If you have recently inherited a property, making sure that it remains properly and adequately insured is likely to be one of your immediate concerns.
Why is it an immediate concern?
The property, together with any contents you have also inherited, is at risk of all manner of perils which may result in its loss or damage. Property insurance provides the first line of defence against such risks.
Upon inheriting the property, you are likely to find that it was previously insured either by the person or people who bequeathed it to you or by the executors of their estate.
When ownership of the property passed to you, so too did the so-called “insurable interest” in it – as the new owner, you became the one likely to suffer financial loss in the event of damage to the property. In other words, for any insurance to be valid, it now needs to be in your name.
Empty property insurance
If you have only recently inherited the property, there is every chance that you are still undecided what to do with it – do you plan to take up residence as your new main home, for example, or do you intend to let it to tenants? Are you going to sell it? While you are making up your mind, the property is likely to stand empty and unoccupied.
That is when the house you have inherited is probably at its most vulnerable – with no one to keep an eye on it and report the need for repairs, even minor maintenance jobs may turn into major disasters. A still greater risk may be posed by intruders, squatters, vandals or arsonists, who are invariably drawn to empty and vacant property. Make sure that your buildings insurance policy is specially designed to cover empty properties.
Although you have had every indication that you will inherit the property, it may still be subject to probate. During this period, responsibility for insurance rests with the executors of the deceased’s estate, and they need to have arranged probate insurance to this end.
If you plan to take up residence yourself, or eventually let the property to tenants, you might decide to update, upgrade or generally renovate the home. Structural alterations – such as the addition of an extension or a reconfiguration of the internal layout – are likely to call for a specialist form of cover known as renovation insurance.
This insurance is specifically designed to protect damage to the existing structure of the building – something which regular property insurance is unlikely to do, whilst building works are in progress – and also provides essential cover whilst the property is unoccupied during the course of the building works.
With the building works complete, the types of insurance you need is driven by your decision on how to use the property. In the meantime, if the property stands empty whilst awaiting sale or the completion of renovation work, don’t forget you’ll need unoccupied property insurance.
If you decide to take up residence in your inherited property, you need standard home building and contents insurance.
The total building sum insured needs to be sufficient to completely reconstruct your property following any major insured event that has resulted in a total loss. The contents insurance must be enough to cover the cost of repairing or replacing lost, stolen or damaged items – either on a “new for old” basis or after the deduction of an allowance for “wear and tear”.
If you chose to let your inherited property to tenants, the appropriate cover might be found in buy to let or landlord’s insurance.
This protects the structure and fabric of the building and any contents you continue to own as the landlord. But it also indemnifies you against the liabilities you may face as the landlord – if a tenant is injured on the property, or has his own belongings damaged, for example. Landlord insurance may also provide compensation for loss of rental income following an insured event which leaves the let accommodation temporarily uninhabitable.
Further reading: Making sense of probate and empty insurance for properties