6 Tips to Follow When Dealing with Homeowners Insurance When You Sell Your House
When you’re in the midst of a home sale, your to-do list seems never ending, which is why homeowners insurance may be at the bottom of your list — or not on it at all. Unless you’ve spent time in the insurance industry, you’re likely unfamiliar with the intricacies surrounding your home policy, but it’s as important a time as ever. Let’s take a look at some tips to make sure you’re properly insured when it comes time to sell your home.
1. Get to know your insurance agent
There’s no time like the present! Once your house is listed on the market, put a call through to your insurance agent to let them know you’re in the process of selling. Your agent can walk you through what you’ll need to do in preparation for your home sale, as well as advise you if you’re planning on purchasing a new home at the same time. If you’re moving out of state, your agent can even help you locate a trusted agent in your new locale to make sure your insurance needs are handled properly.
2. Don’t cancel too early
When you’re keeping your home show-ready, hunting for a new home, and trying to finalize any last-minute repairs, you’re buried and likely a little stressed. The last thing you want to think about is dealing with homeowners insurance when you sell your home, but the reality is that it’s very important and can possibly make or break your home sale. In fact, when you chat with your agent about listing your home, they’ll likely tell you not to cancel your insurance policy too early.
Murphy’s Law has a funny way of undermining even the best of intentions. In your haste, you told your agent to cancel your policy on your closing date, but a paperwork error on the buyer’s end pushed back closing by several days. If you’ve canceled your policy and something happens to your home before closing, you could be in for costly repairs, or even worse, have the sale fall through. Better safe than sorry — wait until the paperwork is signed to cancel your policy.The cancellation can be backdated to the date the home officially closed by providing your closing documents so it only makes sense to wait until after the closing.
3. Document and catalog
Among the many tips for selling your home, organization takes precedence when you’re getting your place show-ready. As you sort through items, create an inventory of your household goods, if you’ve not already done so. If creating a list is too cumbersome and time-consuming, photograph your home or conduct a walk-through while recording a video. If you have the time, it’s extremely beneficial for you to photograph or record serial numbers on your valuables. On the off-chance that something happens to your home goods during the moving process, your well-documented inventory will make the claims process smoother.
4. Ensure that you’re insured
Another reason why you want to communicate with your insurance agent is so that you know whether your home goods are covered for your move. If you’re using a professional moving company, then you should know that your items may not be insured under your homeowners policy in-transit, but are the responsibility of your movers (Talk to your agent to discuss the specifics of your policy). Your agent can guide you in choosing the insurance options that make the most sense with your moving company.
This is also a good time to talk about different types of personal property protection (replacement cost v. actual cash value) and scheduling valuables on your policy. In fact, a discussion with your agent could uncover that you’re underinsured and put you on the right track for adequate coverage. Your agent should be able to tell if you have the proper endorsements to be fully covered in the event they are residing elsewhere.
Many people find themselves in a situation where the closing dates for their home sale and new home purchase don’t coincide, which means they may find themselves owning two homes for a period of time. Again, this is important for your insurance agent to know, especially if you’re moving into your new home before you close on the sale of your current home.
Insurance companies often have different guidelines and coverages for homes considered vacant — which your home will be if you’re moving out before closing. Make sure you have the appropriate coverage by clearly communicating with your agent. Vacant homes carry higher risks, which is why many insurers have a clearly stipulated time period of vacancy before a policy is canceled; you may need to get a different or new policy to cover your home in the interim. When in doubt, call your agent.
6. No transfers allowed
If you’re purchasing a new home after you sell, you should know that homeowners insurance policies are not transferable, so make your agent aware of your plans to avoid any unexpected delays. Home insurance policies are specific to the home being insured, and take into account everything from the age of the home to the materials used to construct it. Allow enough time to have your new policy drafted by your insurance agent and you’ll be set to close on your new home.