If you’re not married but live with your significant other, there may be insurance limitations of which you are not aware. In this post, I’ll explain the insurance problems that often apply to domestic partners and what you can do about them.
If either of you carry a Homeowners or Renters policy, you might assume that the policy’s personal property and liability coverage will automatically extend to the other partner. Unfortunately, this is usually not the case. A standard Homeowners or Renters policy provides personal property and liability coverage to “insured persons”. Typically, an “insured person” is the policyholder and his or her resident relatives.
This means that if a policyholder has children, parents, siblings or a spouse who live with them, these individuals are covered – but not the policyholder’s unmarried domestic partner. And while your policy may give you the option of choosing to cover your domestic partner's personal property after a loss, no such option exists in the event of a liability claim against them.
No one really expects a future liability claim, but think about this. Imagine your partner accidentally leaves the stove on which starts a fire, causing thousands of dollars of damage. Your insurance company pays for the damage but then sues your partner as the negligent party causing the damage. Since your partner is not an "insured person" in your policy, your carrier is fully within its rights to seek reimbursement from the responsible party.
So what can be done to extend coverage on your home policy to the partner you live with? There are a couple potential solutions.
In some cases, you may be able to make your home insurance a joint policy. This would mean that you share ownership and control of the policy with your partner, and you also share all the coverage. Normally a joint policy won’t cost any more than a policy written in just one name. The problem is getting a joint policy often requires that you both own the home. Or if you are a renter, some carriers may require that you are both on the lease. Another thing to keep in mind with a joint policy is that you will probably both be named on any claim checks or refund checks, which perhaps may not appeal to you.
Another solution which might be better is to add your partner as an additional “insured person”. This coverage option is often called the “Other Members of your Household endorsement". As the sole policyholder, you still maintain exclusive control and ownership of your policy and your partner probably won’t be named on claim checks. You will, however, usually pay an extra charge for this (often $50 to $75 per year), and this option is not available with all insurance companies.
Depending on who you are insured with, it is certainly possible that neither of these options may be available to you. In that event, there may be no way to cover your partner on your existing home policy, and your best course of action (short of changing carriers) may be for your partner to buy their own Renters policy. He or she will be able to buy a Renters policy even if they don’t actually rent, and if they bundle it with their Auto insurance, it may not add much cost at all.
Speaking of Auto insurance, there might be coverage issues there as well. Now, if you each own and insure your vehicle under separate policies, there shouldn’t be any major concerns. Both of you are covered under your own insurance, and if you drive your partner’s vehicle with their permission, their policy will cover you. (If you do drive your partner’s vehicle, we recommend making sure their coverage limits are at least as high as yours.)
But what if only one of you carries an Auto policy? Sometimes one person will be sole owner of both vehicles in the household – perhaps because they have better credit or are otherwise better positioned to take out a loan. In this situation, what often happens is that the partner owning the vehicles insures carries the insurance for both and lists their significant other on the policy as a driver.
If your partner carries Auto insurance listing you as a driver, you probably think you are worry free. The insurance company knows about you; so you are covered, right? Yes and no. While you are covered to drive your partner’s listed vehicles with his or her permission, you are lacking important policy coverage for non-owned vehicles.
If your significant other who carries the Auto policy borrows a vehicle, his or her policy provides backup coverage in case the borrowed vehicle isn’t insured or its insurance limits are lower than their own.* And when they rent a car, their Minnesota Auto policy covers that as well. This coverage usually extends to any “insured person” on their policy, but, just like home insurance, you’re likely not an “insured person” being their unmarried domestic partner. So, in this situation, you are covered to drive vehicles listed on their policy with their permission, but you are not covered by their policy to rent or borrow a car.
If this is your situation, what can you do to resolve this coverage gap? Depending on your carrier, in some cases it may be possible to make the auto insurance a joint policy. As with a joint home policy, you then share ownership and control of the policy and will both be listed on claim or refund checks. Both of you enjoy all the policy coverage. But a certain percentage of insurance companies won’t write a joint policy unless there is a jointly titled vehicle.
At Pine Country Insurance, we represent multiple insurance companies, and our carriers’ rules pertaining to domestic partners vary. This choice of insurance carriers usually gives us the flexibility to get both individuals fully insured, if so requested. But we don’t always know when our clients living situation changes. So we advise calling your agent when things change to see if any insurance updates are needed.
*Coverage under standard Auto policies for a vehicle borrowed by an “insured person” typically applies as long as the vehicle is not furnished or available for the regular use of an “insured person”.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.