Can insurance companies claim lapse of coverage in a situation where a purchase of home is thru a relative who maintains their coverage on the home until move in of the relative who purchased the home?

Answer 1

Yes. The previous owners insurance policy coverage does Not pass through to a new owner. You can not ride off the previous owners insurance policy.

If all you had was the previous owners insurance policy, Then you had no insurance at all. You and your property were effectively uninsured. If a loss occurred, payment would be denied based on the fact the the named insured (previous owner) no longer has an ownership interest in the property and the new owner never contracted for an insurance policy. The old policy does not belong to you as a new owner.

The previous owners policy was a contract specific to that named owner and his or her owned property with the insurance company and was between them. Once they sell, it is no longer their property. A new owner is not a named insured under the terms of the previous owners policy. The previous owner being a relative does not change this.

.

When a property sells or changes hands the previous owners Insurance Policy ceases the exact moment down to the exact hour minute and second of the day the property changes hands. All coverage under the previous owners policy stops, it is null and void whether or not the insurance company has yet been notified of the change in ownership.

The new owner has a responsibility to purchase and qualify for his or her own insurance coverage. All Property Insurance policies are like this and it is clearly stated in the terms of the insurance contract.