When should I cancel my homeowner's insurance?
I have heard a few "horror" stories, and agreee. Tell your selling clients not to cut off their homeowners insurance until the transaction has been completed.
I have told mine to put the cut-off date a few days after closing for two reasons.
1) They have time to reactivate if closing doesn't take place, and;
2) they don't need remember to make that call.
A question my sellers most often ask as we get closer to closing is "When should I cancel my homeowner's insurance policy?"
I always emphasize how important it is not to cancel their homeowner's insurance policy until the proceeds are in their bank account from closing.
We see issues arise in this mortgage environment that can cause delays in closing on time or at all thus causing problems for sellers. The transaction is not complete until the proceeds hit your account!
Recently a title company told me of a transaction where the buyer and seller signed the closing documents, the wire was issued from the lender and then rescinded because they did a last minute credit pull. The buyer went shopping after closing and charged new appliances!! It took 30 days to resolve (30 more days the sellers owned the home and were responsible for insurance coverage) this issue.
We had a home close in 2009 in the morning after a very bad hail storm occurred. The owner owned the home at the time of the storm therefore their insurance covered the damages. I explained to them early in the process not to cancel their homeowner's insurance until their proceeds were in their bank account. They were so glad they did not cancel early because they were liable for the hail damage (which was extensive).
It's always better to be safe than sorry! Knowing procedures and consequences surrounding closing any real estate transaction is why a professional Realtor® is always recommended. If you are looking for a competent Realtor® with multiple references to guide you through the process from beginning to end and everything in between, please call me to schedule an appointment to see if we are a good fit.
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