A friend of mine called me last week with one of the most unusual questions I’ve ever been asked as an insurance advisor. It turns out her father passed away before Christmas and she wanted to know how she and her siblings should handle the home and car insurance on their dad’s home and vehicles. The answer depends on many factors.
The good news is their dad had an updated will leaving everything to his kids. This should be a great reminder for everyone to get a will if you don’t have one and if you do have one, update it when things change. Before I could provide guidance, I talked with an underwriter and a friend of mine who’s an agent with the company insuring the dad’s home.
Is the Home Occupied: The first question is whether the home is occupied or vacant? The issue is many home insurance companies will move to cancel a home insurance policy if the home is vacant for a period longer than 60 days, which is the case with the company insuring the dad’s home. The carrier may choose to view the home as occupied if my friend or one of her siblings is there for a few days every few weeks though.
If the home insurance company is unwilling to view the home as occupied, then the siblings will need to procure a vacant home policy. These insurance policies are designed to cover the home and its contents with coverage while vacant, as well as, provide personal liability coverage to protect the survivors.
Plan for the Home: The next question we needed to work through was what will my friend and her siblings do with the home. Will it be sold, rented, or occupied by one of the adult children? If one of the surviving siblings is going to permanently move into the home, then they will need to obtain home insurance in their name once it’s been titled in their name. If they decided to rent the home, then they need a landlord or rental property policy.
In their case, they will sell the home. The issue here is timing and how long will it take to sell the home. If they sell it quickly, they may not a vacant home policy. If, however, it is going to take a while, then they may still need a vacant home policy because their current carrier will not want to have an active home insurance policy on a vacant home that’s being sold.
Additional Insured’s: My last question was whether my friend’s dad had placed her or one of the siblings as an additional insured on either policy. By naming one of the siblings as an additional insured, this may make it easier for my friend or her siblings to manage the policies once their father passed away. He hadn’t, however, this can be dealt with by providing their dad’s agent with a copy of the death certificate and possibly the will.
There are several lessons for those of us who have older parents. Have a plan for what to do with the home before a family member dies. Determine if it will be occupied, rented, or sold. Know how long the policy will cover the home if it’s vacant or will be put on the market. Talk with the parent’s insurance agent and have the trustee added to the policy as an additional insured to make decisions concerning the policy easier. What do you think? Share your questions, comments, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!
