February 8, 2017

Cohabiting May Require an Insurance Merger

Falling in love in your later years can make you feel like a senior in high school all over again. But as you embrace the experience, you need to remember that you are an adult with responsibilities–such as a home, a car and perhaps a family–not a carefree teenager. If you and your new love (or even a close companion or friend) decide to move in together, the practicalities of the move go beyond deciding whose toaster to keep.

“When you merge two households, it’s a good time to discuss with your partner the implications for your insurance policies and your legal situation,” says Loretta Worters, vice president of communications for the Insurance Information Institute (III). “You may want to talk to an attorney and draft new wills or at least review them, especially if there are beneficiaries involved.”

Worters says your insurance needs vary according to the type of policy and who owns the asset being insured. In addition, your insurance requirements could be different if you decide to cohabitate with or marry your partner, or if your living arrangements include several non-related adults.

Protecting Your Home

Your homeowners insurance needs depend in part on who owns the property.

“In ‘The Golden Girls’ TV show just one of the women owned that house, so she would have had homeowners insurance while the others had to buy renter’s insurance to cover their personal belongings and their personal liability issues,” says Worters.

What this means for you is that, “If you’re the sole owner you can ask your insurance company to add another occupant to your policy to cover their belongings, but if the insurance company won’t do that, you need to make sure your partner or other residents have renter’s insurance,” explains Worters.

If you own a property jointly, some companies will write a homeowners insurance policy even if the owners are unmarried, adds Worters.

If you rent your home and are cohabiting, Worters recommends shopping around for renter’s insurance.

“You might be able to find a company that would cover both residents that will save you money,” says Worters, “but some insurance companies will make each person buy a separate policy if you’re not married.”

When selecting renter’s insurance, it’s very important to make sure that each person in the household has coverage for their personal belongings, as well as shared possessions, and that liability coverage and coverage for living expenses are included, just in case they have to move out temporarily.

Keep in mind that if you have a joint homeowners or renter’s insurance policy and one partner passes away, you’ll have to notify the company of the change, advises Worters. “Make sure the billing and contact information is kept up-to-date.”

Protecting Your Car

Married couples will typically receive a discount if they insure more than one car under the same car insurance policy. Unmarried partners don’t always have that advantage, although some insurance companies will write coverage for them.

Once again, it pays to shop around, says Worters, because some insurance companies provide a discount to unmarried couples in a long-term relationship and some don’t.

“If you each own a car, you can have separate insurance policies and that could be cheaper than combining your car insurance,” she says. “But sometimes you can get a discount if you insure two cars and two drivers with one policy. It depends on the insurance company and it depends on whether you are both good drivers. If one of you is a bad driver, that could send the rates higher for both of you.”

If you share a car or even if you each own your own car, you can often list someone who lives in your home as a second driver, even if they are not on the title to the car, Worters says.

“Another option is to transfer the title to shared ownership, but there has to be an understanding between the partners about what happens to the car if someone passes away,” says Worters. “Sometimes family members assume they will inherit a car from a relative, so that needs to be addressed.”

Keep in mind that as older drivers, you may be able to get a discount if you take a driver refresher course.

Adding an Umbrella Policy

When reviewing your insurance, Worters recommends looking into an umbrella insurance policy for additional coverage above what your home, auto or even boat insurance provides. She says the extra liability coverage can be valuable, particularly if you have a lot of assets. And you may have more assets than you realize, particularly in retirement funds or from selling one home to move into together.

If you move in with someone, remember to get all your paperwork in order. The last thing you want is for your partner or you to end up without insurance coverage, or without a home or a car because those things are going to a different beneficiary, says Worters.

Consult an insurance expert and an attorney to review your decisions so that you can go back to acting like a teenager again.

Disclaimer: The information presented is intended to be informational in nature, may not be current, and is subject to change without notice. Please contact your agent or carrier for your specific coverage implications and, if you need legal advice, please contact an attorney directly.

READ MORE: How Your Relationship Status Can Affect Your Insurance

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