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Understanding Probate – House Insurance

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An important obligation that executors must fulfill is to ensure that the estate of the deceased is protected properly during administration of the estate until it can be divided among beneficiaries. What is the process if the deceased’s estate includes the property? What is the most important aspect of home insurance? be? In short, it’s very important. Relying on cover that is already in place or not insuring assets in a proper manner can have grave consequences.

It is crucial that the estate’s assets are secured. Executors who fail to ensure this is done can be held personally accountable for any loss suffered by the estate, if they fail to provide the proper care in ensuring the property was properly insured.

Practical steps

If you’ve been appointed as executor, and the estate contains an unoccupied property (which is no longer occupied) you must:
Contact the insurers currently in place informing them about the new conditions and determine if the current policy offers adequate protection.

If an estate contains the house that was later abandoned it alters the insurance policy and you should avoid using any existing policy. Although the deceased may have had sufficient insurance coverage for the house, in the case of the property that is not occupied, insurance companies will insist that the policy be updated or a new policy bought.

Take note of the coverage of any newly or amended policy

If an insurer does offer assurance, it’s possible that the cost will be greater. Additionally, it is possible that coverage will be limited; insurance companies tend to limit the damage to property that is not occupied to damage caused by lightning, fire aircraft or explosion. What do you think this means to you? If your home was for instance, broken into or vandalised, your insurance would not cover the damage. In these circumstances as executor you could be held responsible for the costs of repairs, or any variation in the valuation of the property.

If the insurance company does offer extensive coverage, they might put a burdensome condition on you as executor. In most cases, insurers offer comprehensive insurance for homes that aren’t occupied will require regular (e.g. fortnightly) inspections. In the event of a failure to comply, it could cause the claim to be rejected. When the home is currently on the market, the estate agent can assist you (for an additional fee, perhaps) however as the executor, you are responsible to make sure that the terms that are set out in your insurance contract have been being complied by.

Any new or amended policy must be issued in an executor’s name. The executors’ interest being “noticed” doesn’t necessarily give them the right to submit claims or get the benefits of any claim proceeds that are payable under the policy. It can only mean that they are informed if the policy has been cancelled or expired.

Select the right insurance provider

It is important to consider the insurance provider you’re using and whether they are experienced in the field with probate properties. Some specialize in probate insurance and could be more knowledgeable about the duties of being an executor.

Be aware of (increased) premiums for insurance

In the event that your estate’s assets are cash-limited it could cause problems with the payment of the premium. An insurer that is specialized may grant an amount of time during which the unoccupancy clauses will not be in effect or permit the an extension of payment until funds are received from the estate.

Make sure you take some concrete steps

Some practical steps to take include: Making sure that the house is secured by shutting off unneeded utilities; taking away things of value to ensure secure storage until they can be distributed to beneficiaries, and keeping a log of the items; frequently making a visit to check on the property, and collecting mail (or request a trusted neighbor to watch the property) Also, consider maintaining the lights (on on a timer) and heating on during the winter seasons.
Consult with a lawyer in the context of estate administration, If you haven’t already taken this step.

Additional details

For more information about probate house insurance you can contact us immediately.