What Happens to Homeowner’s Insurance When a Person Dies?

While not legally required, homeowner’s insurance covers the repair or replacement of a home, including items not attached to the home (i.e. furniture, jewelry, and other valuables). It also covers threats such as lightning or wind damage, burglary, and vandalism. In general, only the homeowner can file claims for compensation under this type of insurance policy.

Death of the Policyholder

The norm is that homeowner’s insurance coverage ceases to exist in the homeowner’s name when the policyholder dies. Once the insured stops paying the monthly premiums, the policy lapses. Depending on state regulations, the policy is not always void upon death. A surviving spouse or estate executor may have the legal right to continue to make payments to maintain the coverage.

Inheriting a Home

If you find yourself inheriting a home, make sure to notify the insurance company of the original homeowner’s death. Failing to do so could mean missing a payment and putting your newly acquired residence at risk. Fortunately, most insurance companies give you up to 30 days to inform them of the homeowner’s death by sending an official death certificate. Keep in mind, you can’t let a newly acquired home sit vacantly. Homes without occupants are more prone to theft and vandalism. Most insurance carriers give you a grace period between 30 to 60 days to find occupants for the home if you don’t plan on living in it yourself.

Maintaining Homeowner’s Coverage

Unless you’re the spouse of the deceased homeowner, you’ll have to take out new coverage in your own name, or in the name of the estate. A beneficiary should take out homeowner’s insurance regardless if they plan on selling or occupying the home. And, be certain to check the policy to spot any mortgage life insurance riders that will pay the mortgage after the death of the homeowner.

A Final Glance

Beneficiaries of homes should communicate with the insurance company to make sure there are no gaps in coverage. The most common course of action is to transfer the homeowner’s policy to your name or seek coverage with a different insurance carrier. Maintaining a homeowner’s insurance coverage is advisable to avoid financial duress and potential lawsuits.

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