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Current census statistics reveal that almost 50 percent of households are occupied by unmarried individuals. If you reside with roommates or a significant other, auto and home insurance traps, in the form of who qualifies as "insureds," may be lurking.

When it comes to auto insurance, the typical policy will define "insureds" as the "named insured" and his or her spouse. In addition, specific coverages, such as liability, underinsured, uninsured and medical payments, may define "insured" more specifically per coverage. Each of these definitions can create issues for unmarried cohabitants.

For example, two college roommates graduate and get jobs in the same city so they decide to continue living together. One has a motorcycle and one has a car, each has insurance for their vehicle. Motorcycle rider is worried about accident injuries, so he has policy limits for all coverages of $250,000 to protect himself if someone hits him and is not well insured. Car driver is not so concerned because he is typically in his car and does not think there is a significant risk that he will be seriously injured. He has policy limits for all coverages of $50,000. The two routinely switch vehicles depending on plans, work schedules and the weather.

Motorcycle driver is in terrible accident while driving the car and the policy limits for the car policy don’t come close to covering his medical bills or lost wages. He looks to his own policy with higher limits for additional help. That policy covers the named insured (him) and his family members for the use of all vehicles so he thinks he is fine. Then he receives a letter from his insurance company denying his claim because his policy also excludes coverage while any insured, namely him, is operating a vehicle that is furnished or available for regular use. The roommates car is just that, so no coverage.

Similar problems can arise when it comes to homeowners insurance. The typical policy will cover the "named insured" and his or her spouse residing in the home, as well as "resident relatives" – those individuals residing in the home who are related to the "named insured" by blood, marriage, adoption or some other relationship status such as guardian for an adult in the home. If you don’t qualify as an "insured," the insurance company will not cover any claim made against you that would be covered if you did qualify as an "insured."

Let’s go back to our recent college graduates living together in the big city. Motorcycle driver bought the condo the two are living and is concerned about liability, so he takes out a policy with limits of $250,000 to protect the structure, the contents and any covered liability he may incur. Car driver is not covered under the policy. Car driver has a dog living in the condo who seriously injures a visiting friend. Friend has no alternative but to file suit because of her medical bills and lost wages. Unfortunately for her, motorcycle driver’s homeowners insurance company denies the claim because the dog is owned by non-covered car driver and car driver has no personal assets to cover the claim.

There are ways to guard against the pitfalls outlined above. In the auto insurance situation, one can look to make sure he or she is adequately protected by their own policy (such as increasing policy limits). Also, some insurance companies may offer riders that offer coverage through another resident’s policy. As for homeowners insurance, each adult can consider their own policy, either homeowners or renters as applicable, to make sure everyone is protected.

The bottom line is that if you live in a household with others you are not legally married to, don’t assume you are covered by policies held by others in the household. If you have any questions about coverage, sit down with an insurance agent to review all relevant policies so you can understand your situation and your options.

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