Transferring a Deed? Don’t Forget Homeowners Insurance, Too!

Understanding how to keep your insurance in line with the transfer of a deed.

Many people have questions about the legal effects of transferring their residential real estate to an adult child. There can be some benefits to doing this, but it is important to understand the potential disadvantages before you proceed. There are basically three ways of “putting a child’s name” on real estate: 1) an outright gift; 2) a deed reserving a life estate; 3) a “transfer on death” deed.

No matter how you decide to transfer your property to your children, it’s important that you don’t forget one important element: insurance! Homeowners insurance is there to protect the property and your wallet from facing serious damage after a covered incident. However, for this policy to even be effective, the policy must have the name of the current owners, whether it is yours or your children’s.

There is such a thing as an ‘additional insured.’ This includes people and even organizations that are covered by the policy’s property and liability coverage. This can include the spouse of the insured, as well as blood relatives that are currently living with the insured.

When the insured dies, it will be his estate that becomes the temporary insured. At the end of the policy period, the policy will no longer be renewed. The insurance policy is not automatically transferring to the heir of the property, so it is important to ensure that all of your bases are covered. Generally, the heir will have to negotiate with the insurance company about coverage, taking up precious time and money in the period that should be spent grieving. What’s more, when the child needs to file a homeowners insurance claim, he or she could face large issues if the policy is still in the parent’s name.

If you decide to make a change like this, transferring a deed to your home to your children, then also take the time to call up your home insurers. The insurance name must match the name on the deed!

You’re going to need the right homeowners insurance to cover your home from all things life has in store for you. Contact the independent insurance professionals Perry & Carroll in Elmira, New York for all of your homeowners insurance coverage needs this season.