At the outset of every estate, we warn our client/executors to investigate the home insurance status of the property formerly occupied by the deceased.
Sometimes the deceased will have been the last person living in the home and it is now vacant. It is crucial that the executors in writing advise the insurers of the death of testator (the person who made the Will) and the occupation status of the home. Most home insurance policies have a vacancy exclusion clause. Namely, if no one is living in the home there is no insurance coverage.
Insurance companies generally will provide insurance coverage to an estate either in return for a higher premium or if arrangements are made for regular inspections of the property.
Not only must the notice to the insurer be made in writing, the insurer’s written confirmation of ongoing home coverage is crucial.
If you are an executor and fail to attend to this detail, you may very well be personally liable if the estate suffers any loss due to an absence of insurance.
In the recent Ontario Superior Court decision of Gregson v. CAA Insurance, the Court summarily granted judgement in favour of the insurer. In that case, the homeowner became mentally incapable and was eventually transferred into a retirement home where she died. The home had been vacant for a significant period of time and a loss was suffered due to water damage. When the deceased’s estate trustee attempted to make a claim, it was denied based upon the vacancy exclusion found within the insurance policy. This case simply brings home a long-standing rule that insurer’s first reaction upon receiving a claim is to attempt to determine whether or not there is coverage or there is a method by which they can deny such coverage.
Again, we repeat, this is an important obligation of an executor/estate trustee.