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They're baaack! Will your insurance cover your boomerang child?

The recession has fueled a trend in recent years of adult children returning home after college, job loss or personal upheaval. Faced with unemployment or underemployment, so-called "boomerang kids" are moving back in with parents in order to save money or pay off bills -- or just because they have little other choice.

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A recent survey by the Pew Research Center found that 13 percent of parents with grown children said one of their adult sons or daughters has moved back home in the past year, largely due to the recession. Census Bureau data confirm that proportionately fewer 18- to 29-year-olds are living alone now than before the recession, down to 7.3 percent last year from 7.9 percent in 2007. Similar drops were recorded after two previous recessions -- in 1982 and 2001.

With more households opening their doors to adult children, parents should consider the insurance consequences. 

As with any change in household status, parents and adult children should contact their respective insurance agents and let them know and about their new arrangement, says Dick Luedke, spokesperson for State Farm, the nation’s largest insurer of homes and cars. You want to make sure you’re adequately insured, and it could even save you money.

When it comes to a boomerang child’s belongings, parents should revisit their home insurance policy’s coverage amount for personal property. Make sure it would cover the catastrophic loss of expensive or prized possessions. The policy amount stipulated for loss of personal property is usually a percentage of the dwelling’s coverage amount, so if your adult child has just moved his flat-screen TV, computer and stereo system into the basement, make sure your coverage level is sufficient.

It's also worth noting that home insurance policies generally have coverage limits for specific items such as cash, jewelry or firearms. If your policy’s limits aren’t enough for certain expensive items, consider a personal articles policy. "That would allow you to insure those items for an agreed-to value," Luedke says.

Returning adult children don’t need to buy renters insurance for personal belongings when they live with their parents, regardless of whether or not they pay rent. However, if the returning child occupies a separate rental property, such as an apartment above a garage or self-contained basement unit, Luedke recommends a renters policy.

When it comes to car insurance, if parents and children are all insured with the same company, bringing all the policies under one household would likely result in a multicar discount, Luedke says, even though the policies themselves would be unique to each vehicle.

Having an adult child move back home can be stressful. Protecting your household from potential financial ruin is a step in the right direction.

About the author: David Schepp is a freelance business writer based in New York's Hudson Valley. He has written for numerous news organizations including DailyFinance, Dow Jones Newswires, Gannett newspapers and BBC News Online.

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