Do I Need To Insure My Deceased Parent’s Home?
Posted on 12th May 2024
When a property owner passes away, the responsibility for the house can often fall to the executors of the estate. In cases where the deceased has not left a valid Will, it can be left to the proposed administrators – those entitled under the Rules of Intestacy – to deal with their loved one’s home. Whilst there are many things to deal with after someone dies, one crucial aspect, that is often overlook, but requires immediate attention is the continuation of home insurance to ensure the property remains protected from losses- this can include damage from flooding, electrical faults, subsidence, or fire. Our Probate Solicitors in Preston explore the steps involved in insuring a house after the death of the owner, and provide guidance on managing home insurance during the estate administration period.
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Understanding the Immediate Need for Home Insurance
Firstly, it’s essential to understand that a home insurance policy may become void or its terms may change upon the death of the policyholder. This can leave the property vulnerable to risks such as theft, fire, or weather damage. Therefore, it’s important to act promptly to ensure continuous coverage. Often, Probate clients do not realise the importance of insuring the house is insured, as they believe it will be covered under a policy paid for by the deceased whilst they were alive. Our Probate Solicitors in Preston see cases all too often where insurance lapses due to a person dying, and the executors have not realised. Fortunately, we have not come across too many situations where a tragedy has occurred, and the house has not been insured when there has been a major event, such as a fire. However, for the sake of paying the insurance for 12 months whilst the executors obtain Probate, saving the personal cost to the executors of privately funding the house repairs if there is an accident, is worth it.
Notification and Documentation
The first step is to notify the insurance company of the policyholder’s death. This should be done by the executor of the estate or the proposed administrator. The insurer will likely require a copy of the death certificate and details of the estate’s executor or administrator, so they can be contacted going forward. They may also ask for a copy of the Will or other legal documents proving the authority of the person managing the estate, such as Probate or Letters of Administration. Whilst these may not be immediately available, ask the insurance company what else they can accept, to ensure they do not cancel the insurance whilst waiting for Probate to be granted.
What information do I need to insure the property?
Depending on who you decide to insure the property with, will depend what information they required.
First of all, most insurers will require a valuation of the property to be carried out. Fortunately, this will be needed for the application for a Grant of Probate or Letters of Administration, too, so you can use any valuations for both purposes. Generally, for estates where inheritance tax will not be payable, our team of Probate Solicitors in Preston would suggest having three separate estate agent’s valuations carried out. This way, you can consider all the valuations and take an average for Probate purposes and the insurance. If the estate is, or even could be, subject to inheritance tax, for Probate purposes a valuation of the property will need to be carried out by a Chartered Surveyor, usually one qualified through RICS.
Other insurers will also need in-depth information about the property, such as the number of rooms, the security (i.e. door locks, window locks, etc.), the location of the property, the material it is built out of (i.e. the percentage of flat roof the property has, and the material used on the property exterior, such as brick), and how long you expect the property to be insured. Whilst you may not have – or know – all this information, do your best to collate as much as possible, as providing accurate information to insurers is essential for continued cover.
Assessing the Policy
Once the insurance company is notified, they will guide you through the next steps. The existing policy may allow for a grace period during which the coverage continues under the same terms while the estate is being settled. However, this varies between policies and insurers, so it’s crucial to clarify this point.
If the house is going to be unoccupied for a significant period, you may need to convert the policy to a vacant home insurance policy, or look to obtain a fresh policy with a completely different provider. Vacant home insurance is specifically designed for properties that are not currently inhabited, as they present different risks compared to occupied homes. For example, vacant properties can be more prone to the risk of break-ins, freezing and burst pipes when temperatures drop, and damage due to lack of physical visitation to the property.
Updating the Policy
If the property is to be inherited and occupied, or if it will be put up for sale, the insurance policy will need to be updated accordingly. The new owner or the executor responsible for the estate during the interim will need to be listed on the policy. If the property is going to remain unoccupied for an extended period, it’s important to discuss this with the insurance provider, as standard home insurance policies typically do not cover homes that are empty for more than a set number of days, generally being between 30 and 90 days, depending on the insurance provider. Some Insurers may impose specific terms on the vacant policy, such as periodic visits to the property, draining the water down, and capping the gas off; our Probate Solicitors in Preston have seen all these requirements through various insurers.
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Regular Review and Communication
While the estate is being settled, regular communication with the insurance company is essential. Keep them informed of any changes in the status of the property or its occupancy. Additionally, ensure the property is maintained and that all necessary precautions are taken to prevent damage or deterioration, as this can affect coverage, and could lead to an unnecessary claim.
Considerations for the Future
Once the estate administration is finalised, the beneficiaries have been paid out, and the property has been transferred to the beneficiaries, or sold for the net proceeds of sale to be distributed, the insurance policy will need to be re-evaluated to meet the new owner’s needs. If the property has been sold, the new owner will be responsible for obtaining their own insurance policy. Likewise, if the property has been transferred to a beneficiary, they will be responsible for insuring it from the date of completion of the transfer.
How much will the insurance cost?
The answer to this question will depend on which insurer you choose to insure the property. Many of our Probate Solicitors’ clients will arrange insurance themselves, often using websites to compare the costs with different insurers. However, some of our clients have an insurance broker they will use, and others will ask us for assistance with passing their details to a specific Probate insurer.
Some insurers charge, say, £300-£400 per year. However, their requirements can be stringent, in terms of visiting and maintaining the property, whereas other insurers charge a higher fee, but on the basis that less maintenance or inspections are required. Probate insurers often require no visits to be made to the property, and are satisfied that, providing all valuables are removed, the building is covered.
Can my Probate Solicitors in Preston obtain insurance on my behalf?
Yes, as your Probate Solicitors in Preston we would be able to obtain insurance on behalf of the Personal Representative of the estate if we are instructed in relation to the estate administration.
For example, in one recent case, after making enquiries with a variety of insurers, we obtained a specific Probate Insurance on behalf of our client. Whilst the premium was slightly more expensive than the other quotes we obtained, our client decided to utilise a Probate Insurer that charged a flat fee of £60.00 plus VAT, per month on a rolling contract.
The perks of this policy? The insurer required no information about the property, except for confirmation of whether the value was under one million pounds and that it wasn’t a listed building. In addition, the client was able to pay any outstanding invoices in one lump sum, after the property had been sold, preventing a lay-out of costs before the estate was ‘in funds’ (i.e. the money was available to make any payments). The policy runs on a 30-day basis, and therefore could be cancelled at the end of any 30-day period, without incurring additional admin fees.
Whilst this may not suit everyone’s needs, this policy was perfect for our client as it allowed flexibility and payment at the end, and there was no requirement for property inspections to take place, which meant that there was no obligation for our client to constantly check the state of the property. Finally, if client wanted to make a claim, the broker would deal with this on their behalf – preventing any added stress or time-consuming tasks for our client.
It is important to note that, as Solicitors, we are not regulated to advise on insurance terms, so can only assist with making an introduction to an insurance broker, or suitably qualified professional, who can then advise on your requirements and whether a specific policy would meet those needs.
Insuring a house after the owner has passed away involves immediate notification, understanding the current policy’s terms, updating the policy as necessary, and maintaining open communication with the insurance company. It’s a crucial step in protecting the estate’s assets during the estate administration period, and ensuring it is dealt with promptly could prevent any nasty issues arising in the event a claim needs to be made and the property is not insured. Remember, each situation can vary significantly, so it’s important to seek professional advice from Probate Solicitors in Preston tailored to the specific circumstances of the estate and property in question.
How do I instruct you to administer my loved one’s estate?
Contact our team today. You can email our Probate Solicitors in Preston at wills@mglegal.co.uk, you can use our contact form, or you can call on 01772 783314. Our Probate Solicitors in Preston are SRA regulated, and have over 35 years’ experience, administering estates and helping families finalise their loved one’s affairs after their death.
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