In short: a home insurance policy has two roles worth telling apart: the policyholder, who signs and pays, and the insured, who is the person the policy covers. As a couple, the usual and most convenient setup is for both of you to be listed as insured, even if only one pays. What costs people the most isn't the premium, it's insuring for less than your belongings are worth: many policies pay only a proportional part of the loss. And if you rent, the landlord's insurance doesn't usually cover your things, so check what each policy covers.
Policyholder and insured: they're not the same
The policyholder is the person who takes out the policy and takes on its obligations, such as paying the premium. The insured is the person the policy covers. They can be the same person or two different people.
As a couple, this matters for three reasons:
- If only one of you is listed as insured, the other may find their belongings aren't properly covered. What the policy says is what counts: read who is listed as insured and whether it covers someone who lives with the policyholder.
- The contract's obligations, like paying the premium, fall on the policyholder. Know who that is.
- If the relationship ends, a policy in only one person's name means the policy has to be changed.
The most practical setup is for both of you to be listed as insured, with whichever of you prefers paying, and to note it in how you split expenses.
Own or rent: what each of you insures
Policies usually split into two parts: the building and its fixed installations (the structure) and what's inside and could go with you in a move (the contents). The exact names and limits are whatever each policy says, so read the terms.
- If you own the home, you'll want to insure both parts. If you have a mortgage, check whether your lender requires any insurance.
- If you rent, the owner normally insures the structure. What you usually want is the contents and liability coverage (damage you cause to others, like a water leak into the apartment below).
Whether your lease requires you to carry renter's insurance depends on the lease and on local rules, so read that clause. Don't assume the landlord's policy covers your things.
The expensive mistake: insuring for less than it's worth
The sum insured is the maximum the insurer will pay. And with many policies, if it is lower than the real value of what's insured when a loss happens, the insurer pays the damage in the same proportion, unless the policy was written to exclude that rule. This is what's called underinsurance. Check how your policy treats it.
Here's an example with made-up numbers to illustrate the rule. Say the contents of your home are truly worth $12,000 but you insure them for $6,000. A breakdown causes $2,000 in damage:
| Item | Amount |
|---|---|
| Real value of contents | $12,000 |
| Sum insured | $6,000 |
| Proportion covered | 50% (6,000 / 12,000) |
| Damage | $2,000 |
| Payout (50% of $2,000) | $1,000 |
You'd pay the other half yourselves, even though the damage was smaller than the sum insured. The opposite also happens: if you insure for much more than it's worth, you pay extra premium and the insurer only pays the real damage. Either way, you can ask the insurer to adjust the sum insured and the premium.
To get it right, make an inventory room by room (including what belongs to each of you), with photos and rough replacement prices. Redo it when you renovate or buy something expensive.
How much each of you pays
Suppose, just for the example, a premium of $240 a year. Split 50/50, that's $120 each. Proportional to income (Blue, the whale, earns $2,800 and Orange, the penguin, earns $1,600, so 2,800 / 4,400 and 1,600 / 4,400):
- Blue: 240 × 2,800 / 4,400 = $152.73
- Orange: 240 × 1,600 / 4,400 = $87.27
Together that's $240. It's a small number, so it isn't worth arguing over: what matters is being clear about whether it goes in shared expenses or is split separately.
What gets complicated as a couple
- Two policies for the same home. If you each had your own before, don't just let them both run: you'd be paying two premiums for the same thing. Tell each insurer about the other policy, decide which one you're keeping, and check the deadline for canceling the other.
- Valuables. Jewelry, bikes, laptops, or instruments often have their own limits in the policy. If something belongs to only one of you, check whether it's covered.
- Changes to the home. If its use changes (for example, you start working with clients at home), tell the insurer.
- Answer accurately when you sign up. Answer the insurer's questionnaire exactly. An inaccurate answer may reduce a payout and, if it was deliberate or grossly negligent, could leave the insurer not paying at all.
- Renewal. Policies often renew automatically from year to year. To opt out, you may have to give notice in writing ahead of time, so check how far in advance your policy requires.
If something happens
Report the loss to the insurer as soon as you know about it. The policy sets a deadline, so check it. Take photos before you repair anything and keep the invoices.
Checklist before you buy
- Decide who is listed as insured and who pays.
- Make the inventory and work out the value of your contents.
- Compare policies with the same coverage and the same sums insured, not just the price.
- Look at exclusions, deductibles, and per-item limits.
- Note the renewal date and the deadline to give notice.
General information, not financial, tax, or legal advice. For your specific situation, talk to a professional.