When Frank Sinatra originally recorded the song "Love and Marriage" in 1955, it became a huge hit. Yet, like many once-popular notions, those lyrics seem nostalgically quaint in our current world.
Even in this month of Valentine's Day and all things romantic, the world has clearly moved on in its definition of commitment and relationships. Except, it seems, in the personal lines universe, as the forms are clearly living in the last century. For example, here is the applicable policy wording from the current homeowners form: In this policy, "you" and "your" refer to the "named insured" shown in the Declarations and the spouse of a resident of the same household. "We," "us" and "our" refer to the Company providing this insurance.
The ISO Personal Auto policy has the same language, with one interesting additional requirement: You better not only be married, but you better still be living together.
According to the latest U.S. Census Bureau survey, the total percentage of "married" dropped from 70.6% of all households in 1970 to less than half (48.7%) in 2012. Clearly that is still a significant percentage of the marketplace, but the trend is clear. Regardless of the demographic makeup of the remaining households, the key fact for us is that the policies we offer on a daily basis were never designed to fit this new reality "as is."
Who else may be living in an insured's household today that the standard form's language has left on the coverage curb? Here are a few examples:
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A resident non-spouse "significant other"
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Resident children of the "significant other"
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Non-resident spouses and relatives
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Non-relative residents
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Relatives of a former spouse who no longer lives with you
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A former spouse who is still a resident.
Regular readers know I'm a "white unto harvest" guy myself, so gap-filling coverage arrows should be a key part of your 21st century household personal lines quiver. Here are two key homeowner possibilities:
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Carrier underwriting options: Much of the "resident spouse" trap that threatens non-spouse significant others can be erased by adding the significant other as a named insured to the homeowners policy. At what point, if ever, will a carrier be willing to do that? A given time period of stable residency? Although it may appear logical, there is a huge difference in coverage exposure to a carrier for property and liability when an insured acquires a long-term cohabitant. Then why do all of those underwriting worries—and premium considerations—seem to miraculously disappear when the couple invests in a marriage license?
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If a carrier, for whatever valid underwriting reasons refuses the "named insured" option, then the non-owner needs at a minimum an HO-4 (renter's policy) or, if available, the descriptively named HO 04 58: Other Members of Your Household.
If Frank Sinatra were to record today, the song might go something like this:
"Love and marriage, love and marriage,
Have gone the way of the horse and carriage.
Even if you're a Dad or Mother,
It's up to you to wed or other."
And where they go, their insurance should go also. You can't get much more romantic than that.
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