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Homeowners Insurance – Your Children Might Not Be Covered!

There are no definitions of terms such as “resident,” “family,” “relative,” and “in the care” in the policies. Thus, the courts had a lot to say about the definitions of those terms. I can list court cases, but I don’t want to bore them. If you need to know the specific cases, please let me know and I will get it for you.

Let’s take each of the examples above and expand on them.

  1. You are separated from your wife. You still live in the house you own together, but you took an apartment. Politics is in both names, but you don’t live there. You do not qualify as a “resident”. If you have a claim, the insurance company may try to deny you coverage because you don’t live there, even during a legal separation.
  2. You are divorced from your spouse and have joint custody of the children. Kids move back and forth between your house and your ex’s. One child seriously injures another child in the neighborhood while in your home. In the liability portion of the policy, the insurance company has a duty to provide legal defense for the claim and any lawsuit. But is the child “insured”? The insurance company could argue that the child spends more hours per week at your ex-spouse’s place of residence than where you live, and refuse coverage for you. This could expose you to settling a major lawsuit and could lead to bankruptcy. Cheer up though. There is a court case in which the court decided that the children had double accommodation,It determined that the child is covered under the homeowners policies.
  3. Your second unmarried 22-year-old daughter lives with you in your house. She owns a Bichon Friese that bites the postman who is suing you. Is the daughter covered? Well, it’s close, so it’s covered. How about a dog bite suit? Congratulations, you’ve been covered again. The policy states that dog bites are covered. But, if the daughter has a friend who stays with her, there is no coverage for anything the friend does that causes a loss.
  4. Your elderly parents are moving in with you. But they are healthy and financially self-sufficient. They spend 7 months each year in their winter home in Florida, and use your address as their legal address. They are not ‘in your care’. Are they covered under your policy? Yes, they are insured because they are relatives. But in the event of a claim, the insurance company can argue that they are not “residents”.
  5. (Actual Case You Worked) Your roommate is moving from California to Atlanta in search of work. You take it with the understanding that it’s only for three months while you get a job and find an apartment. In the second month, your California roommate’s mother has a debilitating stroke, and she’s also moving into your house. The roommate wakes up one morning after you and your wife have left, and gets ready to go to the bathroom. Light a candle and place it on top of the fiberglass garden basin. She forgets to blow out the candle and leaves for a few hours, while her wheelchair-bound mother is home alone. The candle ignited the fiberglass tub, causing a fire worth $135,000. Mom goes out safely. In this allegation, the insurance company actually referred the claim to the Special Investigations Unit (SIU) to try and prove that the homeowners committed arson. The insurance company spent more than three months on its investigation, during which time they did not tell the homeowners anything. The insurance company took recorded data from the homeowner, his wife and roommate…None of them were at home when the fire started. The insurance company never asked for any information from the mother, who was already inside the house when the fire started. Furthermore, they will not pay the homeowners any additional living expenses. They denied the roommate and her mother’s coverage of their personal belongings destroyed in the fire, because they were not eligible for “insurance.” The delay nearly bankrupted homeowners. I represented the homeowners, and we finally got a settlement for them after months of hard negotiations.

So, you can see that unspecified words in your policy can cause you headaches, and even litigation. Custody of your children does not necessarily mean that they qualify as residents. Being a resident of a dwelling does not automatically qualify a person as a household resident for insurance coverage.

Do you have a story about how the definition of the term insurance caused you problems, or made the insurance company deny your claim? Let’s discuss it in the blog.

Thanks for reading this post, here’s a clear toast for the definitions!

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