The Importance of Insuring Estate Property

If the Deceased owned and occupied a home or secondary residence like a cabin or cottage at the time of death, the property will remain vacant until it is sold or transferred to a beneficiary. It is therefore essential that the property be properly secured and insured by the executor.

If the executor fails to secure and insure property, the executor will be liable to the beneficiaries for any damage and resulting loss in the value of the property. It is therefore necessary for an executor to arrange for and obtain insurance. It must be noted that the cost of such insurance is to be covered by the estate and is not meant to be an out-of-pocket expense for the executor. If there are not enough liquid funds available in the estate to pay the premiums, the executor could pay the same and seek reimbursement from the estate once the property is sold or from the would-be beneficiaries (should they wish to keep the property). If a property will remain vacant, the insurer must be made aware and will likely require periodic inspections of the property as a condition of insurance coverage.

Insurance premiums for vacant property tend to be more expensive than an occupied home. It is never a good idea to conceal the fact that the property is vacant from an insurance company in order to save money on the insurance premiums. Vacancy must be disclosed to the insurance company at the time of securing the policy in order to avoid the insurance company’s attempt to deny coverage in the event of damage or vandalism.

Grass cutting, snow removal and maintenance must be continued in order to discourage vandalism.

If the property is left vacant, especially in winter, it is necessary to ensure heat is supplied to prevent the freezing of pipes. The alternative would be to arrange for the shut off of utilities and draining of water pipes to avoid damage and possible liability to the executor.

If property is to be occupied by one of the beneficiaries, the executor must determine who is responsible for the maintenance and upkeep of the property, payment of expenses associated with the property and whether the beneficiary, as occupant of the property, must pay rent to the estate. All arrangements must be in writing, failure to do so can, at best, sow the seeds for a major family dispute among beneficiaries and, at worst, make the executor personally liable to the estate for the costs incurred by the estate in maintaining the property for the occupant and for lost rent.

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