Amid the grief and turmoil after a loved one's passing, questions about auto and home insurance naturally aren't top of mind. But the death of anyone who owned a home or car raises coverage issues that can lead to trouble if they're not addressed soon enough. "I see a lot of confusion," says David Morales, a financial adviser with the Barnum Financial Group, a MetLife firm in Shelton, Conn. "Clients are going through the grieving process, so they're not looking at [the insurance issues.]" In addition, heirs might be hunting for records of life insurance policies. Beneficiaries often lack the information they need to make a claim. Here's how to find lost life insurance. The status of the deceased's homeowners and auto insurance coverage depends on the situation, the policy, the insurance company and state regulations. Here's a look at what generally happens in the following scenarios.
A spouse dies, leaving a home and car to the surviving wife or husband."Most insurance policies have provisions for surviving spouses," says New York estate attorney Jeffrey Asher, a partner with Robinson Brog Leinwand Greene Genovese & Gluck, P.C. "So, upon the death of a policyholder, whether home or auto, the surviving spouse is allowed to maintain the homeowner's insurance policy and auto policy merely by continuing to make premium payments." But in both cases the surviving spouse must still call the insurance company to let it know about the policyholder's death and ask to be listed as the "named insured,” Asher says. Morales says homeowners insurance generally remains in effect for a certain time until the policy can be re-registered or rewritten. "While each company's contract can be different, most insurance companies will give a family up to 30 days to notify the insurance company of a policyholder's death," he says.
The main issue for the insurance company is how the contract is titled -- who will be living there and who owns the property?"For example, if a husband and wife own the house and the husband dies, the wife can send a certified death certificate and the policies can be placed in her name since she has ownership," Morales says.
A widow or widower dies, leaving the house to adult children.The heirs should notify the homeowners insurance company as soon as possible, Morales says. If the house will be vacant or rented out, then the insurer will require that the policy be rewritten because the home will no longer be owner-occupied. "Or if the home is re-deeded to one of the children after the estate has been settled, then a new homeowner policy can be written for the child," Morales says. Understand these home insurance policy basics to make sure you have an adequate policy. Asher advises that "you need to be very upfront with the insurance company." You may have to pay a higher premium if the home is vacant. The risk for theft, vandalism and other losses is greater for vacant than occupied homes because no one is there to catch problems, such as water leaks, or establish a presence to ward off thieves. "But the extra premium is worth it, compared to a loss if the insurance doesn't pay because you didn't tell them that Mom had died," Asher says. How long will the old home insurance policy stay in effect before it needs to change? That depends on the terms of the contract and state insurance laws, Morales says. "Insurance companies will give a reasonable period to continue coverage," he says. Asher recommends documenting telephone conversations with the insurance company or agent when you call report the death of the homeowner and discuss the next steps. Don't forget to check when premiums are next due.
"If the family informs the insurance company of the death of the homeowner within the time prescribed in the policy, and the family continues to pay the premiums due as the insurance company has instructed them, then the insurance company should pay a claim if something happens to the home," Asher says. "However, an insurance company may not honor a claim if the family hid the homeowner's death from the insurance company, or the home was vacant for an unreasonable amount of time, or for whatever other reasons the insurance company considers breaches of the insurance policy."
A single policyholder dies, leaving behind a car.The estate's legal representative - meaning an executor or administrator -- is covered when driving the car for maintenance purposes, such as taking the vehicle to the DMV or to the shop for repairs, Asher says. The legal representative is responsible for preserving the estate's assets, including the car. But the deceased owner's insurance would not provide coverage for the legal representative to drive the car for personal use, he says. If another driver besides the deceased is listed on the policy, then that person may be covered when driving the car until the policy's renewal date, Morales says. But other drivers are not covered. "The family should not drive the car until they have contacted the insurance company," Morales says. Normally a standard auto insurance policy covers the drivers listed on the policy and anyone the owner gives occasional permission to use the car. A deceased policyholder can't give permission. Even if your mother let you use the car when she was living, that permission doesn't extend beyond her death. "If a family member is going to take possession of the car, then the title must change hands at the local DMV and a new insurance policy must be purchased," Asher says. "If the car is going to be sold, then it should be sold quickly."
When contacting the insurance company after a loved one has died, be prepared with the policy numbers and a certified copy of the death certificate.