Co-Ownership and Liability Insurance

[starfish]

I am on a quit claim deed as joint owners with my two brothers, one sister and mother. My mother has homeowners insurance that includes liability. It only has her name and her husband's name on it. Her husband is not on the deed but has a life estate named in the will. Does her liability insurance cover myself, brothers and sister? Or must we purchase that on our own? Does her husband need to have his name on the insurance policy since he is not an owner? Only she and her husband live in the home in Connecticut. Myself and siblings live in other states. Any assistance would be greatly appreciated.

[SChinFChin]

If something happened on that property, everyone on the deed would be sued. In these cases, if your name is not on the policy, the usual procedure is to "endorse" the policy to name the others on the deed but not on the policy as "additional insureds".

As an example, I carried a "general liabilty" policy on my business, but in the event certain things happened, my landlord can also be sued along with me, and he asked that he be included as an "addtional insured", and also to make sure that this remains so, a certificate of insurance was issued to him, with new copies issued on each renewal, notifying him of continuing coverage.

Sure enough, something did happen on that property, had a fire at my business, an employee was injured, and he sued the landlord. This is because under the workman's compensation laws of NY, he cannot sue his employer, me, but he can sue anyone except the employer. Whether he had grounds to do so or not is another issue, and being an insured, the insurance company will hire lawyers to defend my landlord, whereas if he's not, he has to hire his own.

If you are also a property owner yourself, i.e., you or your siblings each own your own homes, carry an "umbrella policy" for yourself, and this policy should also name all the properties your name is on, including the one discussed here, plus all the cars that you own. This way, if your mom's insurance prove inadequate, you're covered on your share also, and get lawyers bills paid.

Keep in mind also that if you yourself got sued, on something not having anything to do with your mom's home, as joint tenants, a lein can be placed on her home as well. As joint tenants, there is no such thing as "your portion", theoritically risking the entire home, so an umbrella would be as much to to her benefit as well as yours.

I had my name on the deed for a condo that my sister lives in out of state, and I included that under the umbrella in the event something happened and I get sued, in addition to being an additional insured on her policy.

[starfish]

Thanks SChinFChin!

I called my insurance company and they said they cannot add the secondary property to the umbrella because there are other joint owners on the property (4 more) and they all use different insurance companies. He said, if it were my property alone, he could add it onto my umbrella policy.

We added our names onto my mom's homeowner's policy, she has $500,000 in liability insurance (which is the limit on that policy). We cannot be added on to her umbrella policy because that is a personal umbrella.

None of the kids are comfortable with only $500,000 in liability insurance. Does anyone know if there is another way that each one of us can be insured up to 1 million without having to take out an entirely new policy?

[SChinFChin]

Thanks SChinFChin!

I called my insurance company and they said they cannot add the secondary property to the umbrella because there are other joint owners on the property (4 more) and they all use different insurance companies. He said, if it were my property alone, he could add it onto my umbrella policy.

We added our names onto my mom's homeowner's policy, she has $500,000 in liability insurance (which is the limit on that policy). We cannot be added on to her umbrella policy because that is a personal umbrella.

None of the kids are comfortable with only $500,000 in liability insurance. Does anyone know if there is another way that each one of us can be insured up to 1 million without having to take out an entirely new policy?

Then get a quote for increasing your mom's to a million, and see what the increment is. You'll find it's usually NOT double, but considerably less.

Make an arrangement to pro rate the premiums amongst you kids, probably the fairest way, the kids pay for the additional premium over the $500,000. It makes for a little more complication on your end, but perfectly doable.

If you kids have other assets, increase coverage on the remainder, your home cars etc., maybe even an umbrella just for these, as something happening, like a serious car accident where you are at fault will put my mom's home at considerable risk with joint tenancy. You'll probably should look up how large the "homestead exemption" is in your state as well, since it's your mom's own home.

Also check with a local insurance agent to see if other companies will offer the umbrella policy that your insurance company will not offer. I've gotten umbrellas where other people are on the deed. In fact, through the years, my agent had shifted my policy to different companies as underwriting standards changed, and what is not acceptable in one company is acceptable at others, or what is not acceptable this year was acceptable last year.

Also, at one point, I had to change the all underlying policies to one company as this was the only way they'll do the umbrella.

[starfish]

Thanks again SchinFChin!

My mom cannot increase her homeowners policy to 1 million. $500,000 is the max and then you must go to an umbrella. So she has 1 million coverage for herself and the kids have $500,000 only. We cannot go on her umbrella policy.

I do not want to use a different insurance company to do my umbrella as I like to keep both policies with the same insurance company and we have been with this agent for many years and like him very much. If sued you start with one set of lawyers and then you must change lawyers when you get to the umbrella part of the lawsuit.

I don't know much about homestead exemptions. I thought they were allowable in certain states only. I don't think Ct. is one of them. I could be completely wrong.

Your ideas are good ones and I will check into them.

Do you know anything about deeds? My mother's husband has a life estate in the property. There are no provisions about the life estate on the deed but there are several on the will. I am not sure you can put conditions in the will that are not on the deed, as we signed the deed and later we learned about the provisions in the will that are very unfavorable to the kids, such as us having to be responsible for all expenses on the home and that we cannot go to a court for any reason to evict the life tenant for any reason.