Underwriting and Liability Considerations for Multi-Dwelling Properties

• By: The Big "I" Virtual University
• May 22, 2026

Q: How is the insurance market handling instances of multiple generations owning dwellings on the same deeded property? For example, an elderly couple built a small, one-story dwelling on their property for themselves and sold the property’s primary dwelling to their child.

Response 1: The answer depends upon the exact nature of the ownership, and that, in turn, requires a trip to the attorney’s office. My non-lawyer understanding is that if the parents pay to have a building constructed on their child’s land, the building is owned by the child. There could be complex legal arrangements regarding ownership, but that’s information you’d need to obtain from their attorney. 

Once you have the answer, you need to disclose everything to the underwriter. Forgetting about some special legal arrangements, if the parent simply builds the house on the child’s land and occupies it as their principal residence, I bet you can find an insurance company that will insure it as if it were a standalone homeowners policy. You’d need to be sure that the new policy and the child’s would both provide liability coverage for this situation, of course. 

On the other hand, the underwriters might insist that the buildings be covered by the child’s homeowners policy with a tenants homeowners policy to cover the personal property and personal liability of the parents. 

You’re right to go carefully in this situation. Make sure you know the legal situation and disclose everything to the underwriters. And when you know which policy forms can be used, make sure all property interests are covered, all liability exposures are addressed—including possible lawsuits between the parties—and subrogation has been waived, which is another job for the lawyer.

Response 2: It seems to me that each dwelling on the land likely has its own street address, even if it’s something like Unit 1 and Unit 2. The policy declarations should display the street address for the dwelling that the policy is insuring. I don’t see ownership of the land as being terribly relevant, at least for first-party damage claims. What matters is who has an insurable interest in loss of or damage to the dwelling—and that would be the dwelling’s owner.

When it comes to the liability coverage in a homeowners policy, the owner of the land does have an exposure because they could be named as a defendant in a lawsuit alleging bodily injury or property damage. Some carriers may have endorsements available to address that exposure.

Response 3: This is more of an underwriting question. I don’t believe there is anything in the homeowners policy that would exclude coverage, since each of the dwellings would still fit within the definition of “residence premises.” 

Property coverage appears less of a problem than liability. What happens when someone is injured on the jointly owned property and three parties have houses on it? If only one of them own the land, then the others should still have coverage since the land would be considered an “insured location.”

It would be important to know exactly what kind of a sale transferred ownership of the primary house to the child. Did the child buy the whole deeded real property? Or did they buy the primary house on the property that continues to be owned by the parents?

If the carrier allows this situation, and clearly addresses it in the policy, then there should be no problem. Ideally, they should all try to be insured with the same carrier.

This question was originally submitted by an agent through the Big “I” Virtual University’s (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

This article is intended for general informational purposes only, and any opinions expressed are solely those of the author(s). The article is provided “as is” with no warranties or representations of any kind, and any liability is disclaimed that is in any way connected to reliance on or use of the information contained therein. The article is not intended to constitute and should not be considered legal or other professional advice, nor shall it serve as a substitute for obtaining such advice. If specific expert advice is required or desired, the services of an appropriate, competent professional, such as an attorney or accountant, should be sought.