. . . may or may not be just as sweet. I have to sometimes wonder if the people who write insurance policies are just trying to confuse us. I bet they’re sitting back and laughing, “Wait ‘til they try and figure out this one!”

Well, today we’re going to figure out “Insureds.” Let’s start with Named Insured(s) who are the person, people, or entity named on the Declarations page. In the HO3 policy, they’re referred to as “you” or “your.” Spouses are also Named Insureds, even if their name isn’t on the Declarations page, as long as they are a resident of the same household. If the spouse gets ticked off and moves out, and he or she is not named on the Declarations page, then he or she is no longer a Named Insured (or anything else).

Named Insured(s) get the best coverage. How do you qualify to be one of these fabulous people? You have ownership interest in the house or are a spouse of the owner. All Named Insureds must reside at the Residence Premises (the one on the Declarations page).

Insured(s) are people who meet the definition of “Insured,” but are not named on the Declarations page. Page one of the policy has the definitions, and it says Insureds are (1) residents of your household who are your relatives and (2) persons under 21 in your care. Oddly enough, the homeowners policy does not define a relative, but case law generally uses the auto policy definition which is related by blood, marriage, or adoption. Those in your care would be foster children or someone you are legal guardian of, but you haven’t adopted. So now “Insured” will include your children, your unemployed brother-in-law who is living on your couch, and your Great Aunt Mary who moved in. Notice these people must be residing with you, not just visiting. How does someone get to be an “Insured?” They just have to meet the definition.

One of the great coverages for Named Insureds and Insureds is worldwide liability, and that brings us to Additional Insured(s). Additional Insureds are not mentioned in the HO3 policy but are added via the “Additional Insured – Residence Premises” (HO 04 41) endorsement. This endorsement provides Coverage A (Dwelling) and Coverage B (Other Structures) to the Additional Insured. That means the Additional Insured will be named on a claim check for either of these two coverages. So, obviously, the Additional Insured must have ownership interest to qualify for the endorsement. This endorsement also gives the Additional Insured Coverages E and F (Liability and Medical Payments) but only for the “Residence Premises” – not worldwide.

The Additional Insured does not have to be a resident of the home, and typically is not. This is how you provide the correct coverage for a non-resident spouse who is on the deed to the home. Lots of people and entities want to be an Additional Insured on your client’s homeowners policy. Most of them, like a Homeowners Association or Condo Association, want free liability protection. The problem is the “Additional Insured – Residence Premises” (HO 04 41) endorsement provides property coverage also, and the qualifier that must be met is, does the Additional Insured have an ownership interest in the home? If not, they cannot be an Additional Insured. There is no homeowners endorsement that extends only liability coverage to someone else.

Mortgagees are their own category and are given coverage by the mortgagee clause in the HO3 policy. They get property coverage only, no liability coverage, and they must have a registered lien on the home.

One last thing about Insureds. We often get the question, “I’m selling my house. Can you transfer the policy to the new owner?” Also, “Why does it matter that I had a claim two years ago at my house in Michigan? What does that have to do with my new house in Florida?” The public often doesn’t realize that the insurance company underwrites not only the property, but also the Named Insured. The Named Insured’s actions can determine whether there are claims or not. Is the property well maintained? Does the Insured participate in activities that can injure others? Does the Insured have certain pets or invite neighbors over to jump from the trampoline into the pool? It might be the same house that was sold to someone else, but it also might be an entirely different risk.

That’s “Insureds” in a nutshell. Please send us a note or add a comment if there’s a topic you would like covered.

Kathleen Davis, CPCU, CIC, ARM, API

About Kathleen Davis, CPCU, CIC, ARM, API

VP, Customer Relations
Tower Hill Insurance Group

Kat is a 1st Degree Insurance Nerd who started her career at Rollins Burdick Hunter (now AON) in Chicago, 1980. Kat spent 19 years in the brokerage/agency business in Chicago, Los Angeles, and Ft. Myers, FL. She was an Account Manager for most of this time handling retail and service businesses, and specializing in construction sub-contractors. Along the way she picked up her ARM, CPCU, API, and CIC designations (they were just lying around). Kat was hired by Tower Hill Insurance Group in 1999 to start their Training Department where she wrote and presented employee training and agency CE classes. In 2006 Kat moved to Underwriting to finally use her CPCU and picked up all kinds of great stories. She says: “Insurance is a laugh a minute, and I can’t understand why some people don’t see it.” In 2013, Kat was reassigned to Administration to assist Tower Hill’s Customer Service Department.