Sounds pretty straightforward, but it is not. The named insured is the person(s) shown on the declarations page of the policy. The person(s) listed here should be the same as recorded on the deed. Named on the deed and on the homeowner policy it’s a question you need to ask yourself when a property is left to you and your siblings.
Anyone recorded on a deed should be listed on the insurance policy, avoid doing this at your own peril.
It gets tricky when you have more than one person owning a home. Some homes are owned in part by people, often brothers and sisters, who may live elsewhere. They’re called “non-resident owners.” Here is a fictional example of what could go wrong and what should be done.
Robert Doe married his childhood sweetheart, Debbie, in 1930. They bought a modest home in New Bedford and raised three sons and a daughter (Jane). The sons grew up and left home to live and work elsewhere – Joe to Boston, Jim to Denver and John to San Diego. Jane never married and lived at home all her life.
When Robert died in 1980, he left the house to his widow, and upon her death, to the children. Jane continued to live there and take care of her mother. At this point, the ownership changed from Robert and Debbie to Debbie alone. The Homeowner’s policy was amended accordingly.
Debbie died in 1990 at age 85. When the Homeowner’s policy was due to renew, Jane called her agent and had the renewal put in her name since “she had always lived there, paid all the bills every year, and believed it was now her home”.
She never had attorney probate the estate of either parent, because the only asset was the small house of low value, and she did not want to pay a lawyer.
Two years ago Jane invited a neighbor to visit her. The neighbor fell on Jane’s icy front stairs and suffered severe injuries. Jane was sued and contacted her Homeowner’s company who said the demand was below her limit of coverage and she had nothing to worry about.
Jane soon received calls from her three brothers who were also sued. They asked her to notify the insurance company that they were being sued. The insurance company politely declined to defend them because their names appeared nowhere on the policy.
Next, the brothers sued Jane.
Meanwhile, a fire at home caused a total loss. Jane, in her mid 70’s, decided not to rebuild the house, and instead accepted an Actual Cash Value settlement from the insurance company. She then moved into a retirement home on Cape Cod. Then the brothers sued Jane again to recover their share of the property settlement.
Jane should have had the estate of both parents probated.
Next, she should have added the names of the three brothers to her Homeowner’s policy to cover them for property claims on the house, and for liability claims, since they were non-resident co-owners of the property. The cost to do this is zero. It’s free.
So please take a good look at the ownership of your home, and if anything seems questionable, discuss it with your insurance agent or your attorney, as the case may call for. Contact me if you’d like I’d be happy to discuss.