You can’t insure it if you don’t own
it!
Sounds
logical – right? Well, you’d be
surprised! Many people think that if a
family member owns something, that “thing” (car, house, whatever) can be
insured by the family or parents or children.
NO, NO, NO!
You must
have an insurable interest in the “thing” to be insured (Otherwise
people could insure other people’s “stuff” and cause damage to that item and
collect $$$!). Your (not your kid, not
your parents) name must appear on the deed or title.
I often hear
people say I put my son or daughter’s car on my policy because we’re family and
they live here. Doesn’t matter! If the car is titled to the son or daughter,
then the son/daughter must insure it on an insurance policy in THEIR name (not
the parents).
Or someone
passes away and the house transfers to a child (or anyone else) and that person
leaves the homeowner insurance in the deceased person's name…again, NO, NO,
NO! If the name on the deed is different
than the name of the policy holder, there is NO insurance so basically, it’s a
waste of money since claims would be denied (and after all, that’s the whole
point of insurance – right?).
Another
popular trend is putting your home in a Trust – which transfers the deed to the
Trust – now the Trust owns the home – NOT you.
This can be addressed simply by adding the name of the Trust to your
homeowner policy.
The above
may sound extreme, and if there was a minor loss, the insurance company might not notice the owner. But if you
have a major loss (fire, car totaled, lawsuit for damage or injury), the
insurance company would see you don’t own the house, car etc., and deny the
claim! Then you could be out THOUSANDS
of dollars!
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