To understand who is covered under your homeowners policy, it's helpful first to understand what homeowners insurance covers. Basically, homeowners insurance covers your home and other physical structures on the property (property insurance), your personal belongings (personal property insurance), and liability resulting from bodily injury or property damage suffered by others in connection with your property (liability insurance). Your homeowners policy protects more than just the owner of the house. But depending on who you're talking about, they may not be covered in all three areas.
Every homeowners policy lists a named insured. This person is the individual primarily insured under the policy and is usually the same person named on the deed as the owner (if the house is jointly owned, both people should be listed as the named insureds). The named insured receives the most extensive coverage under the homeowners policy--property insurance, personal property insurance, and liability insurance. If something happens to your home (e.g., a storm shatters your windows, a car crashes through your fence), you'll be the one to make the claim with the insurance company.
If your spouse resides in the home, he or she is covered by personal property and liability insurance, even if he or she isn't identified in the policy.
Children and other residents
Any individuals who live in the home are also covered by personal property and liability insurance if they are related to you (e.g., your children, an aging parent) or if they are under 21 years of age and in the care of any member of your family. So, if your daughter moves back in with you after college, she would be covered for personal property and liability insurance, even if she's over age 21, but a nonrelative would not.
Any employees you may have, such as housekeepers, au pairs, or landscapers, are covered by your policy's personal property insurance.
Guests and other visitors
Your guests and other invited visitors (as opposed to trespassers) are covered by personal property insurance, provided you contact your insurance company at the time you purchase the policy to request this coverage.
Although your homeowners policy covers many people, there is one group who generally isn't covered--tenants. To protect their belongings in case your home is damaged, renters will need to get a separate renters insurance policy. A renters policy can also provide them with liability protection if someone suffers an injury or property damage due to their negligence.
If you have an in-law apartment, determining whether your tenant's personal belongings will be covered under your homeowners policy is a bit trickier. For some insurance companies, a private entrance is the deciding factor on whether a separate renters policy will be necessary. For others, the deciding factor is whether the person occupying the in-law apartment is a relative. Make sure you confirm your coverage with your insurance agent before you have to file a claim.
If you own a home and are renting it out, keep in mind that your standard homeowners policy may not be appropriate for you because (1) you don't need to insure the contents of the house (unless you're offering it fully furnished), (2) you'll probably need more liability insurance, and (3) you may want to protect yourself against the loss of rental income. If so, you might be interested in an insurance policy designed specifically for rental property.