Should we have been covered? Home insurance/flood

[thunt]

My son and I have occupied the suite of my parents' home for the last 7 years. I paid $200 a month towards
utilities etc but have never had a rental agreement or anything of that sort. It's actually the same home I grew up in. They recently moved out of town and rented the upstairs of thw home out but nothing changed as far as my and my sons living situation. Last summer we had a bad flood where we had to have all floors replaced and it was put under insurance - my parents have had the same coverage through the same broker for over 20 years and this was the first claim ever made. For over 3 months we were unable to live in the house, and I ended up putting out over 3g on hotels so we had a place to stay. Since I wasnt technically a renter and I'm immediate family to the homeowners I'm not sure why their insurance didnt help us for accommodations at all . Does this seem right? If not what can I do about it? Tia

 

[jesusislord007]

@thunt Yes it does seem right in most circumstances.

Understand no one can truly answer that without seeing your parents’ policy, but let me give you the high level of how this is usually structured.

A homeowners policy for one’s primary residents will usually provide insurance for the individuals named on the policy (your parents) and their family members that live with them. These additional insureds (you and your son) can be considered unnamed insureds as you were not named on the policy, but coverage was extended to you through the terms of the policy.

So for the period of time your parents lived upstairs while you were downstairs you and your son would likely have been insured under your parents’ policy.

This all likely changed the second your parents moved out, and when renters moved in it was even more likely to change.

When someone owns a property they do not live in, the homeowners policy that covers it is often not the same type of policy that insures their current residence. The actual policy# and term may not have changed, but the coverage provided likely did.

Once your parents moved out you were likely no longer considered unnamed insureds as described above. The extension to you only existed while you lived with them. In most policies this was the point in time you likely needed to obtain contents insurance for yourself. This is generally sold as tenants or renters insurance. But don’t let the name fool you, It is effectively just a home insurance policy for people who have 0 financial interest in the dwelling they live in and thus only have to cover their own interests (contents, loss of use, and liability).

A home that the owners do not occupy, but others do, is often written under a rental policy. This can occur whether the people living in it are contracted tenants or not. Quite simply, the primary trigger for this policy type is: people live in a home and they are not the owners. What matters here is this is most likely the policy your parents currently have and these policies provide 0 coverage for the occupants in any capacity and the policy likely doesn’t even have loss of use on it anymore.

Note: each policy may have different terms for who is covered and insurers will have different criteria to determine when a policy should be written as a rental or not. Further, brokers and agents may be able to persuade underwriters to write a risk a particular way that could have continued to provide insurance in this scenario. It is highly unlikely, but not impossible. It also probably wouldn’t happen without pressure from your parents to do so.

TL;DR - Based on two primary concepts:

1. the description of who is insured under a home insurance policy, and
2. it is highly likely the home is insured by a rented home policy,

I would say it is almost certain you were not covered by your parents’ policy. You likely needed tenant’s insurance the second they moved out; regardless of if you considered yourself a renter or not as that is not what determines your need for insurance.