Living together and your insurance policy

2013-08-25 14:00

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When moving in together, insurance may be the last thing on your mind – until you need to claim for your household contents in such an arrangement, writes Neesa Moodley-Isaacs

These days, it’s quite common for couples to choose to live together either before marriage or as an alternative to marriage.

But before you move your belongings into your partner’s home, what are the insurance implications for your household contents in such an arrangement?

1 Full disclosure:

You face an increased risk of having your insurance claim rejected if you fail to disclose to your insurer that you have had a change of address or are keeping your possessions at your partner’s home.

You should also be transparent with your insurer about who owns what in your home.

Peter Atkinson, the national technical portfolio manager of the Financial Intermediaries Association says that determining the extent to which a homeowners’ policy will cover property that does not belong to the policyholder or his or her immediate family presents challenges to insurers due to the variety in modern-living situations.

2 Legal requirements:

Atkinson says: “Insurers must provide cover that is fair, while at the same time addressing the legal requirement of insurable interest, which prohibits someone from taking out insurance cover on property where he or she does not stand to lose financially if the property is damaged, lost or stolen.

The matter is further complicated by the fact that property owned by a person moving on to the premises may not have been catered for in the calculation of the sum insured on the homeowners’ policy.

In some cases, the person moving in may have their own insurance policy, which may or may not pay out in the event of a claim.”

3 Separate insurance policies:

If you are a young couple who each have household-contents insurance and then decide to move in together, you could choose to have two separate insurance policies to cover a combined household’s contents.

However, you have to be wary of duplicating any items under both insurance policies.

You would also be paying two premiums and, in the event of a claim, the insurers would probably have to apply proportionate contribution to prevent the insurance payout being more than the value of the insured items.

“So, both parties could keep their policies, but would have to state that they only want to insure certain items,” says Atkinson.

4 A combined insurance policy:

The easiest solution would be to have one policy that defines both parties as insured persons (co-insured or joint insured) at the outset, provided the insurer is willing to accept such an arrangement.

“In this case, the principle of ‘disclosure of all material facts’ becomes important – the insured must disclose the cohabitation upfront and make sure that the sum insured is sufficient to cover the total property value to prevent disputes at claim stage.

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