Insuring Inherited Property – Does the Estate’s Policy Protect Heirs?

2466829142_3c71a3e808_oMany clients have ask us what to do with property that their recently-deceased parents owned. There are so many scenarios that it’s hard to generalize. Here are three we see often.

If Your Parents’ Property is Insured

When someone dies, their property becomes part of their estate. Most insurers will continue their Maine homeowners insurance or condo insurance until the policy expires. The insurance company wants to know who is looking after the property and protecting it from loss.

Sometimes, the estate isn’t settled before the policy expires. In that case, heirs buy a new policy in the estate’s name, often with a surplus lines insurer. If the insured property is a vehicle, the Maine auto insurance company will ask where it is, if anyone is driving it, and what the plans are for the vehicle. They will make an underwriting decision accordingly.

If Your Parents’ Property is Not Insured

Too many heirs or probate attorneys discover that one of the estate’s largest assets, the home, is uninsured. Insurance companies aren’t eager to insure previously uninsured properties. Homes without continuous insurance pose higher risks of damage. The policy may only be needed for a short time. Both scenarios are unattractive to insurance companies. Often a surplus lines insurer is the only available market.

If Probate is Cleared and You Have Inherited the Property

If you are the sole owner, simply insure it as you would your other property or autos. If you plan to use it as income property, you can buy a Dwelling Fire or business property insurance policy. If you intend to use it as a seasonal or secondary home, you can usually insure it on a personal policy.

Sometimes several members of the same family inherit property, or create a trust. Some insurers will provide a personal policy in the name of a trust. If siblings inherit shared ownership, one buys a policy and includes the others as “additional insureds”. They all share the policy to protect their property interest and liability exposure.

Each Estate Situation is Different

Consult an attorney familiar with estate law, as well as your Maine insurance agent. Together, they will help you protect your interest and obligation in the property.