Many homeowners don’t think twice about their insurance when they sell their houses. Unfortunately, if they jump in and cancel it too quickly, they may end up with a gap in coverage which can create a whirlwind of issues. So, you may be wondering, “How do I handle homeowners insurance when I sell my house?”
Making sure that you’re well-informed about your home insurance needs as a seller is essential for peace of mind. Otherwise, you could run the risk of canceling your policy too soon and incur extra costs if or when the unexpected happens.
Handling Homeowners Insurance When I Sell My House
Homeowners insurance is the protection of a person’s home and property in the case of disasters such as fires, water damage, natural disasters, explosions, and more. The vast majority of homeowners have home insurance, as it is a requirement for those who are financing their house. Every home insurance policy covers the structure, built-in appliances, and fixtures, while most, but not all, also cover personal belongings and liability.
Home insurance policies tend to be fairly confusing for the homeowner and the majority of homeowners are not fully aware of all that their policy entails. This can cause confusion when the owner is looking to sell their house, as they’re unsure of their responsibility during the sale period. It’s always a good idea to speak with your insurance carrier or home insurance company, to understand your policy limits and the best way to ensure extra protection for your home.
Homeowners Insurance and Selling Your Home
While you will keep your homeowners insurance throughout the entirety of your homeownership, you may be wondering what to do when you are selling your house. Many homeowners prepay their insurance when making mortgage payments. This money is put in an escrow account for distribution.
If you sell your home, your insurance coverage will remain in effect until the final payoff is sent in by the mortgage company. Any excess escrowed insurance money will be paid back to you.
Financing and escrow make it pretty simple to keep your home insurance until your house is sold, protecting you and your home until the last moment. Maintaining home insurance until your home is officially sold is important, as unforeseen circ*mstances can occur.
Personal Liability Insurance During Showings
Many homeowners insurance policies include personal liability insurance. This is important coverage that protects the homeowner if someone is injured on their property.
When you’re selling your home, you can expect a parade of people through it as showings commence. This could put you at risk for a lawsuit if someone is injured on your property.
With personal liability insurance, you have help and support in the rare case that someone is injured during a showing. If your home insurance policy doesn’t contain personal liability coverage, you may want to consider looking to add on the coverage as you begin the home selling process.
Insurance Cancellations
If you are buying another home while selling one, you can simply transfer your insurance policy over to the new house. Just make sure that you don’t transfer your policy until the house you’re selling has closed.
If you’re going to cancel your policy, and you currently have an escrow account, you won’t need to take action. Your mortgage company will handle everything and will make sure that you get your refund check for any money left behind. For homeowners that pay their bills themselves, a simple call to your insurance company when it’s time to cancel will suffice. This call should be made 1-3 days after closing, to ensure there are no problems.
Wrapping Up
Selling your home can be difficult and stressful. There are a number of things you’ll need to consider and take care of as you sell one home and move elsewhere.
A homeowners policy can be canceled or transferred to your new home. This shouldn’t be done until directly after the sale, to ensure proper coverage. Keep you and your home safe during the entire sale process.
If you have any additional questions about homeowners insurance or the next steps, call us! We’d love to help! You can also visit our website for basic information on the types of insurance that work best for you and your family.
