Unmarried couples and co-owners on one policy

If you own a house with a partner you are not married to, or with a friend or sibling, every owner who lives there should be a named insured on the same policy. The standard ISO homeowners form (HO 00 03) treats a spouse and resident relatives as insureds automatically. An unmarried partner is neither, and neither is a friend who owns half the house, so each of them is covered only if the policy names them or the insurer's own form says otherwise.

The wording below comes from the May 2011 edition of the ISO HO-3 hosted by the Maine Bureau of Insurance. Insurers often write their own definitions, and some treat domestic partners and civil union partners like spouses, so the answer for your policy is in your forms and on your declarations page. Get it in writing.

What the standard form says

In the HO-3, "you" and "your" mean the named insured shown in the declarations and the spouse if a resident of the same household. "Insured" adds residents of your household who are your relatives, and others under 21 in your care. A live-in boyfriend, girlfriend or fiancé who is not related to you and is over 21 fits none of those categories. The form does not define "relative" or "spouse" beyond those words, and insurers and courts read them in line with state law.

Several things follow if only one partner is named:

• Liability. If the unnamed partner is sued after a guest is hurt in the house, the policy may not defend or pay for that partner. Your own liability coverage still applies to you, and a suit often names everyone who lives there.
• Belongings. personal property coverage applies to property owned or used by an insured. The unnamed partner's laptop, furniture and clothes may not be covered. The form excludes property of roomers, boarders and tenants who are not related to an insured, and a partner can be treated the same way.
• The building. Coverage A pays for loss to the dwelling, but the form limits payment to an insured to that person's interest at the time of loss. An unnamed co-owner has an interest in the building without being someone the policy owes anything to.
• Payment. Losses are adjusted with "you" and paid to "you" unless someone else is named or legally entitled to the money.

State rules and insurer practice vary on partners, so the practical step is to put everyone's name on the policy rather than rely on a definition.

Co-owners need to be named, not just listed on the deed

Say you and a friend buy a house together and both are on the deed and the mortgage. Fannie Mae's Selling Guide says that for individual one- to four-unit properties, the policy must name all persons holding title as named insureds, so the borrower has full rights under the policy (B7-3-08). Many lenders apply a similar rule to other loans. The policy should match the deed as written, with legal names and a notation if the owners hold title as joint tenants, tenants in common or in some other way. The form of title matters later, because it governs who has rights to the house if one owner dies, and it can affect who the insurer pays after a death. Ask your attorney, not your agent, how to hold title.

Compare the declarations page with the deed whenever either changes:

1. Does every person on the deed appear as a named insured, spelled as on the deed?
2. Does every named insured actually live there? The insurer may ask about owners who do not.
3. Is the mortgagee shown the way the servicer's instructions require?
4. If the owners are an unmarried couple, does the policy say how the insurer treats a partner who leaves, and who receives claim payments?

An owner who does not live in the house, such as a parent who co-signed the mortgage or a sibling who inherited a share, is a different case. The standard form protects people who live in the "residence premises," and an owner who lives elsewhere may be better served by being added as an additional insured or by a different policy form. Insurers handle this differently; the inherited and trust-owned versions of the problem are in insuring an inherited house: what to do in the first 30 days and Insuring a home held in a trust or LLC.

Roommates and tenants

A roommate who rents a room from you is not an insured. The form excludes their belongings from your Coverage C unless they are related to an insured, and your liability coverage does not protect them. They need their own renters policy (HO-4 renters insurance explained: coverage, limits and common gaps), which usually costs far less than a homeowners policy and also pays for their liability to you and others.

If a roommate pays rent, tell your insurer. Renting a room can be allowed, limited or excluded by the insurer. The ISO form has a business exclusion in Section II and treats rental of part of the residence premises in specific ways: renting one room to a roomer or boarder can be handled differently from renting the whole house. If you rent rooms to several people or to short-term guests, you may be moving into landlord or home-sharing territory; see Insuring an Airbnb or other short-term rental and landlord insurance: what a rental property policy covers.

Ask a roommate for evidence of a renters policy at move-in. It protects your property when a roommate causes a fire or a leak, because the roommate's liability coverage can respond to your damages, which your own insurer would otherwise have to pay and then recover.

When the relationship ends

Unmarried partners separate without a divorce decree, and the policy gets no signal. The same problems described in divorce and the homeowners policy apply, with fewer legal tools: any named insured can usually cancel or change the policy, a partner who leaves may stop being a resident, and the deed and mortgage keep both names until someone refinances or deeds out. Put the insurance on the list when you talk through who stays, who pays and what happens to the loan.

Claims fraud and the innocent co-insured

The ISO form says that if an insured intentionally causes a loss, no insured is entitled to coverage for it, and that coverage is void for all insureds if any insured conceals or misrepresents a material fact or commits fraud related to the insurance. Many states have statutes or case law protecting an innocent co-insured, and many insurers include state amendatory endorsements that soften the form. That matters when two unrelated owners share one policy and one of them sets the fire or lies on the claim. Whether the other owner is paid depends on your state and the policy wording. If you are in that position, ask an attorney, and see intentional loss for the term.

A hypothetical

Say Maya and Sam, unmarried, buy a house in both names. The agent writes the policy for Maya only because she handled the application. Two years later a guest slips on the icy steps and sues. The lawyer names both Maya and Sam, since both own the property. Maya has a policy and a defense. Sam's coverage depends on whether the insurer treats him as an insured under its form, and he may find out only after the suit arrives. One line on the application, naming Sam as a second named insured, would have settled it.

Key takeaways

• The standard HO-3 covers a spouse and resident relatives automatically; an unmarried partner or friend is covered only if named or if your insurer's form says otherwise.
• Match the named insureds to the deed, spelled the same way, and give the lender the declarations page.
• A roommate is not an insured and needs a renters policy of their own; tell your insurer if they pay you rent.
• Any named insured can usually cancel or change the policy, so settle who controls it before a breakup.
• After a loss, one owner's fraud or intentional act can affect the other, depending on the policy and state law, so know your state's innocent co-insured rule.