| I got to thinking this week about families and how | | | | Liability portion of the policy, the insurance company |
| they can be affected by the definitions of words in | | | | has a duty to provide legal defense for the claim and |
| insurance policies. | | | | any lawsuit. But is the child an "insured?" The |
| We all know that the divorce rate in America is very | | | | insurance company could argue that the child spends |
| high. And we know that many divorced people have | | | | more hours per week at your ex-spouse's residence |
| children. We also know that many divorced people | | | | than at yours, and deny coverage to you. That could |
| with children get remarried. | | | | expose you to a large lawsuit settlement, and could |
| The old understanding of what defines a family is | | | | bankrupt you. Take heart, though. There is a court |
| changing constantly. But insurance policy terminology | | | | case in which the Court decided that the children had |
| is not keeping up with that change, and your family | | | | dual residency,and decided that the child was |
| may be affected at claim time. | | | | covered under both homeowners policies. |
| For today, let's look at how family structure can | | | | 3. Your second wife's 22 year-old unmarried daughter |
| affect your homeowner's, condo or renter's insurance | | | | lives with you at your home. She owns a Bichon |
| coverage. | | | | Friese dog that bites the mailman, who sues you. Is |
| Here are scenarios where family structure can be a | | | | the daughter covered? Well, she's a relative, so she's |
| coverage issue: | | | | covered. How about the dog bite lawsuit? |
| | | | Congratulations, you're covered again. The policy |
| 1. You are separated from your spouse. She still lives | | | | states that the dog bite is covered. But, if the |
| in the house you jointly own, but you've taken an | | | | daughter had a boyfriend who stayed with her, no |
| apartment. | | | | coverage for anything the boyfriend does that |
| 2. You and your spouse have joint custody of the | | | | causes a loss. |
| children. | | | | 4. Your elderly parents move in with you. But, they |
| 3. Your second wife's 22 year-old unmarried daughter | | | | are healthy, and financially self-sufficient. They spend |
| lives with you at your home. She owns a Bichon | | | | 7 months each year in their Florida winter home, and |
| Friese dog that bites the mailman, who sues you. | | | | use your address as their legal address. They are not |
| 4. Your elderly parents move in with you. | | | | "in your care." Are they covered under your policy? |
| 5. (Actual case I worked) Your wife's college | | | | Yes, they qualify as "insured" because they are |
| roommate moves from California to Atlanta, looking | | | | relatives. But, in the case of a claim, the insurance |
| for work. You take her in with the understanding | | | | company could argue that they are not "residents." |
| that it's only for three months. In the second month, | | | | 5. (Actual case I worked) Your wife's college |
| the roommate's mother back in California has a | | | | roommate moves from California to Atlanta, looking |
| debilitating stroke, and also moves into your home. | | | | for work. You take her in with the understanding |
| Look with me at the HO-3 All Risk Homeowners | | | | that it's only for three months while she gets a job |
| Policy, the HO-6 Condominium Policy and the HO-4 | | | | and finds an apartment. In the second month, the |
| Renters Insurance Policy, all from the Insurance | | | | roommate's mother back in California has a debilitating |
| Services Office (ISO). The ISO is the standard | | | | stroke, and also moves into your home. The |
| language for nearly all insurance policies. | | | | roommate gets up one morning after you and your |
| First, we have to lay some groundwork by making | | | | wife have left, and gets ready in the bathroom. She |
| sure we all understand some of the word definitions | | | | lit a candle and placed it on the top of the fiberglass |
| in the policies. You might consider this stuff boring, | | | | garden tub. She forgets to blow out the candle and |
| but know this: if the insurance company takes the | | | | leaves for a couple hours, while her wheelchair-bound |
| time to define a particular word, then that word has | | | | mother is at home alone. The candle ignites the |
| a special meaning. If you or your situation don't | | | | fiberglass tub, causing a $135,000 fire. Mom gets out |
| qualify under the definition, you won't be covered. | | | | safely. In this claim, the insurance company actually |
| In all three policies, "Insured" means you and | | | | referred the claim to their Special Investigations Unit |
| residents of your household who are: | | | | (SIU) to try and prove that the homeowners |
| - your relatives: or | | | | committed arson. The insurance company spent over |
| - other persons under the age of 21 and in the care | | | | THREE MONTHS on their investigation, during which |
| of any person named above. | | | | they would not tell the homeowners anything. The |
| "You" and "your" refer to the "named insured" shown | | | | insurer took recorded statements from the |
| in the Declarations and the spouse if a resident of | | | | homeowner, his wife and the roommate...none of |
| the same household. | | | | whom were at home when the fire started. The |
| Definitions for terms like "residents," "household," | | | | insurer never asked for any information from the |
| "relatives," and "in the care of" are not to be found in | | | | mother, who was actually inside the house when the |
| the policies. Consequently, the courts have had a lot | | | | fire started. Further, they would not pay the |
| to say about the definitions of those terms. I could | | | | homeowners any Additional Living Expenses. They |
| list court cases, but I don't want to bore you. If you | | | | denied coverage to the roommate and her mother |
| need to know the specific cases, let me know and I'll | | | | for their personal property destroyed in the fire, |
| get them for you. | | | | because they did not qualify as "insured." The delay |
| Let's take each one of the examples above and | | | | nearly bankrupted the homeowners. I represented |
| expand on them. | | | | the homeowners, and we finally got a settlement for |
| | | | them after months of strenuous negotiation. |
| 1. You are separated from your spouse. She still lives | | | | So, you can see that undefined words in your policy |
| in the house you jointly own, but you've taken an | | | | can cause you headaches, even litigation. Custody of |
| apartment. The policy is in both your names, but you | | | | your children doesn't necessarily mean that they |
| don't live there. You don't qualify as a "resident." If | | | | qualify as residents. Being a resident of a dwelling |
| you have a claim, the insurance company could try to | | | | doesn't automatically qualify a person as a resident of |
| deny coverage to you because you don't live there, | | | | a household for insurance coverage. |
| even during a legal separation. | | | | Do you have a story about how the definition of an |
| 2. You are divorced from your spouse and have joint | | | | insurance term caused you problems, or caused the |
| custody of the children. The children go back and | | | | insurance company to deny your claim? Let's discuss |
| forth between your house and your ex-spouse's | | | | it in the blog. |
| house. One of the children causes a serious injury to | | | | Thanks for reading this posting, and here's a toast to |
| another neighborhood child while at your home. In the | | | | clear definitions! |