You've decided to sell your home and set out on the path to more living space, a shorter commute— and hopefully— the figurative and literal greener pastures. Depending on what stage of the sales process you're at, it's vital to your financial and mental well-being to understand and cut through as much of the red tape as possible. There will be contracts to sign and disclosures to complete, and with any luck, you'll find a buyer and the sale will go off without a hitch. Homeowners insurance should be one important item on your administrative to-do list. A few different scenarios that follow should guide you through exactly how to handle your home policy as you move on to bigger and better things.
For Sale and Owner-occupied
It's likely that you've decided to list your home for sale but either have not found another dwelling or are in the process of closing on another property. In the first instance, you have but one homeowners policy to manage, and that should spell business as usual. The deed to the property is still in your name and your possessions haven't been moved to another location. Pay your premium as you always have, and don't reduce coverage in the interest of saving a few dollars.
For your new property, you will need to secure a second home policy as closing nears to protect both your own budding financial interest in the property, and that of the bank.
One way to reduce your cost on that second policy would entail reducing personal property coverages to bare minimums since all your stuff hasn't been moved from the home listed for sale. Your current owner-occupied contract fulfills all the coverage needs you've always had: physical damage to personal property and structures, liability insurance, and maybe even an identity theft rider.
For Sale and Unoccupied
Another common situation for home sellers unfolds after you close on the new property but have yet to sell the former residence. Here's where things get a bit tricky—and understanding the nuances of the home-for-sale policy becomes paramount. You will still need to maintain both policies and don't entertain thoughts of cancelling the old one until the deed legally changes hands. Even if you have a buyer and the closing is two days away, deals have been known to break down— for a variety of reasons— at the eleventh hour.
Furthermore, should the house you offer for sale sit on the market for more than 60 days, it's crucial to discuss this consequence with your insurance company. Each carrier has different underwriting rules around unoccupied homes and as days on the market accumulate, you may need to pursue a replacement policy that applies specifically to vacant dwellings. Empty homes pose much higher risks to insurers when no one is around to keep an eye on things.
Ideally, you don't want to juggle two mortgages and two homeowners policies. Yet in the real world, you have to prepare for any eventuality. The temporary cost burdens of maintaining two homes pale in comparison to leaving one home at risk to a fire or windstorm, and the last place you want to be is out on the street should a crippling hazard drain all your resources. Homeowner rates for one, two or more homes can be easily compared by visiting Insurance Hotline.