If you have experienced a recent death in the family, or you are the beneficiary of property, you may be wondering what happens to homeowners insurance if the primary owner passes away and the estate enters probate.
Unfortunately, not all insurance policies are set up to cover a death. If you want a better understanding of how to manage your homeowners insurance in probate, read on for an overview of best practices.
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Transferring homeowners insurance after a death
One of the basic issues with homes after the owner dies is who is legally in charge of the home. With homeowners insurance, typically policies only allow the owner to file claims or be compensated for any damages.
Does home insurance get automatically transferred to a beneficiary when someone dies? The insurance will be transferred to a live-in spouse as they would typically be listed on the policy as well. But if you’ve suddenly found yourself in charge of a deceased person’s estate who is not your spouse, you need to act quickly to find out what the homeowners insurance policy will cover.
Most insurance companies give at least 30 days for someone to notify them formally of an owner’s death, which means that you must let them know of the death as soon as possible by sending a copy of the death certificate.
It is advised to also follow up with a phone call to clarify and solidify your options with regards insurance coverage for the property until title can be officially transferred to yourself or another party if it is sold. This "gap" period could take several months, depending on what assets you have and how quickly you are able to go through the process.
What happens to home insurance during probate?
When it comes to dealing with homeowners insurance in probate, things have the potential to get tricky, because you will need to probate an estate in order to officially transfer the ownership title to the beneficiary or new owners before the insurance is transferred.
But since this process can take months, you run the risk of the homeowners insurance running out or being canceled in the interim.
If you plan on occupying the house with insurance during probate and you can prove that you are a beneficiary, you may be able to maintain the existing coverage. However, if this is not the case and probate takes a long time, a phone call to the insurance company is required to find out what options you have to cover the home until it is sold or ownership is transferred.
If you are planning on selling the house, you can check with the insurance company that you are able to keep the insurance in the deceased owner’s name — but you will be responsible for covering premiums and making sure it's not vacant.
If it does go vacant but you have not declared that to the insurance company, the company may push you to purchase special vacancy insurance, which can be quite pricey.
There is such a thing as temporary insurance for purposes such as probate. However, this is likely to cost you more than the regular insurance premiums.
Don’t leave the house vacant or uninsured
What if a house gets damaged while there is no one living there?
If an insurance company thinks a house is empty, they will consider it a risk — which means either the premiums will go up or the insurance company may try to push you into purchasing vacancy insurance. This is why getting in touch with the insurance company right away is so important. You may also want to consider living in the house (definitely keep it furnished) to ensure that the insurance doesn’t get unexpectedly canceled.
Another reason to keep it insured is due to the risk of damage, theft, squatters, or even other tenants, since insurance covers liability.
Be proactive & prepared
If you are a beneficiary of a home asset, it’s important that you take the steps ahead of time to understand the insurance policy and ensure that the property in question is covered properly through the probate process.
Here’s what you can do to make sure you are covered:
Understand what assets need to go through probate in your state
Update the insurance company by sending a death certificate as soon as possible
Follow up with a phone call and check all relevant details about the policy
Ask the insurance agent if it is possible to transfer the policy into your name
Keep a copy of the latest insurance policy handy with the will and other important documents
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