When the last owner of a property dies, the property becomes part of their estate. Then, it is to be distributed based on the terms of their Will or, if they die without a will, the State. That’s about the extent of my knowledge when it comes to Wills, Estates, and Probate (and it may not even be technically correct) but what we do know is how to handle the insurance so there is coverage throughout the process AND so it can be done as efficiently as possible.
When a homeowner dies, the insurance policy will generally continue to be valid for a period of time, (30-60 days generally speaking) without any action necessary. If something were to happen, the deceased would be paid, and the estate would receive the money and would be responsible for dealing with the property. Most homeowners policies have two exclusions that can come into play during this process.
First: hen the use or occupancy of the property changes, after 60 days after change of occupancy the policy will often exclude ANY loss that happens. They will refund your premium, since they wouldn’t be providing coverage, but they won’t pay for any damages.
As a result, it’s VERY important to communicate with your insurance agent or company when the occupancy of your property changes so they can give you guidance and help write you a new policy that meets the guidelines for the new occupancy or use.
Second: When the ownership of the property changes, the existing policy no longer provides ANY coverage to the new owner. None. Zero. Zilch. Even if the property is being transferred from a family member or from a family member’s estate and into your name, and you keep the existing policy in place, AND even if you pay the policy AND NOTIFY the insurance company of the transfer…. Even in those situations, there is no coverage from that policy. The prior policy, even if it is in force, is in force to benefit the prior owner – not you.
As a result, it’s VERY important to make sure you coordinate with your attorney and your insurance agent or company to make sure you have a new policy in place effective PRIOR TO you taking legal ownership of the property. This is because 1) you want to make sure you have coverage, but 2) also because if you wait until after closing, not only are you at risk but now you have a lapse in coverage… and insurance companies do NOT like lapses in coverage and it can make the rate higher or more difficult to get – or both! (They’re concerned that something has happened and, because the contract is broad and claims interpreted in favor of the insured whenever possible, it’s very difficult for them to deny a claim that is likely to have happened prior to the policy taking effect.)
Remember, please do not rely solely on this general guidance for making an insurance decision. You should consult your agent or carrier and get specific guidance on your specific situation before making a decision.
If you’re in the process of inheriting a property or otherwise transferring title of a property, make sure you communicate with your insurance agent to get the correct coverage set up, with the appropriate timing, to help make sure you’re best taken care of.
If you’d like help getting an estimate on a homeowners policy, please contact our office or complete the appropriate questionnaire below and we will be in touch!
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Home/rental property – https://hipaa.jotform.com/build/231034458635152
Allen McGinniss, 850-329-6996
Home Auto Life serving Florida, Georgia, & Tennessee
McGinniss Himmel Insurance Agency
2367 Centerville Rd, 32308
Office 850-329-6996; Fax 850-329-6982; allen@insurancemh.com
