Handling a Probate or Trust Estate? Why the homeowners insurance policy is one of the first things you should find...

In the last month, I’ve had the same conversation twice with two different people, handling two different probate estates under similar circumstances. 

Both sellers had been named the administrator of a loved one’s Sacramento area probate estate. In both cases, the death of their loved one (the property owner) had occurred more than a year ago and they had delayed filing for probate. And when I asked questions about the property and status of the homeowners insurance policy, both of them admitted that they did not know if there was a homeowners insurance policy for the property. And in each of these cases, the policy coverage had lapsed.

Yikes! That’s a big hairy detail that just CAN NOT be overlooked. 

When someone passes away, often grief, family dynamics, and sheer overwhelm take over. Filing for probate is often not top of mind. And it’s emotionally very daunting to sift through your loved one’s finances, documents, and personal property, but I can’t emphasize enough how important it is…and checking for a homeowners insurance policy on any real estate that person owned is one of the most critical boxes to check. 

Here’s the reality: if a property is uninsured and something happens like a broken pipe, a break-in, vandalism, a fire, etc…the estate could suffer a massive and catastrophic financial loss. A house or other real property is probably going to be the highest-value financial asset of a probate estate. And if it’s uninsured, and there’s a loss, there is no do-over. There is no retroactive insurance coverage if policy coverage has lapsed. 

When someone passes away, the first thing I suggest is look for any and all documentation for existing mortgages and insurance. Contact the insurance agent immediately. You should ask if an existing homeowners policy automatically remains valid after the owner’s death. Some policies may require the insurer to be notified of the death or a change in occupancy status. Vacant homes often need special endorsements or entirely different policies. If the insurance company isn’t informed, a claim could be denied when you need it most. 

And if the policy renewal notice comes and goes without being paid, that will likely result in a lapse in coverage. Don’t let that happen. 

This is why early in these conversations I try to slow things down and ask very direct questions: Is there an active insurance policy? Who is the carrier? When was the last premium paid? Has the insurance company been notified of the death?

If no one knows the answers, that’s the signal to stop and investigate as soon as possible. Please make one of your first priorities protecting the estate's assets. Making sure there is an active, appropriate homeowners insurance policy in place is one of the simplest steps and one of the most important.