Unmarried couples living in the same household – a potential E&O issue?

Today, this is quite possibly much more of an exposure than in recent years – couples that have decided to “live together” without getting married. If the homeowners’ insurance was not modified, would there be coverage for the additional person if a loss occurred? There are some issues that could determine this.

First, it is important to look at the definition of “Who is an Insured”. It is common for this to read as follows:

“Insured” means a) you and residents of your household who are (1) your relatives or (2) other persons under the age of 21 and in the care of any person described in a. (1) of this provision. Thus, using this policy language, if the unmarried couple bought a home together (in both of their names), I would guess that most carriers would be willing to issue one policy with both names as the named insured. Thus, coverage for both parties should be in place.

But what if the home was only in the name of one of the parties, would there be coverage for the other person? Technically they don’t meet the definition of “who is an insured”. Thus I would conclude that “no, there would not be any coverage – no property coverage nor liability coverage.”

If the additional person has substantial personal property, it would be prudent to check with the homeowners’ carrier to see whether they can be added and thus covered. If that will not be allowed, the additional person should look to look to purchase a separate renters’ insurance policy. This should be easily accomplished.

This is all well and good provided that your agency is aware of this exposure and can find out the necessary details. However, is there the possibility that you have clients with this exposure that have not given any thought to the insurance implications?

Might be a question to add to your new and renewal business questionnaires and checklists.

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