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My parents don't want to pay for home owners insurance (they've paid off their house). I was wondering if I could, or if it makes any sense to initiate a policy on their house. (Do I get the liability benefits and all too?)

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Consider these costs when you complain about a yearly premium of $700.

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I don't know the answer to your question, but what's going to happen when their house burns down and you get a check for $250,000 and they get nothing?

I doubt that you could just go ahead and buy a policy for them for several reasons (I am sure there are others):
1. They would probably need to sign any application for insurance affirming that the details provided are true to the best of their knowledge (loss history, risk details etc)
2. You would have no insurable interest in the property, so you could not collect on a claim (assuming the home is owned by your parents alone)
3. Liability coverage is subject to the policy's definition of an insured. If you don't live there and you have no financial interest in the property, doubt you would be an insured under the policy.

You could probably have them apply for a policy and have you pay for it. But you are getting into sketchy territory with any other scenario.

Most likely not. The rule for property insurance is you must have a financial interest in the property at the time of the loss. Even if an insurance company let you purchase the coverage (which they would most likely not), they would then just refund your premiums during a claim.

Sounds reasonable. Thanks.

dnickerson said:   2. You would have no insurable interest in the property, so you could not collect on a claim (assuming the home is owned by your parents alone)

Would the preservation of a future inheritance be considered a valid interest in the property? Or the possibility that if the house were to burn down uninsured, OP would bare the burdon of sheltering his now-homeless parents?

Glitch99 said:   dnickerson said:   2. You would have no insurable interest in the property, so you could not collect on a claim (assuming the home is owned by your parents alone)

Would the preservation of a future inheritance be considered a valid interest in the property? Or the possibility that if the house were to burn down uninsured, OP would bare the burdon of sheltering his now-homeless parents?


In my opinion (IANAL)- no. The policy language defines who is and who is not an insured, and thus covered for losses. The scenario above would not extend coverage to you in any policy I have ever seen.

FYI, in the event of a fire or other loss that makes the dwelling inhabitable, most all policies provide additional living expense coverage. Usually the insured can claim an alternative called "fair rental value" if you are staying with relatives and not incurring "additional living expenses", per se. All the more reason your parents should have a homeowner's policy.

dnickerson said:   Glitch99 said:   dnickerson said:   2. You would have no insurable interest in the property, so you could not collect on a claim (assuming the home is owned by your parents alone)

Would the preservation of a future inheritance be considered a valid interest in the property? Or the possibility that if the house were to burn down uninsured, OP would bare the burdon of sheltering his now-homeless parents?


In my opinion (IANAL)- no. The policy language defines who is and who is not an insured, and thus covered for losses. The scenario above would not extend coverage to you in any policy I have ever seen.

FYI, in the event of a fire or other loss that makes the dwelling inhabitable, most all policies provide additional living expense coverage. Usually the insured can claim an alternative called "fair rental value" if you are staying with relatives and not incurring "additional living expenses", per se. All the more reason your parents should have a homeowner's policy.


I was also wondering about inheritance in this situation. Could he be added to the property documents as an owner?

ETA: Would he be able to show a financial interest in the property if the parents' wills list him as the inheritor?

unless OP parents are against having ins. Vs. Against paying for it, then why not just set it all up with an agent and then just get them to sign. You could then get an auto ACH from your account for the premiums.

unless OP parents are against having ins. Vs. Against paying for it, then why not just set it all up with an agent and then just get them to sign. You could then get an auto ACH from your account for the premiums.

RidicuRuss said:   unless OP parents are against having ins. Vs. Against paying for it, then why not just set it all up with an agent and then just get them to sign. You could then get an auto ACH from your account for the premiums.

If he wants to gift them with the insurance premiums so they are insured, that's fine. But otherwise, he'll only end up looking like a villain. The parent's house will burn down, everyone will say he "stole" the insurance money, and the parents will probably end up living with him to boot.

Anyone can buy homeowner's insurance for most properties with little proof of ownership. However when a claim is made, only owners and lienholders as identified on a deed or registered in county property office are listed on the check, and all signatures are required.
You can buy renter's insurance for the contents as long as you can produce a valid lease when a claim is made.

It works for credit default swaps...

buy the insurance for them, their names as the insured . If there's a large claim they will be thankful you did

Or you can get added to title and buy it in your NAme

jstar1 said:   My parents don't want to pay for home owners insurance (they've paid off their house). I was wondering if I could, or if it makes any sense to initiate a policy on their house. (Do I get the liability benefits and all too?)Bolded the only word that matters. Just have them get a policy in their name and pay the premiums yourself...

jstar1 said:   My parents don't want to pay for home owners insurance (they've paid off their house). I was wondering if I could, or if it makes any sense to initiate a policy on their house. (Do I get the liability benefits and all too?)


It makes no sense for them to do this. Your parents work their ass off to pay off their home and no they dont want to insure it? All it takes is a small spark and the whole house could go up in flames!!!!!!

I've purchased home insurance for my parents' home in my name. Fortunately, no claims needed to be made. In retrospect, though, it was probably a bad idea since I wasn't on the deed/title. Insurance companies are always looking for ways to get out of paying out any claims, you don't want to give them a reason.

Just get it in their name and pay for it - the main point is to protect their home anyway.

Would they be willing to give you power of attorney? Sample

See page 3 #6. I imagine you could modify the document to limit powers (potentially to only the ability to "To purchase, pay premiums and make claims on life, health,
automobile and homeowners' insurance..." as stated).

thok said:   It works for credit default swaps...

A bit off topic but this comment really nails one of the problems from back then. Imagine if you (GS), your cousins (John Paulson), your siblings (Steve Eisman), your friends (Michael Burry), your parents friends (DB), etc all bought insurance against your parents house burning down (name the CDO). The insurance company (AIG Financial Products) has an exponential amount of risk on their books as opposed to just your parents having one policy. This is just one of the crazy things that was allowed to go on. Welcome to the world of synthetics.

*just a quick simple take

Name added to title through attorney. Upside: if you need an unmortgaged asset to support borrowing in the future, as well as to strengthen your own inheritance when they pass on (hopefully many years from now) and to allow you to make and pay for repairs, etc. if needed. Not hard to do, easier than trying to "pull a fast one" as any financial firm would see it so as to avoid paying you anything later. Downside: your interest (1/3?) probably will not be protected against creditors/divorce (could impose forced sale maybe); it will not be tax-favored should house prices go up (assets are revalued at death of owners for heirs, appreciated assets thus subject to capital gains tax, your principal residence it is not.)

Some of you are not seeing the entire picture. Homeowner's insurance is not only to help you repair or replace your home, a major coverage is liability protection. If someone gets hurt on your property, that person can file a liability claim against the homeowner. Regardless of fault, the attorney fees are enough to bankrupt most people, little less a payout.

And to stay on topic: No, you cannot take out a homeowner's policy on a home you have no insurable interest in. The chance of getting it in an inheritance is not insurable interest. Anyone taking out a policy on a home they do not own is subject to the policy being void ab initio and possibly legal action for insurance fraud.

I'd recommend you offer to pay for your parents policy and have them actually sign the policy application.

JRedleg is the only sane one here. You cannot take insurance out on a dwelling you have no interest in. Sure you can get a policy, but why not just burn the money instead - same result. If there were to be a claim, it would not be paid to material misrepresentation - you said you had interest in the dwelling, you didnt - the claim does not get paid, the policy gets rescinded back to the effective date. As for the inheritance angle, no luck. The policy gets taken out today, as of today you have no interest in it. Now if youy have paid money into the home (renovations, etc) you MAY be able to get listed as an additional interest - at best, thats all. Take the policy out in their name, you pay for it - carriers do not care where the money comes from. The liability aspect alone should want you to do it. If your parents are found negligent (it does not have to happen on the property) for bodily injury or property damage, the policy will defend them. (25 yrs in the insurance world)

as for the liability angle, the policy states:
"Insured" means:
a. You and residents of your household who are:
(1) Your relatives; or
(2) Other persons under the age of 21 and in the care of any person named above;
b. A student enrolled in school full time, as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of:
(1) 24 and your relative;

Where YOU is the named insured, so if you are over 24 and a full time student - you get nothing.

Perhaps you should just have a conversation with your parents wherein you politely explain how astonishingly stupid it is not to have homeowners insurance even if their house is paid off.

You need to have a legal ownership interest (not just a financial interest) in the property to be an insured. A non-mortgage lien holder (say, a roofer who wasn't paid) can put a lien on the property to protect their financial interest, but cannot be an insured on the homeowner's policy.

The only people who can be insured for the home are the owners, i.e., the mortgage company or whoever holds the note, and your parents, how are the legal owners. They could take out a mortgage from you or make you a co-owner on the deed, and then you would have the insurable interest to buy the policy.

Best option is as suggested earlier, just pay the premiums for them.

If they have a mortgage (you do note they paid it off, but others interested in this subject may not), they are required by their mortgage instruments to have at least a fire insurance policy. If they don't, the mortgage company will put it on for them and add it to their payments.

I want take a life insurance policy on someone else's grandparents.

Give me an their address... I'll insure it.
Yes, I used to be a pyromaniac... but I've changed and I don't need the money.

I wonder if I can get life insurance on my idiot roommate who just got a crotch rocket?

I've worked in property insurance for 5 years. I just wanted to add & concur with the thread:

- You need homeowners insurance, even if they own the house. Liability for guest medical is critical: for example, if someone slips on the icy sidewalk in front of the house during winter... you could get sued. What if a party guest falls in the house? etc. It's rare, but can be a costly proposition.
- If the house has major damage, like a windstorm knocks a tree into the roof and a huge hole opens up, then you'll need money for both the repair AND somewhere to live (e.g. hotel or motel) until the repairs are complete. Some homeowners policies cover these scenarios.
- Sump pump failures can happen -- you might want to get covered in case the basement floods.
- Your posessions can be covered while you are traveling and carrying them with you, etc.

I suggest creating a policy under your parents' name as primary & secondary insureds, residing at the house full-time. Your name is not associated with the policy at all -- you don't live there, have no "insurable interest", and honestly are not part of the day-to-day risk that is being insured.

Your involvement will be in putting your account down for paying the bill. I would make sure they agent/insurance company knows your name is associated with the account, just in case of rate changes or lapses in paying the bills. You wouldn't want to lapse the policy!

The bigger picture here is that maybe your parents didn't understand they'll need home insurance (even if they own the home outright). It's their risk, their house, their living space... but if something crazy happens, they literally could be out on the street. That's why the homeowners insurance conversation is a little different than other types of insurance (auto, boat, life, etc.).

Update: They said they'd be happy to let me pay for it if they felt it was a reasonable value (because they're also anti-insurance in principle) ... it's probably a $250k valued house, and we figured up to around $450 a year would be reasonable (There's ice in the winter, and a number of big trees in close proximity to fall on it!) An online quote was for $700 ... which seemed high relative to what I pay for my own house. This was all for the least coverage/highest deductible ... I don't know the details, so it probably doesn't mean much, but at any rate we thought it may not be so "worth it". Insurance blah blah.

$700 a year is not worth protecting a $250k house? What insane planet are you guys on?

Is your culture averse to things like insurance ?

No cultural aversion - but 2 things: insurance companies are good businesses (IE aside from the peace of mind which the insurance can buy you, in general, it's probably not a ":good deal" in terms of expected value from the consumer perspective), and 2) I have home owners insurance on a house that's "worth" 3 times more, and I only pay around $1k or so (which I DO think is a good deal) ... so it seems like something's off with the pricing for the cheaper house - not that it should be directly proportional to the house value, but I would think roughly so.

Yes, You can buy insurance on property you do not own.

I do this all the time. I bid on the Tax sales auctions. When i win a bid in Tax sales auctions I wait 6 months for the property owner to redeem the property.
If the owner do not redeem it then I go ahead and buy the insurance in anticipation that property will be mine in 6 months time.

In short, yes you can purchase a property insurance even if you are not an owner.

Just because you are buying the coverage it does not mean you will be paid in event of a claim. Purchasing the tax lien may give you an insurable interest in the property.

jstar1 said:   No cultural aversion - but 2 things: insurance companies are good businesses (IE aside from the peace of mind which the insurance can buy you, in general, it's probably not a ":good deal" in terms of expected value from the consumer perspective), and 2) I have home owners insurance on a house that's "worth" 3 times more, and I only pay around $1k or so (which I DO think is a good deal) ... so it seems like something's off with the pricing for the cheaper house - not that it should be directly proportional to the house value, but I would think roughly so.
I just had a $50k+ claim , and had no idea it was coming, it's not about whether it's a "deal" or not. But I've probably paid less than $5k in
Premiums over the past ten years

It's their house. Let them be idiots if they want.

They said they don't want insurance and will not pay for it. Why are you butting into their business?

Then you go get a quote after they agree to let you pay and you think it's not worth the premium.

All kinds of dumb in the family. Don't have kids, end the cycle.

SIS - That situation has to be the exception - not anywhere near the norm. As far as payouts vs pay-ins: insurance has to be a net loser to the consumer on average ... unless you're suggesting that as a FW'er, we'll make more successful claims in borderline situations, while most others are paying in their premiums without making some of the potentially successful claims? Then a disproportionate chunk of the premiums paid in (from the entire pool) would be received back from the FW'ers ... making it "cheaper" insurance for a FW'er, and too expensive for the rest of the pool.

Its not always about protecting it from fire ...

http://www.youtube.com/watch?v=DBSAeqdcZAM

Skipping 5 Messages...
Consider these costs when you complain about a yearly premium of $700.

My parent's policy paid out $20k and a neighbor's policy paid $80k in a stupid accident where kids were throwing toys at each other and one kid got a permanent eye injury. The accident happened in our yard, but the neighbor's kid was throwing the toys. No fault of my parents but their policy was on the hook for the attorneys to defend them and a settlement amount to make it dissappear.

Another scenario, a friend hit an errand golf ball that broke another golfers arm (he shanked it to the right, off a tree, into the guy's arm). His homeowner's liability coverage paid for his liability. Not sure what the final cost was, but I can bet it was more than $700.

I could give you other scenarios, as I'm in the industry as well, but these two are close to home.



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