After the death of a loved one, family members have plenty of things on their mind. Unfortunately, talking with their insurance agent is typically not one of them — and this can lead to problems.
Merely paying the insurance premium on an auto policy or a home policy in the name of a deceased family member will not necessarily keep the coverage in place. An important step in settling someone’s estate is an appointment with the insurance agency to review policy language pertaining to homes and automobiles.
In the examples below, we will make reference to “named insured.” This refers to the person who is listed on the face of the policy as being insured. If you do not know who the “named insured” is on your home and auto policies, you should check with your insurance agent.
The starting point in looking at a homeowner’s insurance policy is that the name on the deed should match the named insured in the policy. If the person named on the deed is not living in the home, a different policy may be required to cover the building.
There are two common scenarios. In declining years, one spouse may pass away and the other may move away to live with family members. A homeowner’s policy typically requires that for the house to be insured, the named insured actually live there. If not, a different policy, (typically a dwelling policy), may be required.
In the case of McGrath v Allstate, no coverage applied to damage from frozen water pipes because the mother had moved out of her insured home and into an apartment with her daughter. The homeowner’s policy required that the insured home be occupied. Since it was not, there was no coverage for the loss. While it is possible that unusual wording of a policy will still allow coverage, the better course would be to get the correct policy when no named insured lives in the house listed on the policy. The other common problem arises after a death. It may be mistakenly thought that coverage obtained by the homeowner before his or her death still applies because the premiums continue to be paid.
Two cases illustrate this mistake. In Johnson v Michigan Mutual, there was a two-family dwelling. Prior to death, the mother had lived in one flat and her daughter and son-in-law lived in the other. The premiums on the policy continued to be paid by the children after the mother’s death. A personal property loss of the daughter was not covered because she was not the named insured on the insurance policy. A policy will typically allow for coverage for a period of time after the death of the policyholder.
However, renewing a policy with a named insured who is deceased does not mean that there is coverage just because premiums were paid. In Auto-Owners v Robert E. McGowan Trust, adult children continued to use a cottage insured in the name of their deceased father. In a lawsuit with neighbors, the children were not insured by the policy.
In short, the actual named insured needs to be changed to take the decedent’s name off and list the actual living insured party. If you need any assistance with any aspect of this process, be sure to contact not only your trusted insurance agent, but an attorney as well.
In the next edition of our blog, learn more about automobile coverage.