What happens to homeowners insurance when a property is sold?

When a property is sold, the homeowners insurance typically requires action from the seller and buyer, making it necessary to either cancel the existing policy or transfer it to the new owner. Most homeowner insurance policies are not designed to automatically transfer to the new owner due to differences in coverage needs and the financial responsibilities associated with the property.

The original policyholder is responsible for the insurance, which means that upon the sale, the new owner will need their own policy that meets their specific needs and requirements. The existing policy may no longer be valid once the ownership changes hands; thus, it’s important for the new owner to secure their own insurance coverage as part of the purchasing process to ensure continuous protection.

This necessity for cancellation or transfer reflects the standard protocols in the real estate market, making the correct understanding of homeowners insurance critical during property transactions.