In the aftermath of a loved one’s passing, typically few think about auto and home insurance. But the death of anyone who owned a home or car raises coverage issues that can lead to trouble if they’re not addressed timely. Most realize clients are going through the grieving process and not looking at insurance matters. Additionally, heirs might be hunting for records of life insurance policies. Beneficiaries often lack the information they need to file a claim. The status of the deceased homeowner’s and auto insurance coverage depends on the situation, the policy, the insurance company and state regulations. Following are several scenarios.
A spouse dies, leaving a home and car to the surviving wife or husband
Most insurance policies have provisions for surviving spouses. Therefore, upon the death of a policyholder, whether home or auto, the surviving spouse is allowed to maintain the homeowner’s insurance policy and auto policy merely by continuing to make premium payments. But it is imperative the surviving spouse call the insurance company to let it know about the policyholder’s death and requesting to be listed as the “named insured.” Most homeowner’s insurance generally remains in effect for a certain time until the policy can be re-registered or rewritten. Each company’s contract can be different but most insurance companies will give a family up to 30 days to notify the insurance company of a policyholder’s death.
The main issue is how the contract is titled, who will continue to live there and who owns the property? If a husband and wife own the house and one dies, the living spouse can send a certified death certificate and the policies can be placed in that name since he or she now has ownership
A widow or widower dies, leaving the house to adult children
The heirs should notify the homeowner’s insurance company as soon as possible. If the house will be vacant or rented out, the insurer will require the policy be rewritten because the home will no longer be owner-occupied. If the home is re-deeded to one of the children after the estate has been settled, a new homeowner policy can be written for the child. The important thing is to be very upfront with the insurance company.
The new owner may have to pay a higher premium if the home is vacant. The risk for theft, vandalism and other losses is greater for vacant than occupied homes because no one is there to catch problems, such as water leaks, or establish a presence to ward off thieves. The extra premium is definitely worth it if a loss occurs and the insurance doesn’t pay because they were not updated on the situation.
How long the old home insurance policy continues depends on the terms of the contract and state insurance laws. Insurance companies will give a reasonable period to continue coverage before they require updated information. It is advisable to document telephone conversations with the insurance company or agent when calling to report the death of the homeowner and discuss the next steps and don’t forget to check when premiums are next due.
If the family informs the insurance company of the homeowner’s death within the time prescribed in the policy and the family continues to pay the premiums due as the insurance company has instructed them, the insurance company should pay a claim if something happens to the home. However, an insurance company may not honor a claim if the family hid the homeowner’s death, the home was vacant for an unreasonable amount of time, or for whatever other reasons the insurance company considers breaches of the insurance policy. Therefore, it is very important to tell the truth.
A single policyholder dies, leaving behind a car
The estate’s legal representative, such as an executor or administrator, is covered when driving the car for maintenance purposes as the legal representative is responsible for preserving the estate’s assets, including the car. But the deceased owner’s insurance would not provide coverage for the legal representative to drive the car for personal use.
If another driver besides the deceased is listed on the policy, that person may be covered when driving the car until the policy’s renewal date. But other drivers are not covered, so no one should drive the car without checking with the insurance company.
Normally a standard auto insurance policy covers the drivers listed on the policy and anyone the owner gives occasional permission to use the car. A deceased policyholder can’t give permission. Even if a mother let her children use the car while she was living, that permission does not extend beyond her death.
If a family member is going to take possession of the car, the title must change hands at the local Department of Motor Vehicles and a new insurance policy must be purchased. If the car is to be sold, it should be sold quickly. When contacting the insurance company after a loved one has died, be prepared with the policy numbers and a certified copy of the death certificate. (Marquand, B., 2014, Insure.com)
Submitted by Kathryn Shrader
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