How To Handle Inheritance And Divorce
Divorce is a major life event, and sits at the top of the list with buying a home. One of the reasons why divorce is such an important occurrence is because it can significantly affect your finances. Even though you may not be planning on getting a divorce, knowing how it can impact your homeowners insurance situation is important.
Name Changes
Divorcing can mean that one spouse may keep the home. If that's you, you will have to ensure you’re your homeowners policy is changed so that only your name is listed on it. At this time, you may also want to take an additional look at your policy to see whether or not it's current and reflects your new needs.
Two Terms
There are two terms that should be fully understood before making any changes to your policy. These are replacement cost coverage and cash value.
Replacement cost coverage is the amount paid to you in order to replace or repair the home and any personal property.
Cash value is how much you will receive from the insurance company for the market value of your home. Cash value will not cover you for any replacements.
Location Of Insured Items
If your spouse removed some expensive items from your home that were insured under your policy at that time, it's important to ensure that these items are no longer listed on the policy. Otherwise, you will be paying for coverage on these items indefinitely.
Inheritance And Homeowners Insurance
If you receive an inheritance from a loved one in the form of a second home, you will need to notify your insurance company that you are the new 'named insured'. This will allow all claims filed by you to be covered.
You will have a grace period for finding a new policy, as coverage from the original policy will continue for a specified time after your loved one has passed. You can confirm this deadline by getting in touch with the insurance company.
The most important thing you can do if you received a home as part of an inheritance is to keep records of all your communications with the insurance company. This will help ensure that everyone is on the same page should there be questions in the future.
Selling Your Inherited Home
Some who inherit homes think that they don't need a valid homeowners insurance policy until they sell the home. But this means risking not being covered should something unforeseen occur. This will result in the insurance company not paying for losses, as they are no longer under obligation to do so.
Planning Ahead Is Key
Whether you're getting a divorce or have inherited a home, planning is critical. As soon as possible after divorcing or obtaining your inheritance, contact the necessary offices and have the required changes made.
And although it may take some time at the outset, going over your homeowners insurance policies now can benefit you in many ways in the future.
