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Insurance for the Newly Engaged and Cohabitants

Obviously, it’s doubtful that anybody has ever called their insurer before their mother after getting engaged. However, such life changes warrant significant attention to your insurance policies, and getting engaged and/or other commitment steps made with partners are no exception.

Many people are likely walking around with a newly engaged glow right now too, making it more important than ever to learn about what marriage means to some insurance products before you even set a date. According to Modern Bride magazine, November and December produce 26% of marriage proposals. Although it may be all about rings and announcements right now, those newly engaged will soon learn how engagement and even cohabitation affects practically all insurance policies.

We’re Getting Married!

If you just got engaged or are moving in with a partner, you’ll have to make changes no matter how “un-official” such steps may seem compared to marriage. No marriage certificate doesn’t mean a couple is “free” of each other when it comes to some issues. However, that doesn’t mean couples are always treated as one entity either. Though there have been some major changes to other types of insurance in order to accommodate contemporary policyholders, most auto and home insurance regulations have yet to catch up.

So where do you begin? Shared house keys may come before engagement rings, wedding dresses, or any other sequence, but we’ll start with diamonds since they’re a dear friend of mine.

Depending on the value of the ring, it should be covered on a homeowners or renters insurance policy in case it’s lost or stolen. The best way to do this is to schedule it as an addendum, as basic homeowners policies offer very little coverage for jewelry, and sometimes none. You can also buy an inland marine policy, also known as a floating articles policy. This type of policy would cover situations like when Kim Kardashian lost a diamond earring in the ocean — where it truly became a “floating article.”

As soon as you buy wedding rings, they should be scheduled as well. If you don’t live with your fiancé, the ring should be scheduled under the owner’s policy. If the ring’s owner still lives with parents, it should be scheduled under the parent’s property policy.

His and Hers — or Not?

If you live together, you may assume you can insure rings and any other property — both shared and owned prior to living together — under one property policy. This is only true if you’re married though. Even though 12% of unmarried couples lived together according to 2011 data from the U.S. Census Bureau, up 25% from a decade earlier, many insurers still haven’t adjusted related guidelines.

Let’s say a couple rents their home. Even though both of them are listed on the lease, insurers still require both to have their own renters insurance policies if they’re not married. That may seem complicated and could lead to taking inventory separately as though you’re about to break up. To ensure coverage though, it’s essential to do.

I’ve heard unmarried couples who live together scoff at this idea and say they’ll just buy one renters insurance policy. However, being unmarried and attempting to be on the same property policy can cause a mess as lines blur for what’s his and what’s hers. The logic behind this requires thinking with your head and not your heart.

Let’s say an unmarried couple, Kanye and Kim, aren’t married but live together. Whether engaged or not is irrelevant. Kanye has $20K worth of personal property (clothes, furniture, etc.) and Kim has $20K worth. They want renters insurance, but can’t be listed on one renters insurance policy together because they’re not married. Insurers don’t consider the couple’s personal property jointly owned — it’s technically not from a legal standpoint either.

But Kanye and Kim decide they don’t want to pay two renters insurance policy premiums, so they add the value of their belongings together and decide Kim will buy a policy in her name. She buys a policy with $40K in personal property coverage.

Then their rented home burns to the ground, resulting in a complete loss. When Kim makes a claim, the claims check would be made out to her only. This means Kim is the one with all the compensation for the loss — which included Kanye’s property. Technically, Kanye just lost everything, and it’s Kim who has the money to replace Kanye’s property. That may be fine in most situations (hopefully). However, if Kim decides she likes $40K better than she does Kanye, she can take the money and run. If she did that, Kanye would have absolutely no legal stake in that compensation without legal ground to stand on. (Then again, Kanye has made it clear he’s not broke).

In addition to property loss issues, there’s another reason they should each buy policies under their own name. If Kanye has a policy in his name only, Kim has no personal liability coverage for situations that result in some kind of injury.

Mi Casa Es Su Casa

If your partner is moving in with you, you may feel this way while all warm and fuzzy inside. Insurers don’t though. There’s not any kind of “but we’re in love” rider to add to insurance policies either.

What if Kanye owns his home and Kim moves in? Unless Kanye lists her on the property deed, Kim can’t be listed on the homeowners insurance policy. Kim is technically a tenant and needs her own renters insurance policy if she wants coverage for her personal property. If she moves everything she owns into Kanye’s home and it burns to the ground, again, that couple better trust each other. If not, Kim could be left without any belongings or a home because she doesn’t have any insurance to cover her loss.

“Baby You Can Drive My Car”

Perhaps more accurately: “If you have a decent driving record, and if I don’t essentially ‘ban’ you from doing so on account of my auto insurer’s rates and guidelines. Maybe when we’re married.”

Auto insurance in such situations can be especially troubling depending on the state you live in. Similarly to being unable to “share” property and property policies, you face some hurdles to jump through when it comes to auto insurance. Failing to understand them or ignoring them can easily result in expenses much larger than all of Liz Taylor’s weddings combined.

Some couples make the mistake of moving in together for economic convenience. Kim stays at Kanye’s house all the time, so they feel it’s pointless to be making two payments on everything. They think they may save money, but sometimes the exact opposite happens. All states and insurers have different insurance regulations regarding auto insurance for domestic partners. Even though each person’s vehicles can’t be on the same policy, most states require full disclosure about household residents and require them to be listed. Insurers think if you live in the same house that you have access to the other person’s vehicles, meaning more risks. Like property insurance, Kanye and Kim would need separate auto insurance policies if not married, but different than property policies, they’d have to be listed on each other’s policy. Most states and insurers would require them both to be listed one of the following ways:

  • Kim could list Kanye (and vice versa) as a non-driver. The catch? Non-drivers are rated on policies, so if either one has a bad record, it affects rates.
  • The other choice is to list your partner as an excluded driver. Excluded drivers aren’t rated on policies, but if an excluded driver drove the car insured by the policy listing them as a excluded driver, claims wouldn’t be covered if there was an accident.
  • They could be listed as drivers on each other’s policy, but their background would be a premium factor. The drawback obviously is basically paying for two policies which cover and rate them the same as if they were married with one policy.

Are Insurers Getting Romantic?

More like realistic and keeping up with the times.

A lot of larger companies first began making the foray into “equal opportunity partnerships” — regardless of whether a heterosexual or same-sex couple — with health insurance. A surprising amount of employers are now allowing employees to add domestic partners on to their health insurance just as they would a married couple. That’s a relatively easy process too — it usually just requires proof of residency. Even some life insurance benefits have developed aspects allowing benefits to extend to domestic partners in the exact same way they would spouses.

With such changes affecting life and health insurance, it may not be long before this makes its way to auto insurance. There have been some monumental changes in the auto insurance industry regarding domestic partnerships and same-sex couples, so there are definitely glimmers of hope.

For example, in 2011, two of the biggest auto insurers in the country, Allstate and Esurance, granted marriage discounts to be applied to same-sex couples in states allowing same-sex marriage. Esurance was ahead of the times and may pioneer changes for domestic partners by offering the same savings to domestic partners as they would a married couple. Better yet, Esurance even grants a multi-policy discount when domestic partners have the same garaging address. Married couples usually see discounts around 10% according to the Insurance Information Institute, and some companies, such as Rockingham Insurance, offer a “New Family Discount,” providing newlyweds and those with new children an additional discount on top of already reduced savings resulting simply from being married.

It’s still a bit tricky with property policies though due to the property ownership problem, but at least some changes could be coming.

The best thing any couple can do is play by insurers’ rules. If there’s a loss, and the insurer discovers you lived together and failed to disclose it, you’ll probably face a denied claim or a much smaller payout than anticipated. Severe situations can even result in insurance fraud charges.

Not only is there not a “but we’re in love!” rider for insurance policies, there’s also not a “But that (expletive) broke my heart and took everything!” exclusion either. Although different rules may govern our hearts when we’re in love, insurers don’t make exceptions based upon feelings, and neither does the law.

Follow Desiree on Twitter @DesireeBaughman

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