What Happens to My Homeowners Insurance Policy When I Sell My House?
You will likely go through a myriad of emotions the first time you sell your house. It is a thrilling and exciting time for you and your family but can also be quite stressful and confusing. You will likely feel overwhelmed at times with a ton of unanswered questions, such as what to do with your existing bills for your previous house, namely your homeowners insurance policy.
It is important to understand that your current homeowners insurance policy does not transfer over to your new house after you sell, nor will it transfer to whomever purchases your house. This is because two houses are different from each other, with different conditions and coverages. A homeowners insurance policy is specific to one home only and considers:
- The age of the house.
- The amount of money put down on the house.
- The size and physical location of the house.
- The cost to repair or rebuild the house.
- Any previous repairs, like a new roof that was done by the previous owner, and when it was done.
- The amount of your current mortgage.
- Any issues your neighbors with similar homes may have had related to the area you are in.
What Should I Do When Selling My House?
The best thing to do is to contact your insurance agent when you put your home on the market. That way, they could guide you through the process of canceling your policy and how to get any refunds on any premiums you had paid, and how to get a new policy on a new home. Many insurance companies have different processes on how to cancel your homeowners policy, and some have penalties if you cancel too early or too late. It is important to discuss the matter with your insurance agent first.
You do not want to cancel your homeowners policy before your house goes to closing. It must stay on your home until it is officially no longer yours. It is recommended to let your insurance agent know when your closing date is, and if it changes for whatever reason, to let your agent know of the change so they can keep your policy going. You need to have your homeowners policy canceled as soon as your house is closed on so you are not paying a bill on a house that you do not own.
Depending on how you pay for your policy, it will likely tell you if you will get a refund or not. For instance, many policy premiums are paid monthly, bimonthly, every six months, or every year. If your closing date is on a month that you do not renew your policy, you should be able to secure a refund on the months you no longer own the house. If you pay your premium annually and sell your house on the sixth month, then you should be refunded the remaining six months. Again, speak with your insurance agent if you have any questions on refunds.
When you purchase a new home, your mortgage lender will determine how much insurance coverage you need for your new policy. However, you are granted the ability to pick your own insurance company and deductible amount if you so choose. You will need to do this before the lender approves the mortgage, as proof of homeowners insurance is a must to close on the new home.
Selling a home is a difficult process, and you may need the help of an experienced attorney. A lawyer will guide you through the real estate process and assist when issues arise.
Annapolis Real Estate Lawyers at Oliveri & Larsen Help Families Selling or Purchasing a New Home
If you are selling your home and need legal assistance, contact one of our Annapolis real estate lawyers at Oliveri & Larsen. Call us at 401-295-3000 or fill out our online form for an initial consultation. Located in Annapolis, Maryland, we serve clients in Ocean City, Anne Arundel County, Baltimore County, Baltimore City, Calvert County, Harford County, Howard County, Queen Anne’s County, St. Mary’s County, Worcester County, Kent County, and the upper and lower Eastern Shores of Maryland.