Unoccupied Property – Do I Need Insurance?
Unoccupied One important responsibility executors have is to ensure that the deceased’s estate is properly protected during the estate administration until it can be distributed to beneficiaries.
It is important that the estate’s assets are properly insured. An executor who fails to do this could be held personally liable for any losses suffered by the estate if its felt they failed to take the necessary care by making sure the property was adequately insured.
When an estate includes a house, which later become unoccupied, this changes the insurance position and you should be wary of relying on any existing policy. Whilst the deceased would have had adequate insurance on the property, for an unoccupied property, insurers will require that the policy is either updated or a new policy is purchased.
Even if an insurer does continue to provide insurance, it is likely that the premium will be higher. In addition, it is possible that the coverage may be restricted; insurers are known to restrict damage to an unoccupied property to only damage caused by fire, lightning, aircraft and explosion. What does this mean for you? If the property was, for example broke into and vandalised, the policy would not provide cover. In such circumstances, as an executor you may be held liable for the cost of repairs or any difference in the property valuation.
If the insurer does provide comprehensive cover, they may place onerous conditions on you as the executor. Often insurers in exchange for comprehensive cover for unoccupied properties, will require regular (ie fortnightly) inspections. Failure to do so would result in the claim being rejected. If the property is on the market, then your estate agent may do this for you (for a fee possibly) but as the executor it is your responsibility to ensure the conditions of the insurance policy are complied with.
Any amended or new policy should be in the name of the executors. Having the executor’s interest ‘noted’ does not necessarily entitle them to make a claim or receive the benefit of any claim proceeds payable under the policy; it may only mean that they are notified if a policy cover is cancelled or lapsed.
You should carefully consider the insurer you are using and whether they have experience of probate properties. Some specialise in probate insurance and may be more understanding of the responsibilities attached to being an executor.
If the estate is cash limited, you may have problems with payment of the premium. A specialist insurer may allow a period of time where unoccupancy conditions will not apply, or allow deferred payment of the premium until funds are available from the estate.