As the Baby Boomer generation continues to grow older, it’s not uncommon to see aging parents move in with their grown children. Regardless of the reason, this situation is becoming more widespread and could potentially create insurance ramifications.
Let’s look at the language in the standard HO 00 03 homeowners form, a common homeowners policy. The policy defines “insured” to include you and residents of your household who are your relatives. This definition will be helpful as we look to make sure proper coverage exists.
Next, we’ll look at how the policy addresses contents within the home. The form states that “we cover personal property owned or used by an “insured” while it is anywhere in the world.” Since a parent who moves in with us is considered an “insured,” his or her contents will also be covered by the homeowner policy. Therefore, we’re good to go from a property standpoint.
Let’s move onto the personal liability portion of the policy. Provided a claim is made or suit is brought against an “insured” for damages because of bodily injury or property damage caused by an “occurrence” as defined in the policy, the policy will pay up to the limit of liability for which an “insured” is legally liable. For example, if a grandparent takes their grandchild out for ice cream and accidentally trips someone, she would be covered for the resulting bodily injury and/or property damage. Other bodily injury or property damage claims against her may also be covered provided the situation results from an “occurrence” that isn’t excluded (such as the use of motor vehicles, aircraft, watercraft, etc.).
Keep in mind that the policy excludes bodily injury to you or an “insured” as defined in the policy, so if your parent moves in and accidentally injures one of your children while playing with them in the backyard, the policy won’t provide any liability coverage.
So as you can see, if an aging parent moves into their adult children’s home the contents and personal liability are both covered under a homeowner policy. However, if you find yourself in this situation, please contact your insurance agent to discuss any potential gaps in coverage. Not all insurance policies are created equal.