance, Commercial Insurance and Life Insurance products. Call us at 410-647-1111