Q: When should you cancel your homeowner’s insurance policy after your property has sold?
A: When you have all of your funds in your bank account.
Maintaining your insurance on your property until you have your full balance of funds protects you in the event of something happening to the property before your funds are in.
As your lawyer I am to protect your legal rights, I advise strongly to maintain your insurance. You have an insurable interest in the property until your funds are in your account. The hope would be that if something happened to the property before you receive your funds that the buyer would make a claim to their insurance and you would receive your funds thereafter. However, if for whatever reason the buyer is unable to do this, imagine if their mortgage lender pulled their funding and left the buyer without funds to provide to the seller. In this instance as your interest in the property is maintained and your insurance as well, you can make a claim to your insurer and be compensated.
Relying solely on the buyer’s insurance is not a risk worth taking when the stakes are so high. It is my strong recommendation to be overly cautious when protecting one of your most valuable assets And so, to put it simply, do not take the risk of relying on others for your protection, rely on your own insurance and know that you can sleep easy with your funds protected. One month of a premium to your insurer is worth protecting the potential losses and legal issues should something happen before you have your sale proceeds in your account.
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