Insuring an Inherited House

Inheriting a house comes with added liability and property damage risks. That means you want to be sure to have the right type of policy in place to keep your own assets protected. Depending on your plans for the home, you have several choices when it comes to insurance.

No matter what type of insurance policy you select, be sure to go over all the coverages and limitations so you have a crystal-clear understanding of your risks. That’s especially true if you don’t plan to live in the property. Spending a few hours reviewing your policy can save you mountains of headaches and financial problems.

Average Monthly Cost of Homeowners Insurance in the United States

Inheriting a House and Insurance Options

When you’re inheriting a house, the deceased homeowners policy doesn’t automatically transfer to you. You’ll need to get your own policy. Unless you plan to move into that home, you likely won’t qualify for a traditional policy. That’s because homeowners insurance is for homes that are the primary residence of the policyholder. They typically do not provide coverage for a home that’s unoccupied for stretches of 30 days or more. If you don’t plan to take up residence, it’s almost guaranteed that once the home transfers, you won’t be able to get a standard homeowners insurance policy on the property.

Insurance companies are in the business of risk, and they know vacant properties can be targets for vandals and thieves. What’s more, when a property is empty, there’s no one around to prepare for storms or make sure that tiny leak or electrical issue doesn’t turn into a major flood or fire. As a result of that increased risk, unoccupied insurance policies can be quite expensive. The good news is, you may be able to purchase a policy that covers the property for three to six months while you get ready to sell, a cheaper alternative to buying a policy for a full year.

Suppose you decide you want to rent the home. As a landlord, you want to protect your home from damage. That means you’ll need a landlord insurance policy, also called a rental property policy. Rental policies protect you against many types of damage to your property. They also provide liability protection if someone is injured on your property. When buying a landlord policy, it’s critically important to make sure you have ample coverage. You might even want to consider an additional umbrella policy for added protection and peace of mind.

Maybe your loved one owned a property in a popular vacation spot or other destination that’s near and dear to you. In that case, you’ll need second home insurance. Like unoccupied property insurance, second home insurance is more expensive than a regular homeowners policy because it recognizes the added risk that comes from having the home vacant during large stretches of time.

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