When Insurance Claims Meet Extenuating Circumstances: Moving, Sale, & Foreclosure

Posted on June 28, 2018


Hayden Haskins | author

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ICHQ | Site Author

Homeowners and flood claims are never easy processes to navigate, particularly alone. Matters can only become more complicated when your claim meets extenuating circumstances. There is a lot that can happen with the status of your home over the course of an insurance claim. You may put your house up for sale and end up moving, or, in the less favorable scenario, your home may enter foreclosure. While these instances may present scenarios less-commonly encountered by your insurer, you are hardly the first one to experience them. So, while resolution in your claim may not be as cut-and-dry as in a more orthodox situation, there are still answers nevertheless.

First, it is worth discussing what happens to a homeowners insurance plan when you move, regardless of whether or not you have an open claim. The good news is that this process is fairly straightforward. As you would with your cable service when you move, simply call your provider and make a representative aware of your situation. From there, you will receive assistance in either cancelling your plan or transitioning it to a new home. If you have paid advance expenses on your existing policy, you stand a good chance of receiving a refund. Note that if you do transition policies with your provider, you will not be able to keep your existing policy for verbatim. Different homes require different types and levels of insurance. For example, moving near a fault line will certainly require much more insurance than a home somewhere dormant. However, staying with your current provider should be welcomed. Insurers tend to give credence to long-time customers.

When it comes to moving when you have a pending claim, there are more factors at play. Fortunately, there is more good news—you can, indeed, sell your home concurrently with a pending homeowners insurance claim. So, if a job opportunity or family illness presents itself a long way from home, you are not tethered to your property until the end of your claim. You may be wondering who will receive the final payouts—you or your buyer. The answer to this question comes down to assignment. Most policies dictate if insurance funds can be reapportioned to another party besides the policy-holder, as well as if the insurer has a say in the matter or not. In short, if the claim is not assigned to the buyer, the purchase price generally goes down to even out the matter. If the claim is assigned to the buyer, the purchase price reflects what it would have been regardless of the incident in question.

If you are moving under the terms of foreclosure, chances are, you already have a lot on your mind. However, do not neglect the importance of insurance. Your homeowners policy will most likely be cancelled, so it may be worth considering getting a temporary contents policy to protect your belongings while the lengthy process is being carried out. If you are being foreclosed upon while you still have a pending insurance claim, you may have to resign yourself to the fact that you will not see any of these funds. Like in all claims, your insurance check is forwarded to your mortgage company from whom you must await release. If your home is in pre-foreclosure, your insurer may decide to release partial funds to make intermediary repairs on your home. However, if the foreclosure is being carried out, your mortgage company may retain the funds as a piece of their investment (hence why the bank is involved in all insurance claims processes).

While there are, indeed, solutions for moving with an active insurance claim, the motives of your insurer may be the main culprit of complication. Keep in mind that insurers will try to delay claims when there is a sale involved or may try to cheat you out of reasonable funds during pre-foreclosure. If you are experiencing such a scenario, contact a property casualty attorney to ensure that your insurer is acting in accordance with your insurance policy.

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