How do you insure an inherited or vacant home in Michigan? Call the agent right away. The existing homeowners policy generally continues for the estate's legal representative, but it was written for a home someone lives in. Once the house sits empty, vacancy and freezing provisions can cut coverage, so most empty homes need a dwelling or vacant-home policy.
The short version: Don't cancel the policy and don't assume it still works. Tell the insurance company the owner has died or moved out, keep the heat on or have the house winterized, check on it regularly, and get the right policy in place before it has been empty for 60 days. If you plan to rent it out, talk to us and to a tax adviser first.
What happens to the policy when the owner dies
ISO's 2011 homeowners form (HO 00 03 05 11, an edition many carriers still build from) has a "Death" condition. When the named insured dies, the policy covers the deceased's legal representative, but "only with respect to the premises and property of the deceased covered under the policy at the time of death." Until a legal representative is appointed, the person with proper temporary custody of the property is covered for that property. Carriers' forms vary, but many work similarly.
That keeps coverage from vanishing overnight. It doesn't make you, the heir, the policyholder, and the policy can't simply be transferred to you: assignment requires the company's written consent. The policy also assumes someone lives in the house. Its definition of the "residence premises" is the dwelling "where you reside."
The vacancy problem
Empty houses have more claims and worse ones: undiscovered leaks, frozen pipes, break-ins, vandalism. Homeowners policies limit coverage when a house is vacant.
- Vandalism and glass breakage. Under ISO's 2011 homeowners form, vandalism and glass breakage aren't covered if the dwelling has been vacant for more than 60 consecutive days before the loss.
- Freezing. Freezing damage to plumbing and heating systems isn't covered unless you used reasonable care to keep the heat on or shut off the water and drain the systems. That applies whether or not the house is vacant.
- Other forms. Many carriers' own forms have stricter vacancy terms than ISO's. A furnished house that nobody lives in may be treated as "unoccupied" rather than "vacant," but the policy language and the facts decide that, not a rule of thumb.
The right policy for an empty house
When a home is going to sit empty while the estate is settled, while it's cleaned out, or while it's listed for sale, it usually belongs on a dwelling policy or a policy written for vacant homes. These policies are built for houses no one lives in, and terms vary a lot by company. Liability coverage often has to be added separately, and it matters: you're still responsible if someone is hurt on the property.
If you plan to rent the house, it needs a landlord policy. See Michigan landlord insurance, and if you're thinking about short-term rentals, read our Airbnb insurance guide first.
Protect the house in the meantime
- Keep the heat on at a safe setting all winter, or have a plumber shut off the water and drain the systems.
- Visit regularly and keep a record of when. Ask a neighbor to watch the house.
- Secure it. Change the locks, remove valuables, and keep the lawn and snow cared for so the house doesn't look empty.
- Consider monitoring. Leak sensors, low-temperature alerts and an automatic water shut-off can catch problems weeks earlier. See does homeowners insurance cover frozen pipes.
A property tax issue to know about
This isn't an insurance rule, but it catches many Michigan heirs. An inheritance is generally a transfer of ownership that lifts the cap on the home's taxable value. There is an exception for residential property passed to certain close relatives, such as a child, sibling or grandchild, if the property isn't used for a commercial purpose (MCL 211.27a). Renting the home for 15 days or more a year counts as a commercial purpose and can lift the cap. The new owner generally has to file a property transfer affidavit within 45 days. Talk to your attorney or tax adviser before deciding what to do with the house.
Frequently Asked Questions
What happens to homeowners insurance when the owner dies?
Under many policies, including ISO's 2011 homeowners form, coverage continues for the deceased's legal representative for the premises and property covered at the time of death, and the person with temporary custody is covered until a representative is appointed. It doesn't make an heir the policyholder. Call the company or agent right away.
Does homeowners insurance cover a vacant house in Michigan?
Only partly, and not for long. Under ISO's 2011 form, vandalism and glass breakage aren't covered after 60 consecutive days of vacancy, and freezing isn't covered unless you kept the heat on or drained the systems. Many carriers' forms are stricter. An empty house usually needs a dwelling or vacant-home policy.
How long can a house be vacant before insurance stops covering it?
Under ISO's 2011 homeowners form, vandalism and glass breakage coverage stops once the house has been vacant for more than 60 consecutive days. Other carriers' terms differ. Talk to your agent before the house has been empty for two months.
Can I keep my parent's homeowners policy after they die?
Generally not as your own. The policy continues for the estate's legal representative, and it can't be assigned to you without the company's written consent. When ownership passes to you, or if you'll live in the house, it needs a policy in your name.
Do property taxes go up when you inherit a house in Michigan?
Often. An inheritance can lift the cap on taxable value, and if no owner lives there, the principal residence exemption can be lost. Michigan has an exception for residential property passed to certain close relatives that isn't used for a commercial purpose, and renting it 15 or more days a year can end that exception. Ask your attorney or tax adviser.
The bottom line
An inherited house is often an emotional, busy time, and the insurance is easy to forget. The costly mistakes are letting the old policy quietly stop fitting the house, or canceling it before something else is in place.
J. Jacobs & Associates is an independent agency in Lake Orion that has helped Michigan families since 1981. We represent more than twenty carriers and write specialty dwelling coverage, so we can find the right coverage for a house no one lives in and keep it protected through the estate, the cleanout and the sale. Call (248) 693-6455 or visit our specialty dwelling insurance page.