Whose Insurance Does What during “DELAYED POSSESSION”?

Got this great question from Jennifer Allan, author of Sell With Soul today and thought the answer might be helpful.

Hey Dennis…

What’s the deal when a home sells and closes, but there’s a delayed possession – that is – the seller retains possession of the property for a few days past closing to move out?
If there’s damage… which homeowners policy pays? The buyer’s (who owns the property, but hasn’t yet taken possession) or the seller’s (who no longer owns the property)?


WOW! Great questions, Jennifer.

Homeowners insurance for the buyer goes into force to close escrow. After the closing, the BUYER owns and insures the house. Should there be damage to the home, it would fall on the BUYER’S insurance to cover the loss. The new owner would be responsible to pay the deductible. (there could be some stipulations in the RENT BACK AGREEMENT about that, but without some agreement to the contrary, that’s how it would likely settle out.)

Loss to any contents of the SELLER (those items remaining while they move out) could be covered one of two ways.

1. Using the homeowners insurance for THEIR (the sellers) new home
2. Using Renters Insurance if they’re moving to a rental

Most insurance companies offer at least 30 days of “EITHER PLACE” coverage. In other words, their stuff can be covered by their existing policy for up to 30 days in the old OR the new location. So if they’re moving to another home, they will have homeowners insurance in place on that new home. If they’re moving to a rental, they need to roll their old homeowners insurance over to RENTERS INSURANCE for the new residence at the close of escrow, In either case, the EITHER PLACE coverage still applies using the new insurance policies to cover their contents during moving.

If you have any questions, please call, write, email, signal flags, or smoke signals…. 🙂

p.s. My insurance company, which is available nationwide, offers additional location coverage without a time limit. In other words, your stuff is covered anywhere in the world — PERIOD. Doesn’t matter if you’re moving, storing, vacationing, or stocking your Ski Chalet in Switzerland.
Point here being that not all insurance companies handle this situation exactly the same. Check with your local insurance professional to be sure.


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