The average American household looks very different today than it did just a few decades ago.
Longer life expectancies, the high cost of housing and the rise of the “boomerang” kids have brought back a trend that was thought to have become a thing of the past: multigenerational households. According to Pew Research Center, the percentage of Americans living in multigenerational households rose from 12% in 1980 to 20% in 2016, a level not seen since the 1950s.
An increasing number of families are recognizing both the economic and intangible benefits of having three generations or more living under the same roof. Grandparents get to be closer to their grandchildren, and members of the “sandwich generation” can more easily supervise the health and well-being of their aging parents and their young children. But when living arrangements become more complicated, so, too, does the family’s insurance needs. Here’s a look at four areas to consider.
Larger family units bring up auto insurance coverage questions, especially if several family members may be driving one car or sharing multiple vehicles.
The laws governing auto insurance vary from state to state, but in general, drivers who live in your household and may get behind the wheel of your car should be listed on your policy. Typically, insurance coverage follows the vehicle, not the driver. What this means is that if an adult borrows your car, your insurance will be the primary coverage for damages caused by your vehicle in the event of an accident.
If certain family members have a bad driving record, a suspended license or too many claims, your insurance carrier may add a driver exclusion to your policy. A driver exclusion means if that driver uses your car and has an accident, your insurance policy will not cover liability or vehicle damage. Any excluded drivers should have their own auto insurance coverage and not be permitted to use your car.
When your household changes, so should your insurance coverage. Let your insurance carrier know about the new arrangements. It might be a good time to shop around and ensure you’re getting the coverage you need at the most affordable price.
No matter where you live, make sure your insurance reflects your unique household situation. Think of it as an extra layer of protection for the people who matter most to you.
Home and liability insurance
Accommodating several generations in one home may necessitate moving into a larger home, building on an addition or making upgrades to the property.
Whether you remodel to add an in-law suite to the home or just add some safety and accessibility features to your existing square footage, you’ll want to revisit your homeowners insurance. Insurance companies base the coverage limits in a homeowners insurance policy — in part — on the size and age of the house as well as the fixtures in it. When you remodel or make significant changes that increase the value of the home, you need to communicate those changes to your insurance provider. Otherwise, you could find yourself underinsured in the event of a fire or other loss
Another issue you might not consider is family pets. If a new family member comes with a dog, make sure you let your insurance carrier know. According to the insurance research highlighted by the American Veterinary Medical Association, dog bites and related injuries accounted for nearly one-third of all homeowner’s liability claim dollars paid out in 2018, costing insurance carriers approximately $675 million. In fact, some insurance carriers may increase your premiums, exclude coverage for dog bites or refuse to sell you homeowners insurance coverage at all if the breed is considered dangerous.
Personal property coverage
A homeowners insurance policy generally covers the personal property of the homeowner and family. This includes things like furniture, appliances, clothing and other items. However, many insurance policies limit the coverage for certain high-value objects, such as jewelry, silverware, electronics, antiques, artwork, firearms and musical instruments.
Review your homeowner’s policy or check with your insurance carrier to find out what kinds of property are limited in coverage and consider whether your existing limits are enough to cover a loss due to fire or theft. Your insurance carrier may be able to sell you a rider to cover property that is worth more than the per-item limit of your existing policy.
Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.
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