When a person dies, one of two things typically happens to their home insurance: Their policy is allowed to lapse or their coverage is continued for the property now belonging to the former homeowner’s estate or heirs. For the latter, the insurer must be properly notified and agree to continuing the coverage.
Which of these happens and how varies depending on the carrier and the policy details.
In this guide, we explore the factors that determine what happens to home insurance after the death of a homeowner, what documents you need to continue coverage, and what happens when one spouse passes but the other remains in a covered property.
What to do with homeowners insurance during probate
Every insurer handles a policyholder’s death differently. Insurers may even have different requirements for different policies. That said, these three steps should hopefully get you on your way to figuring out what to do in your particular situation.
Contact your insurer
As uncomfortable as it may be, as a relative, spouse, or executor of the estate, you need to let the insurance company know that a or the sole policyholder has passed. Most companies give you about 30 days to do this, and many accept a phone call as notification. However, most, if not all, will require you to fax or email a copy of the death certificate.
Please note that sometimes a death certificate isn’t available as quickly as an insurance company might want it. You still want to let the insurer know about the policyholder’s death. Some may accept other documentation, such as:
-
A court order.
-
The will of the deceased.
-
An updated deed.
-
An online obituary.
If you don’t notify the insurance company, it may cancel the policy, leaving the home unprotected from both property and liability losses. This can lead to problems for the executor who is managing the estate or for the person who ultimately inherits the house.
Check into coverage options
When you notify the insurance company, take a moment to ask about coverage options. Many may allow you to keep the same policy until it expires as long as you pay the premium. Others may ask you to buy a new policy or cancel the current policy. Be sure to note details, particularly deadlines, so you don’t have an insurance lapse.
Ask about homeowners insurance during probate
Probate adds another wrinkle to explaining what happens to homeowners insurance when someone dies. The laws governing probate vary by state, so it’s difficult to provide a general description of what to do. Probably the most important step you can take is to keep in touch with the insurer as things change.
For occupied house insurance during probate, you probably want to get coverage in the executor’s name. This might not be with the same carrier, especially if you plan on selling the property. If you do obtain coverage with another carrier, you need to notify the original carrier of the replacement coverage so the property is not double insured.
Another issue to note is whether the house in question is going to be vacant for a month or more. That often requires a different policy called vacant home insurance.
How to transfer homeowners insurance for estate property
Transferring home insurance on an estate property (i.e., property belonging to an estate prior to any distribution to the deceased’s heirs) to a new owner often starts by determining who the deceased person is in relation to the policy. The people protected by a homeowners policy are typically called insureds, but there are different types of insureds:
-
Named insured, or the person or entity that the policy protects.
-
Additional insured, or a person or entity added to the policy.
-
Policy-defined insures, which are usually other family members living in the home.
On a home insurance policy, the named insured is typically the policyholder, or the person who purchased the coverage.
When a primary policyholder has died and there are no other insureds, then the insurance company will likely:
-
Need a copy of the death certificate, will, or other documentation.
-
Update the named insured to the estate of the deceased.
-
Want the name of the estate executor.
-
Ask what you plan to do with the house.
Insurance companies can usually hold off on making major changes to the policy until an executor is named. Keep in mind that the insurer may decide that the policy cannot or should not be renewed. This means you want to be aware of its expiration date to avoid a coverage lapse.
Once the insurance company knows what’s happening to the property in question, its representative can help you figure out the next steps for transferring the policy. For example, if the house is to be:
-
Transferred to a relative, then you may need to go through the underwriting process to transfer the policy.
-
Rented to someone, then you may need a different type of coverage called a DP3 policy. (For members with a House & Property policy, the only step here is to remove the owner-occupied endorsement.)
-
Sold to a third party, then the insurer will probably cancel the policy.
Remember that insurance companies can have their own process for transferring home insurance after someone passes. Your insurer’s representative should be able to help you navigate the steps.
Please note: An estate cannot renew a homeowners policy, so the current policy will expire at the end of its term.
What happens to homeowners insurance when a spouse dies?
The process varies by insurer, but after a spouse passes, insurance companies typically replace the name of the deceased with “Estate of” and the name of the deceased. This makes the surviving spouse the named insured – assuming the spouse didn’t already hold that status. You may be asked to provide request documentation in order to add “Estate of” to the named insured. Your insurer will be able to give you a list of any documents you need.
Do I need a new policy?
As you work through the changes necessary to continue coverage, you may need to explore options for getting a new policy. This is especially important because an estate can’t renew a policy on a home.
Whether you need a new policy largely comes down to your plans for the property. Here are some of the most common:
-
Sell to a third party. In this case, we need a HUD-1 Settlement Statement from the US Department of Housing and Urban Development. This is a standardized mortgage lending form where creditors or their closing agents list all charges imposed on buyers and sellers. When we have that, we can cancel the policy.
-
Rent the home out. Choosing to rent your property to someone else makes you a landlord, and that requires rewriting your coverage as a DP3. This is a different policy than an HO3, so it must go through the underwriting process, and you’ll need to submit an updated deed. Kin members with a House & Property policy don’t require a new policy.
-
Transfer the home to a family member. We’ll need to rewrite the policy for the new owner if he or she isn't listed as a co-applicant or an additional insured on the original coverage. This is another situation where we need an updated deed, and we’ll send the policy through underwriting. Sadly, we can’t guarantee coverage in this situation.
Dealing with a family death is not easy, and we understand it usually means a lot of difficult situations. At the very least, we hope we can make this one aspect a little easier for you and your loved ones.
