"If you have two people (husband/wife) as named insureds on a homeowner policy and one of them passes away, when is the right time to remove the name of the deceased person as named insured on the policy? Should the remaining insured be changing the name on the deed to remove the deceased person so that the deed matches the named insured that is still alive? Should we, as the agency, be asking for a copy of the death certificate?"
I think this is more of a legal question. There doesn't seem to be any additional exposure for the insurer if the deceased person's name remains on the policy until the family, or their attorney, specify a change. I would be uneasy about an agency launching into this on their own initiative. But certainly, the insurer needs to be made aware of the death of a named insured.
That is a great question for an attorney to answer. First of all, a death certificate is required since a signature is no longer available. There is no rush as losses are settled on an "insurable interest" basis at the time of the loss. There is no change in premium with the notification. It may be a wise idea to send a copy of the death certificate and notification letter to the insurer and let them decide what and when to do it.
In cases where the surviving spouse is the sole inheritor and executor of the deceased’s estate, removing the deceased spouse as a named insured poses few problems. An agent could insist on a copy of a death certificate or they may feel that confirming things by checking the obituaries is proof enough against fraud.
If the executor is to be someone other than the surviving spouse, then leaving the decedent’s name on the policy will provide limited liability coverage to the executor, at least for the remainder of the policy period.
The other question to ask is who will inherit and when. If ownership of property will transfer to heirs to a trust upon death, then those interests may need to be shown on the policy in order for them to be protected.
The parties to the contract are the named insured(s) and the insurer. Ask the insurer how to handle it and whether they need a birth certificate. Leaving the name on may not pose a problem unless there is an insurable interest on the part of the deceased’s estate that doesn’t include the spouse. Removing the deceased should probably only come from the surviving spouse at the recommendation of an attorney. But, again, this is the insurer’s call, not the agency’s call. Most policies state that changes can only be made/initiated by the named insured(s) and insurer.
My parents passed away in 2008 and 2011 respectively and neither name was removed from any insurance contracts until the estate was closed and properties sold. I was most likely more cautious than required, but when the potential legal action would be presented it would then be too late.
By all means seek the counsel of a highly recommended estate attorney. Legal counsel has specialties and this area of the law is no different. This process should begin with a simple will for your parents while alive and competent to avoid the state respectively seizing the assets for lack of proper preparation.
Wait until the executor of that person’s estate tells you all matters are closed and so authorizes you to remove that person as named insured.
You should change it on renewal or earlier if the wife asks. You don't need a death certificate unless you have a life policy. The wife should talk to a lawyer about the deed, not an insurance agent.
I feel this article did not address an important point.
Until the deceased is removed from the policy, any claim check will be made out to all named insured’s and additional interest for endorsement. If the estate is closed out and the name is left on the policy, there is may be no way to endorse and deposit a check. Of course if the bank will except the executor/administrator signing the check in their capacity, this is fine, but I have run into situations where the bank will not do this, unless the estate is reopened and a new account is set up; necessitating going back to the insurance company and having to ask that the claim check be changed not to include the deceased name. This then requires obtaining documentation of death certificates, appointment of executor/administrators etc.
So I agree with the statement leave the deceased on the policy until the estate has been “closed out”, but make sure to take them off the policy once this happens.
As always thanks for excellent articles. I request that all of my team sign up for the VU newsletter so they can benefit by vast amount of information available as an IIABA member…One of the many benefits of being a member.
Matthew F. Clarke, AAI
OceanPoint Insurance Agency, Inc.
Last Updated: August 7, 2015
July 30, 2015