Are you an executor for an estate that includes the late person's primary or secondary home? If so, you have a fiduciary responsibility to the estate to ensure that the property is correctly and sufficiently insured. What should you do to make sure of this? Here are a few steps.
1. Change the Policy Holder. First of all, the estate generally must now be the insured party. Remove the previous homeowner and have yourself listed as the party to make claims and handle communications. This usually involves ending the original policy and writing a new one with the estate information — even if you intend to keep the same coverage.
2. Act Quickly. Insurance carriers have different policies about changing insurance coverage upon a death. You often have 30 days to do this, but that deadline could be longer or shorter depending on the carrier. Even if you have more than a few weeks to make a change, do so as soon as is feasible in case there's a covered incident.
3. Decide About Vacant Property Insurance. Will someone live in the home during probate or until the property is transferred or sold? If no one will live in the house, regular homeowners insurance may not be the right tool. Longer vacancies call for specialized home insurance known as vacant or unoccupied home insurance. Which of these is right depends on what's in the house and how long it will be unoccupied.
4. Adjust Coverage for Belongings. If the house will be sold or transferred to heirs, you may also be in the process of removing much or all of the person's belongings or selling other covered assets. This changes the levels and types of insurance coverage needed. You might be able to reduce personal property coverage limits, for example, saving the estate money.
5. End Coverage When Appropriate. Don't forget to terminate the estate's policy when it is no longer the owner of the house. Coordinate this transfer of insurance with an heir who inherits it, or base it on the closing date of the sale. If you don't terminate coverage, you could end up liable to the estate for the cost beyond what the estate was responsible to pay.
To learn more about transferring, buying, and terminating coverage of your loved one's homeowners insurance, start by consulting with an experienced home insurance agent in your state today. The result will be peace of mind for yourself and any heirs as well as the protection of what the homeowner worked for.
