How Does Homeowners Insurance Work After a Death?

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There are many details to be taken care of when someone passes away—notifying friends and family, taking care of final arrangements and funeral costs, locating the will, and handling insurance matters. 

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Everyone wants to know what to do about the life insurance policy when someone dies. Still, there is another type of insurance that people give little thought to after the primary owner of a residence passes away – homeowners insurance.

Let’s look at exactly how that detail is handled if you’re ever in the situation where the homeowner's insurance becomes something you’re responsible for.

Is a Homeowners Insurance Policy Valid After the Policyholder Dies?

An essential issue that must be dealt with after the policyholder dies is who is now legally in charge of the home? It’s important to determine that because homeowners insurance policies typically allow only the owner to file claims or be compensated for damages to the home.

This is not of significant concern immediately after the policyholder’s death if there are married and their spouse lives in the home. In that instance, the insurance is automatically transferred over to that spouse, and there is no interruption in coverage. 

However, the surviving spouse must notify the insurance company and remove the deceased from the policy for legal purposes. 

If the deceased was not married, the situation is much different. In that case, the insurance company must be notified immediately by the estate's executor, and they will need to follow the instructions of the insurance company at that point. 

Most insurance companies give a family or executor at least 30 days to formally notify them of a policyholder’s death. Therefore, time is of the essence, and this critical detail shouldn’t be allowed to fall between the cracks. The home is likely the most valuable asset in the deceased’s estate, and leaving it uninsured would be a grave mistake.

The best way to notify the insurance company is to send them a copy of the death certificate. After that has been sent, you’ll want to follow up with a phone call to discuss the next steps with them. You’ll want to clarify the situation and be sure that coverage remains in force for the property until the title can be officially transferred to you or another party.

This “gap” in time from death until title transfer can take several months, depending upon whether or not the estate must go through probate.

What Happens to a Homeowners Policy During Probate?

Things can get a bit tricky when it comes to dealing with homeowners insurance when an estate is in probate. Though everyone likes to have probate for an estate settled quickly, ownership and title to a property cannot be considered final until probate has been settled.

If you are planning on living in the decedent’s home during probate and you can prove that you’re a beneficiary, transferring homeowners insurance into your name is not typically very complicated.

If you plan on selling the home, you’ll want to verify with the insurance company that you’ll be able to keep the insurance in force in the decedent’s name, but you will be responsible for paying the insurance premium and making sure the property isn’t left vacant.

Temporary homeowners insurance does exist for purposes like probate, but it’s likely to be more expensive than the homeowners insurance policy that is already in force.

Can You Leave the Home Uninsured While No One is Living There?

Once you’ve notified the insurance company that the policyholder has passed away and they know it is sitting empty, they will consider it to be a greater risk. The insurance company will either raise the premiums considerably or try to get you to purchase vacancy insurance, which is more expensive than a regular homeowners policy. 

To save yourself this additional expense, consider living in the home during probate. At the very least, leave it furnished to ensure that the insurance company doesn’t cancel the policy without you knowing it.

It’s also important to have the property insured and be prepared for what happens when someone dies because of the risk of theft, damage, squatters, or even other tenants since homeowners insurance covers liability. 

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How Can You Best Prepare for Handling Homeowners Insurance During Probate?

If you’re the beneficiary of a residence, it’s important to be prepared in advance about how the homeowners policy works and that the property will be covered during the probate process.

Here’s how you can be best prepared? Here are some tips:

  • Understand what assets need to pass through probate in the state the residence is in.
  • Update the insurance company as soon as possible and send them a copy of the death certificate as soon as you can.
  • Follow up by phone with the insurance company.
  • Talk with the insurance agent that wrote the policy and see if it’s possible to transfer the existing policy into your name.
  • Keep a copy of the latest version of the policy with the will and other important documents.

How Can You Make Sure Your Loved Ones Know What to Do With Your Home Insurance When You Die? 

The best way to be sure all of your estate needs are handled as you’d like them to be, including your homeowners insurance, is to have an “In Case of Death” binder. This binder is where you keep all of your most important documents and financial files all in one place. 

Along with your homeowners insurance policy, these are some other types of documentation that you could include in your In Case of Death file:

  • Will
  • Living trust
  • Power of attorney
  • Life insurance policy
  • Birth certificate
  • Marriage license
  • Bank and credit card accounts
  • Loan documents
  • Automobile titles
  • Property deeds
  • Copies of keys to cars, safe deposit boxes, etc.
  • Account and device passwords

Once you’ve finished putting together your file, you must let your loved ones know that it exists and where it’s kept. Let them know that you did it as part of your estate planning process because you want to make things as easy as possible for them when the time comes.

You should leave more than one family member in charge of the binder and make a copy of everything in it to give to your attorney or financial planner. 

Other Estate Planning Considerations, Along With Insurance

As we’ve mentioned, it’s wise to be proactive when it comes to making sure the home that is part of the decedent’s estate is adequately insured until the title to the property is passed. 

You do many other things before you die to ensure that the material possessions that are important to you are passed along to your intended love ones as efficiently and cost-effectively as possible.

Here are some things you can do, besides your In Case of Death binder, to spare your loved ones much dismay and confusion.

Execute a last will and testament. This is one of the most important documents you’ll ever have because of its importance in getting everything you own to the people that matter most to you. Without a will, you’re leaving it up to the state you reside in and their laws concerning the estate distribution of someone who dies without having drawn up a last will and testament.

When you create your will, you’ll be selecting someone to act as your estate administrator (executor), which is someone you put your trust in to handle the distribution of your estate.

Establish a living trust. As we’ve mentioned, probate can be lengthy and complex. By establishing a living trust, you’ll be avoiding probate and making sure your wishes are followed after your death. By avoiding probate, which is a matter of public record, you are keeping your financial affairs private and protecting your family's privacy.

Complete a living will or advance directive. If you want to be sure that a family member can communicate with medical personnel about your treatment preferences, such as feeding tubes, breathing tubes, and other medical treatments that can prolong your life, a living will is essential. It will let doctors, nurses, and front-line medical personnel know your treatment preferences if you become incapacitated or unable to express your preferences yourself.

Update your beneficiaries. If you own life insurance, pensions, or retirement accounts, make sure that your beneficiaries are up to date—your beneficiary designations control to whom your assets are distributed, not your will. A good time to review your beneficiaries is when you have a change in family situation, like a birth or marriage.

Secure your digital assets. Along with online investment, banking, and merchant accounts, you might have digital assets that need to be handled when you die

For example, Facebook has a special section where you can choose someone to take your account over when you pass away. In addition, if you have a blog, website, or any other online activities that you participate in, leave instructions on how you’d like to have those handled.

Make final arrangements. In addition to funeral plans, final arrangements can include other details, such as your wishes for organ donation. Since your will isn’t read immediately, a letter to the executor of your estate or a loved one can help make sure that your final arrangements, such as music, eulogies, obituary, etc., are carried out as you’d like.

Final Thoughts

When it comes to making sure your homeowners insurance is handled correctly when you die, putting it on paper is great, but talking with your loved ones about important details, like insurance, is critical. By doing so, there won’t be any guessing as to what they should do and the fewer problems they’ll have.

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