Always make sure you notify the insurers if a property is left empty after a death.
If the deceased owned a property which they occupied and the house policy is held in the name of the deceased or in joint names you will need to inform the insurers. If there is a surviving party still planning to live in the house a simple notification of death of the holder will be required with a request to transfer the policy into the name of the surviving party.
When a property becomes unoccupied, insurance companies need to be notified immediately of the situation and cover would normally be unaffected for 30 days following this. However, following on from this initial 30 day period, cover may be restricted and there may be additional requirements to the policy until the house is sold or becomes occupied as set out below. Additionally, when the policy falls due for renewal your insurance company may request that cover is replaced elsewhere, usually at a higher annual cost. In any event, you should consider obtaining competitive quotes when renewal is due. You should also ensure that premiums will continue to be paid, particularly if they are currently paid from a bank account or credit card that will be frozen.
Potential changes which the insurer may make to the policy
- The policy excess may increase
- The property may need inspecting internally and externally at regular intervals
- Accidental damage cover may be removed from the policy
- Cover will not be provided for valuables, personal money and credit cards.
- Cover will exclude contents in the open
- Cover will exclude loss or damage to food or drink in any freezer in the home
- Cover is sometimes restricted to Fire, Lightning, and Aircraft & Explosion perils only.
Other Considerations – Typical Warranties
Escape of Water Clause – escape of water is normally excluded during the period 1st October to 1st April, unless the Central Heating System is in continuous operation at not less than a minimum temperature of say 18C or alternatively the premises’ water system is turned off at the mains and drained.
Inspection Warranty – if the property is unattended or unoccupied for more than 30 days, then the property must be inspected by either the Insured or the Insured’s representative. The property may need inspecting internally and externally every 7 or 14 days.
Minimum Security Warranty – It is warranted that all final exit doors are fitted with a five lever mortice deadlock and that all ground floor windows and all other accessible windows are fitted with a purpose designed window lock. It is further warranted that all such deadlocks and window locks are in operation whenever the premises are left unattended.
Protection Clause – it is a condition of the policy cover that all protections provided for the safety of the insured property be maintained in good order throughout the period of this insurance and be in use at all times when the Premises are left unattended. Such protection shall not be withdrawn or varied without the Insurer’s consent.
Terrorism Exclusion Clause – it is agreed than this policy excludes loss, damage, cost or expense of whatsoever nature directly or indirectly caused by all losses arising from biological, chemical or nuclear substances.
Advise any providers of life insurance of the death of the deceased by letter enclosing a certified copy of the death certificate and requesting a valuation. A review of the bank statements will usually identify regular payments which could include premiums on a life policy if you are unsure as to whether one exists. However some policies are fully paid up and premiums are not still being paid. Other policies may be written into trust to avoid Inheritance Tax but the provider should be able to let you know if this applies.
A policy written into trust is reported separately to other assets. It does not form part of the estate and is not liable for Inheritance Tax. It has the further benefit of being paid to the beneficiary named in the policy as soon as the insurance company receives a copy of the death certificate. If you are unsure as to whether a life policy exists the Association of British Insurers offer a search facility. Visit UK Unclaimed Assets.
These are a type of insurance policy that include a life insurance element. Typically they are designed to pay off the outstanding mortgage on a property. Write to the insurer with a copy of the death certificate and request a valuation.
Private medical insurance
Write to the insurer with a copy of the death certificate and cancel the policy. Study the benefits offered by the policy because it is possible that you can make a claim – for instance you may be able to claim for time spent in hospital.
Death in Service benefits
Not strictly insurance, but nearly all pension schemes will pay a lump sum on the death of an employee. If the terms of the scheme make the lump sum payable to the executors of the estate then the money forms part of the estate for Inheritance Tax purposes. Most schemes, however, are held in trust. Providing the trustees have absolute discretion to distribute the sum as they see fit then these payments will be free from Inheritance Tax. When schemes ask employees who the payments should be made to, this is often not binding in order to provide the necessary discretion.