How Do I Insure A House That I Own And Let My Family Live In?
Does a homeowners insurance 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. Then there was a fire loss. The insurance carrier went ahead and paid the damage to the dwelling. But they did not pay for the damaged contents that belonged to the son and his family. This was 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.
I own a home and live in it. One family member is on the Deed but lives elsewhere. If I was to die the home passes to the family member. I would like the home to stay insured for the remainder of the policy after my death until the family member moves into it, or sells it. Can I, should I get insurance in both our names?
HI Kimberly, We are actually working on a blog and video on this exact subject.
We see family members being added to deeds quite often for this purpose. What you need to do is add that other family member as an additional insured to the current insurance policy.
This accomplishes what you are asking and it also protects that other family member in case there is a liability lawsuit and they get named in the suit because they are on the deed.
If they are not listed as additional insured on your policy, they would have no coverage for defense costs or any settlement that they may be declared responsible for.
In addition to adding them as additional insured on your homeowners insurance policy, they should add that property to their umbrella insurance policy if they have one.
Coverage does vary by state and by company, so it will be a great idea to call your agent or company to discuss in detail. We have to speak in generalities in our posts.
We will have a more detailed blog and video on this next week and I will follow up with you when it is released.
If my mom signed a handwritten note, not the deed, giving part ownership of her house that she moved out of to her ex and his girlfriend can they get homeowner’s insurance on their own? If they were to and there was a fire could they file a claim and get paid without my mom’s ok?
Sorry for the delayed response. The hand written note would not give legal ownership of the property to the ex husband. In this case, your mom would probably need to get a dwelling fire policy on the home and then have her ex and his girlfriend get their own renters insurance policies. This way, any claims checks for damages to the house would be paid to your mom.
I never took into account the fact that a property cannot be written under a homeowners insurance policy if the owner does not reside there. It seems like learning about the criteria for a certain coverage is important before you even decide what to get. Since we plan on buying our own place next year, we have to work with a homeowner’s insurance agent to be educated about the policy options first to get the best deal that can actually protect us in the future.