When the owner of a property sadly passes away leaving their property empty, the existing insurance may not be appropriate.
Even if your client has contacted the previous insurer to continue the insurance, there may be policy conditions that are difficult to comply with. This is because most home insurance policies are not designed to cover long-term unoccupied properties.
From the insurer’s perspective, unoccupied properties are a higher risk and as such require a higher premium and additional policy conditions to mitigate their exposure to claims. The most common claim is a result of escape of water, which undetected can be a significant loss. Other claims like theft, vandalism and fire are also a greater risk for empty property.
For this reason, insurers will usually add new policy conditions to the policy, such as:
- Frequent property inspections which require the property to be checked at a specific frequency, which can vary by insurer. It is common for inspections to be required every 7 days. Some insurers may allow inspections every 14 days. Most insurers will require written evidence of these inspections which need to be provided in the event of a claim. If the property inspections cannot be evidenced an insurer could reject a claim.
- The requirement to drain water systems is another common policy condition. If this condition is added and the system is not drained, claims from escape of water may not be covered.
- Applying a reduced single article limit on contents cover. Unoccupied properties pose a greater risk of theft, so all valuables such as jewellery, art work or collections should be removed from the property and put in safe storage. If the insurer is still prepared to cover the contents, they may apply a reduced single article limit.
The Risks for Executors
From the executor’s perspective, the property needs to be insured in the name of the estate. This ensures the proceeds of a claim have somewhere to go i.e. the estate.
Also, executors need to understand that arranging suitable property insurance is their responsibility. So is ensuring the policy conditions are understood by all the executors and personal representatives. If one executor fails to comply with a policy condition, it can create a liability for all.
Imagine that the property has had its water systems drained down. But one executor refills the system to put the heating on whilst visiting the property. If there is now an escape of water claim that isn’t insured, all executors would have to foot the bill.
What if there is a fire at the property but it hadn’t been inspected in line with the policy conditions?
If a claim would have been covered under an insurance policy but the insurance was either not in place or did not respond to a claim because of a breach of policy conditions, it will usually mean the executors have to put things right out of their own pocket. Particularly as the beneficiaries will seek to be reimbursed for any uninsured losses.
It is for these reasons that you should consider property insurance early on in the probate process.
Thankfully, Insuristic makes this easy for you and your clients.
If the client is arranging their own insurance, you can point them to our unoccupied probate property insurance product. Your client will be able to buy a policy that has been specifically designed for insuring unoccupied property in probate. They can choose from 3 levels of cover, with policy conditions that are less likely to catch them out.
If you are a probate professional with an FCA exemption, you could sign-up to Probate Pro. This product has been designed to help firms arrange insurance for unoccupied property in probate via their own online portal. There is one level of cover with premiums paid on interest free, monthly on account.
If you would like to discuss how you could partner with Insuristic, please visit https://insuristic.co.uk/estate-administration-insurance/ to find out more.
This article was submitted to be published by Insuristic. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.
