Cancelling Your Insurance When You Sell
If you are selling real estate, keep in mind that you will want insurance coverage on your house or other buildings until the sale proceeds are in your pocket. Think twice before cancelling your insurance early just to save a bit on premiums. While a loss during those days is not that likely, it is a possibility.
Vacating for Even a Short Period of Time may Void Coverage
Most insurance policies say that your policy will be void if your property is vacant for more than a few days. Some might do so in 48 hours. Some might give you 5 days. Your insurance company will consider your property at greater risk because no one is there to monitor what is happening to it. The fact that they continue to collect premiums won't help you. Therefore, if you move out of your existing home into a new one that you have purchased, there may be a period of time that your policy is void simply because you have vacated it more than the permitted number of days. You may need to have your policy amended to cover the gap and pay a higher premium for that. The only way to find out if this will apply to you is to read your policy booklet or ask your insurance agent.
Keep your Coverage in Place until the Money is in your Pocket
Some people cancel their insurance effective the day the buyer moves in. The problem is that in the vast majority of Saskatchewan real estate sales, the land titles office will be processing documents for a few days and then the buyer's mortgage company will need to advance their funds after that. If your former home burns down or is damaged during that time, the buyers' mortgage company will probably refuse to advance. The buyers' insurance company may or may not cover the loss, and regardless, they are not your insurer so they will not be looking after your loss. The solution is to keep your own policy in force until you are paid out. Some insurance agents tell people that once the buyer takes possession, you no longer have an insurable interest in the property. I doubt this is correct. Your are an "unpaid vendor" and that is considered a legal interest in the land. Therefore my view is that you still do have an insurable interest. Regardless, if a loss occurred during that time, you surely would be in a better position with a policy that had not yet been cancelled. That's better than no policy at all.
If Your Convert Your Home to a Rental Property
If you decide to keep your home when you move and make it a rental property, discuss this with your insurance agent. A change in use may void your policy unless you notify your insurer and have the policy amended. Talk to your insurance agent if you are doing that.
Notice: The information on this website is general in
nature only. It relates to Saskatchewan, Canada and may not be
applicable in your jurisdiction. It does not constitute legal
advice to you and no solicitor client relationship will be established.
You should seek specific legal advice regarding your circumstances
from a lawyer entitled to practise law in your jurisdiction.
www.rickcarlson.com | Thu, 23 Mar 2017 17:11:10 CDT1
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