Liability Coverage Question

[FBN]

I am trustee of a family trust that holds title to a single family home. My brother and I are beneficiaries of the trust. My brother lives there with his girlfriend. The house is insured with a standard home owner policy with the insured being the trust and my brother as an additional insured. There is 500K of personal liability coverage on the policy. I am concerned if the girlfriend had an accident on the property and filed a claim or lawsuit against the trust or me as trustee. Will the policy cover such a situation? She is not a tenant since there is no lease in place.

 

[kristophmarsh]

It would certainly be wise to have you, your brother and the Trust listed as insured under the policy.

Regarding liability claims instigated by your girlfriend, it really depends on the specific wording of your policy. For arguments sake, I picked up a copy of a policy in my local market to see what it says. The liability section specifically excludes:

"claims made by you, your family or any person ordinarily residing with you or with whom you normally reside"

Your family is defined as "any relative by blood, marriage or adoption or someone with de-facto partner status, who lives permanently with you."

So in this example, liability claims made by your girlfriend wouldn't be covered.

In fact, the definition of insured is quite broad and includes the following:

• Your spouse, partner or de facto;
• Your parents, parents-in-law, grandparents;
• Your children, grandchildren, brothers and sisters, including their respective spouse, partner or de facto;
• The children, parents, parents-in-law, grandparents, grandchildren, brothers and sisters of a spouse, partner or de facto; and
• People who provide care or services to you

Therefore, provided that your girlfriend satisfies the legal definition of "de facto", she'd actually be considered an insured under this policy.

I'll just reiterate that this is an example only. Best to speak to your local broker or underwriter for advice on your particular circumstances. In any case, hope this points you in the right direction.

 

[BigIVU]

ISO has a "significant other" endorsement. Ask the insurer about it or options they offer?