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It’s becoming more common for multi-generational families to move in with one another, creating multifamily homes. It saves money on rent or mortgage and is a way to help out with kids or to care for elderly family members. Having additional people live in your home shouldn’t be a problem for your insurance company, but you may want to tweak your home insurance policy to cover having more people, more personal belongings – and therefore more risk for a bigger loss.
There isn’t a separate insurance policy for multifamily homes. Multifamily home insurance refers to standard home insurance covering more than just a nuclear family of one or two adults and their children. This could include generations of the same family, such as grandparents, aunts and uncles, or siblings living in the same home. It could also include friends, coworkers and their families.
Having multiple generations, extended family or friends stay in your home impacts your risk. Consider reviewing the details of your policy, such as:
Surprisingly, your premiums won’t automatically go up if you have more people living in your home, even if they’re not immediate family.
However, you may want to increase coverage, which will raise your rates. If you’re welcoming additional family members or friends into your home, consider increasing your liability and contents coverage. Liability is often one of the least expensive items on your home insurance policy. For example, if you have a $100,000 liability limit, it could cost as low as $10 to $30 a year to increase it to $300,000 or $500,000.
Increasing your personal contents limit generally costs more than increasing your liability limit. If you increase your contents by $50,000, you could be looking at a $30 to $80 increase in annual premiums.
Aside from standard home insurance exclusions, like normal wear and tear or intentional damage, there isn’t anything excluded specifically for multifamily home insurance. However, what’s not covered ultimately depends on how you adjust your policy to reflect the changes in your household.
For example, if your mother moves in with you and she runs a knitting business from your home, any claim resulting from her business won’t be covered unless you add her home-based business to your policy.
If someone is moving in with a dog that’s on your insurance company’s dangerous breeds list, you’ll need to notify your insurer to avoid a potentially denied claim if the dog causes any damage or bites someone. However, you might still face nonrenewal, which means you’ll need to find a new insurer when your policy term ends.
Also, if you don’t increase your personal contents limits or your new roommates don’t purchase their own renters policy, your policy limits may not cover all damaged items in your household. For example, if you have $100,000 in contents coverage for your items and lose everything in a fire, but your family brought an additional $50,000 worth of personal property, you would only receive a claims check up to the amount on your policy, which is $100,000.
Having multiple or multigenerational families living in your house presents unique challenges on your home insurance. Your standard coverage should still apply, but consider raising your personal liability limits or increasing your personal contents coverage.
And while you’re making changes, it might be a great time to compare home insurance companies to ensure you get the most bang for your buck.
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