Two months ago, Jade moved in with Luke. On the advice of friends, she bought home insurance to cover her belongings and civil liabilityCivil liability insurance is insurance that can cover the cost of certain types of damage for which the insured may be responsible. For example, if you accidentally set fire to the building where you live or if your dog bites someone..

Luke can’t afford home insurance. He tells himself that, if there's ever a fire or robbery, he’ll be able to ask Jade to file a claim for his belongings, as well.

Luke thinks he's saving money, but he could have some problems. He’s not covered by the definition of insured in Jade's contract. Worse yet, if Jade, thinking she’s helping Luke following a robbery or fire, tries to make her insurer believe that everything in the apartment belongs to her, she’s the one who could have problems. Her entire claim could be denied and she might have trouble getting insurance in the future.

The solution? Jade could add Luke as a named insured to her policy and adjust the insurance amountThe insured amount, or face amount, is the amount that an insurance company pays the beneficiary if the covered risk occurs. For example, if Mary has life insurance that pays $100,000 to Peter upon her death, then the insured amount is $100,000.
The insured amount should not be confused with the premium, which is the amount paid to be entitled to insurance. In the same example, if Mary has to pay $200 per year to keep her life insurance in effect, then the premium is $200. accordingly. Luke could also buy his own insurance.