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How Living Together Affects Your Insurance (And Other Legal Stuff)

Initially, it may be a matter of unpacking a few boxes, getting a key cut and living together. There may be a plan to formalize the relationship at some point. But often years can go by without ever making it “official”.

The longer the arrangement lasts, the higher the stakes become – particularly if children are involved, the relationship ends, or a partner dies. For married couples, there are certain rights and obligations that are clearly defined, but this is not always the case for couples that live together.

Common law unions are different in every province

Legally, common-law relationships fall under provincial jurisdiction, so every province has different rules about living together.

In B.C. and Newfoundland, couples who live together for at least two years have the same rights and responsibilities as married couples. In Nova Scotia, a couple must live together for two years before being entitled to spousal support, but they cannot claim property such as a family home or a car.

The law in Ontario and Manitoba states that a couple must be living together for at least three years or one year with a child to be considered in a common-law relationship, and are thereby treated as a married couple.

The Quebec government does not recognize a common-law relationship no matter how long the couple has been living together. In the event of a separation or end to the relationship, they are likely viewed no differently than if they were friends who split the rent.

Alberta also does not recognize the term “common-law”, but has made provisions for people living together under the Adult Interdependent Relationships Act. This is an Act for people in unmarried relationships that are economically and emotionally dependent upon one other. In Alberta, the definition of Adult Interdependent Partners (AIP) encompasses many types of relationships including same-sex couples, people who share expenses under the same roof – but are in a platonic relationship, and even relatives who live together and support each other.

To be considered AIPs, the partners must be:

  • Living in an interdependent relationship for a minimum of three years
  • Living in an interdependent relationship of some permanence where there is a child by birth or adoption, or
  • Living in or intending to live in an interdependent relationship and have entered into a written adult interdependent partner agreement.

Ownership and insurance

Property ownership – If one partner owns the house, and the other contributes to expenses or for renovations, ownership is not necessarily 50/50. Unless you live in B.C. where common-law couples are entitled to an equal split of shared debts and assets. In Ontario, partners can make a claim for property but it isn’t automatically awarded.

Life Insurance – Couples who are living together can purchase life insurance and name their partner as the beneficiary. If you had the policy prior to living together, and the beneficiary named is a former spouse or partner, you may want to name your new partner as beneficiary. In the event of your death, payment is awarded to the person listed as your beneficiary.

Home Insurance – Home insurance insures your home and your assets against fire, theft or an accident. If you purchased the home together, make sure both of your names are on the home insurance policy. However, if you’re the sole owner of the house, your partner’s belongings won’t automatically be covered by your policy. Check with your insurer to see whether he or she can be added as an occupant and covered under the same terms. Otherwise, your partner should purchase a separate insurance policy.

Renters Insurance – When your partner moves his or her belongings into your apartment, your renters’ insurance may no longer cover the entire household. In the event of a fire or theft, or in the event of a liability lawsuit, your claim may fall short of providing sufficient coverage.

Automobile Insurance – If you each own a car, you should have no trouble getting separate automobile insurance. If one partner owns a vehicle that you both use, you will want to either transfer ownership to both of you or list the other as a secondary driver.

Wills and estates

If you have a Will and estate plan at the time you enter into a common-law relationship, it’s important to review these documents in light of your new arrangement to make sure your assets are well protected, and your wishes are clearly defined.

In Alberta, the Adult Interdependent Relationship Act provides for AIPs in the event of the death of a partner in the following ways:

A deceased adult interdependent partner’s estate will be obligated to adequately provide for the surviving partner

An adult interdependent partner may access all or a portion of a deceased partner’s estate should the partner die without a will

An adult interdependent partner’s existing will may be revoked upon entering into an adult interdependent partner agreement

Adult interdependent partners will have the ability to recover damages for the wrongful death of a partner

As exciting as it is to find someone to share your life with, it’s important to be open and honest with each other from the start. Plan for your future and build in protective measures so you can both relax and enjoy what may well be your “happily ever after”.

How Living Together Affects Your Insurance (And Other Legal Stuff)

Find out how living with your common-law spouse can affect your home insurance premium.

Many couples have a desire to share their lives without going through a formal marriage ceremony.

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