The Pitfalls of Shared accommodation – It seems there are more people living together in a variety of arrangements than ever before. Adult children continuing to live with their parents. Students sharing an apartment. Retirees sharing a house. Enterprising people who pool their money to rent or buy just about anything to help with expenses. Current real estate values, especially in the large urban centres, have forced people to get creative with their living arrangements.
These situations, however, can lead to problems. Consider the automobile policy. Your adult son (who does not own his own car) moves back home and asks to borrow your car. Adding him to your policy got overlooked and now he has a serious crash. What happens next depends on many factors which all need to be carefully considered. Insurers do require all household members who will drive the insured vehicle, be properly listed on the policy. This also helps preserve driving record histories (for those that might be between vehicles). Occasionally, a driver might have a record such that they are heavily rated or possibly uninsurable. Best to deal with it up front with your insurance company and not find out when your serious auto crash claim gets denied!
Similar sticky situations can arise with home insurance. All interests need to be properly documented and insured for both liability and loss or damage to property. Consider the following situations –
– Homeowner A invites friend B to move in and help with expenses. B never thinks to arrange own insurance for their liability or personal property. House is broken into and B loses $20,000 of sound and computer equipment – not insured. Or, while cooking, B starts a serious fire. The home insurer for A pays out $50,000 to A and may sue B for the damage they caused.
– Three friends A, B & C rent an apartment and for convenience the lease and insurance is only in the name of A. Only A has the benefit of the insurance policy. B sustains a $5000 theft of computers and musical instruments. Not insured. Similarly, a lawsuit against C for running into a child while riding their a bike leaves C uninsured. Or following a party a guest is injured who sues A, B & C. A is insured, but not B & C. In a situation such as this, ideally A, B & C each need their own policy. In so doing, these policies can be “taken with them” when there is a move to a new location.
– Or the worst case when insurance gets overlooked. Friends rent an entire house. Thinking their personal property to be of insignificant value, they forego insurance. The house is burned to the ground. Homeowner and their insurance company will sue the tenants for the entire amount of the damage caused – good bye savings and future earnings!
– And finally, A & B share a house and have even arranged an insurance policy in both names. B decides to leave and moves out. Several months later, the home is broken into and over $20,000 of goods stolen. When the claim cheque arrives still in both names, A has to figure out how to track down B in the hopes they will sign the claim cheque!
Life is not without risk. There is so much of it that can be mitigated or reduced with a bit of planning and discussion. When in doubt, give us a call. We’re on your side!