Our insured, a widow with two adult kids, dies in a house fire. Her son, who planned to move out soon, escapes unharmed. Her daughter, who lives out of state but stores a drum set in the basement, is the executrix and returns home to handle next steps and insurance.
Notable Timestamps
[ 01:00 ] - The son planned to move into his girlfriend's apartment by the end of the month
[ 02:00 ] - The death clause in the HO3 form is explained as a critical provision ensuring the dwelling remains covered after the named insured's death until the estate can be settled.
[ 03:00 ] - The policy language of the death clause states that the legal representative of the deceased is insured for the premises and property.
[ 04:00 ] - A legal representative is typically the judicially appointed executor or administrator, not just an heir.
[ 05:00 ] - Courts have generally held that the death clause overrides the personal property of others clause, which would likely preclude coverage for the daughter's drum set as she was not a resident insured at the time of the fire.
[ 06:00 ] - The son, who was living in the house at the time of the fire, is covered for his personal property, though he cannot make a claim for the dwelling itself.
[ 08:00 ] - The son's ALE coverage would cease if he moves in with his girlfriend, and the daughter is not entitled to ALE because she was not a member of the household at the time of the named insured's death.
[ 09:00 ] - The difference in ALE coverage for the son and daughter reflects the insurance policy's goal to maintain the pre-loss situation, covering the resident son but not the non-resident daughter.
[ 10:00 ] - Coverage under the death clause is intended as a temporary measure providing peace of mind to the family while they settle affairs, and it ends once the estate is settled.
[ 11:00 ] - If the legal representative deeds the house to themselves after the named insured's death but before a loss, coverage under the original policy terminates because the insurance follows the named insured's personal interest, not just the property.
[ 12:00 ] - Once the property is deeded to new owners (even family members), they must obtain their own insurance for coverage.
[ 13:00 ] - John provides a recap of the scenario and the points above.
Your PLRB Resources
Annotation on the Death Clause - https://www.plrb.org/documents/death-ho120/?search=death
Coverage Question: "Does the Death Clause Prevent the Insurer From Cancelling the Policy?" - https://www.plrb.org/documents/does-the-death-clause-prevent-the-insurer-from-cancelling-the-policy-pcq-2019-11-19-twh-a/?search=death%20clause
Case Law Review: "Insurable Interest Lost When Executor Transferred Property To Self" - https://www.plrb.org/documents/archer-v-cotton-states-mutual-ins-co-2010/
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The views and opinions expressed in this resource are those of the individual speaker and not necessarily those of the Property & Liability Resource Bureau (PLRB), its membership, or any organization with which the presenter is employed or affiliated. The information, ideas, and opinions are presented as information only and not as legal advice or offers of representation. Individual policy language and state laws vary, and listeners should rely on guidance from their companies and counsel as appropriate.
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