Who Are
Insureds?
A pivotal point in every mature parents' life is the
time that their children leave to start their own households.
Among the items that may be overlooked during this time
is whether your grown children have bought their own
insurance.
Most personal insurance policies define insureds to
include the following:
* The person named (shown) on the policy
* The named person's spouse (who lives in the
same residence)
* The other relatives of the named insured who
live at the same residence
The problem with coverage begins when the living
arrangements change.
Related, But Not Residents
Blood is often perceived to be thicker than insurance
contracts, but policy wording prevails. An adult son
or daughter may think that, when a loss happens, coverage
is available from mom or dad's homeowners or auto policy,
but it isn't. Policies are typically clear. A relative
is covered, but only if the relative is a full-time
resident of the named insured's household. Even if the
nonresident child lives next door, her parents' policy
is not going to spread its coverage to take care of
her belongings.
If this fact appears harsh, know that insurance contracts
are meant to handle sources of loss that can be easily
identified. Person A's cars or home is protected by
Person A's auto or homeowner policy. Imagine if that
weren't the case.
Example: The Rabbitfield's home and cars have
been insured by Plausible Fire & Casualty for 20
years. In the last five years, the Rabbitfield's children
have grown and started their own households. Per the
Plausible home and auto policies, the insurance premiums
and two policies that covered the original family's
two cars and one home, now cover the original home and
cars PLUS the following:
* Son Jimmy Rabbitfield's apartment and car
* Daughter Chana Rabbitfield's home and two cars
* Other son Perry's home, seasonal home and two
cars
* Other daughter Bonnie's apartment and car.
Besides covering all of the property, the Rabbitfield
parents' policies ALSO cover everyone's personal legal
liability.
While it might be a bargain for insurance consumers
if a single auto or homeowner policy could be stretched
this far, it's not likely that the insurance industry
could survive the flexibility.
Being Independently Insured
Understandably, insurance is not always a priority
for adult children who are now on their own. In the
beginning, there's often a phase where the kids commute
between "home base" and their new apartment
or home and their property is at both locations. The
new grown-ups typically have few possessions, especially
possessions of high value, and this adds to the likelihood
that insurance is overlooked or seen as unnecessary.
However, even when possessions are few, EVERYONE has
a legal responsibility to handle the damage they accidentally
cause to other people and/or other people's property.
When a child reaches adulthood, they've also reached
the point where they need to get their own insurance.
If an adult child asks you for insurance
advice, give them the name of an insurance professional
you trust to help them get the exact protection they
need.
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