Homeowners Insurance

Couple questions, my mother has Allstate homeowners insurance, probably still under her deceased husband’s name, would an insurance company be stupid about this should she have to use it? Also what things do homeowners insurance usually cover? She wants to have her septic tank cleaned out, to help prevent some flooding, is there any way that this may get some type of credit (probably not, just thought I’d ask) that frequently happens with this home, or installation of sump pumps? It’s a house in Chicago below sidewalk level and there is not practical way to raise it. Thanks!

I can give you a general answer. Insurance is intended to cover *unexpected *costs like storm damage, fire or flood. They will always exclude anything that is predictable like clearing a septic tank because that’s just maintenance.

There will usually be a clause somewhere that requires you to maintain things properly, so a flood caused by a septic tank that should have been cleared would likely not be covered. If a gale blows your fence down, that is usually covered; but if it falls down because it’s old and rotten, hard luck.

A septic tank is supposed to be emptied on a regular basis. Our 1000 gallon tank is supposed to be emptied every five years.

Get your mother’s policy and read it. That’s the only way to determine what it covers and what it doesn’t.

For things like this she should carry a home maintenance policy. I have one that cost me $47 a month and it paid for things like a new electrical box (~$1400) when water got into the old one, a broken toilet and a non-working built in microwave.

Homeowner’s insurance is intended to cover catastrophic events, not normal maintenance. In general insurance should be used for protection against events that could wipe you out financially, like your house burning down.

I do not know what problems she will have if she tries to make a claim on a policy in her late husband’s name, but it is not a matter of whether Allstate is stupid. They are not. It may even be a legal issue. Your mother should get the insurance policy re-written in her own name.

The fact that the insurance is still in her late husband’s name suggests that there may be a bunch of other stuff she should have done as well. For example, she should also have had the house retitled in her name, as well as the mortgage, if there is one. At that time she should have also had the house appraised, if the house was titled jointly, because the cost basis of the half of the house she inherited would be stepped up to the value upon her husband’s death. This is a potential tax advantage to her if she ever sells the house.

Financial advice is best suited to IMHO.

General Questions Moderator

Second this advice.

If she ever has a claim, and the policy is ONLY in her late husband’s name (which was likely possible only if the property was exclusively titled to him as well), then she almost certainly will have a problem. How big a problem depends on state law and the exact language of the policy, which will affect how long the policy remained in force after the death of the owner/named-insured. That time period is typically something on the order of 90 days, or until the first renewal, or something like that. After that, in the event of a claim the insurance company would probably take the position that their only obligation is to return the premiums mistakenly collected after the policy lapsed. If she has a large loss, she could be SOL.

In some states and with some companies, she may be entitled to continue under the existing policy if she was living in the house at the time she inherited it, but that is not anywhere close to universal, and she’d need to verify that with the specific company involved.

Thanks for the responses! Well, I just figured out she had it changed to her name and the house by Illinois law, is completely hers as well, I should have looked better into it before posting and clogging up the board, but I was curious about the situation as it would have been anyway. Thanks again!