Insurance Procedures after a Policyholder’s Death
The homeowners policy is personal in nature, meaning it is designed to cover a named individual and the individual's family members. Manual rules and company underwriting rules for writing a homeowners policy are also designed with the individual residing in the home as the primary focus. The named insured is provided the broadest coverage. Coverage for other individuals depends on their relationship with the named insured and whether they reside in the named insured's household. What happens when the named insured dies? In the ISO homeowners policy, the section entitled "Death" in Section I and II Conditions specifies how coverage continues following the death of the named insured, and it is very limited.
There is no problem if the Declarations names both spouses as named insureds. The policy continues without interruption for the surviving spouse as long as he or she continues to reside in the home. If the named insured wasn't married at the time of death, the policy insures the legal representative of the deceased, but only with respect to the premises and property of the deceased at the time of death. If the deceased had a will, the executor named in the will is the legal representative of the estate, even before the will is probated. If the deceased died without a will, heirs of the deceased will hopefully seek the advice of legal counsel and quickly obtain a court order naming a representative. Provision is made to include as an "insured" the temporary custodian of the deceased person's property. If other persons qualified as insureds prior to the named insured's death (such as relatives residing in the home), property and liability coverages continue for them as long as they continue residing in the home.
The most immediate problem for the agent and the legal representative is the fact that the home is no longer eligible for a homeowners policy. There is no provision for adding an estate as a named insured or additional insured. The definition of residence premises requires the named insured to reside in the dwelling, so all coverage may be impaired following death of an unmarried individual named insured. Provide your insurance agent the facts about who (if anyone) will be living in the house and whether the personal property will be removed. The agent will then prepare a solution, inform the insurance company, and formalize a solution. Any change to the named insured portion of the policy will be expedited, and an updated copy of the policy will be forwarded to both the agent and homeowner’s residence, or revised mailing address. The company can't formally cancel the policy, but if the insurance company believes the policy is "void" because the named insured no longer resides there, you know you have a problem that needs to be addressed with the legal representative. If the home is considered ‘unoccupied’, the coverage needs to be rewritten on a dwelling policy when the homeowners policy expires.