In early spring of 2019, a home was damaged by fire, nearly a year after the homeowner’s death. The heirs submitted a claim under the homeowner’s policy, which had been issued in the name of the deceased. The insurance carrier denied the claim, canceled coverage, and refunded all premiums that had been paid under the policy since the renewal date. The policy had been renewed by the insurance carrier three months after the homeowner’s death, so what could be the problem? After all, the policy indicated that the home would continue to be insured after the homeowner’s death.

The court sided with the insurance carrier and determined that a renewal of an insurance policy is a new contract. Because the homeowner was already deceased when the policy was renewed, and the insurance carrier was not informed of that, there was no contract. In other words, a contract for insurance coverage did not exist at the time of renewal because the homeowner was not alive to agree to it. The heirs made arguments as to why the claim should be satisfied, including that the premiums were paid and accepted by the insurance carrier, but the court did not agree. Thus, the insurance carrier was correct to deny coverage under contract law.

One of the first items that a personal representative or trustee should address after someone dies is any real estate owned by the decedent. Catastrophic damage can occur by mother nature or mischievous individuals looking to damage vacant property. Contact the insurance agent and your attorney immediately to determine who should be named an additional insured under the policy, particularly if the policy is up for renewal after the death of the homeowner and the property remains in the decedent’s estate or trust.

Do not hesitate to call Wright Beamer at 248.477.6300 for answers to your real estate and trust or estate administration questions.