Does Homeowners Insurance Remain In Force When The Insured Dies?
Homeowners Insurance is property specific and is written as the Owner Occupied Primary Residence of the Titled Owner. The Homeowners Insurance Policy is not transferrable and would need to be cancelled in the event of a change of ownership.
Homeowners Policies include an Occupancy Clause which outlines the conditions and requirements regarding reporting occupancy changes; this varies from State to State. Within the policy definitions, the policy will remain valid until a new Policy is purchased by the new owner. It is important to note that if the deceased owner was living in the home and upon death, the home will be held as a rental property; a Landlords Policy will be needed since that would be the correct Form of insurance for a tenant occupied property.
If the owner died in the property and there was a simultaneous covered loss, the homeowners insurance carrier will pay out damages to the Estate of the Insured; in this case, it would be helpful for the children or next of kin to seek legal counsel to assure that all the paperwork is in order through the claims process.
It is important to notify the deceased person’s homeowners insurance company as soon as possible; it would be most prudent to send a notification in writing with a copy of the death certificate and the details of the next of kin or the executor of the estate. The insurance carrier will most probably respond with an underwriting advisory requesting further information regarding any change of ownership and change of occupancy; in accordance with the policy definitions, it is possible that the policy may be cancelled with the proper legal notification requirements pursuant to the State in which the property is located.
It is much easier to handle the transaction if legal provisions have been made prior to the death of the insured; if the deceased person’s assets end up in probate, there could be delays causing further insurance issues. If the home will be left vacant for a prolonged period of time, a Vacant Home Policy must be purchased; in most cases, a Preferred Insurance Carrier will not underwrite a vacant home risk; in this case, the responsible party(ies) may contact the State Fair Plan to obtain a Vacant Home Policy which will be considerably more expensive particularly if the policy includes coverage for Vandalism and Malicious Mischief.
No matter what the specific situation is, it is imperative that the policy is reviewed to assure that adequate protection is afforded to the property in question. If the policy has not been updated for many years, you may find that the policy does not include sufficient coverage to reconstruct the home in the event of a total loss. Also, it is important to review that there is an acceptable amount of Liability Coverage as needed on the policy.
As always, an executor of the estate and/or heirs can change insurance carriers. It is important to note that vacant homes create opportunities for claims. Heirs and executors need good protection to secure their interest. In no situation is it safe to rely on the deceased owner’s policy without review.