After talking to my dad the other week, he mentioned his home isn't insured, because he can't afford it. I've been looking up policies which would suit him, and I'm planning on paying for the policy myself in his name, because his home is in a rural area close to bushland in Australia.

However, in considering this, I wanted to know what would happen with the policy if, for example, there was a bushfire that destroyed the house and he were to die as a result of that. Would there be an insurance payout made to his estate, or would the policy be voided upon his death?

I worry that there will be a bushfire that forces him out of his home and he loses everything, with no insurance. But I also worry that he's the type to try and stay and defend his property (which is utterly un-defendable, as it borders on a mature woodland forest), so I'm just wondering what would happen in that situation.

  • 7
    Note that the insurance company will likely exclude any natural disaster already in progress.
    – Mattman944
    Jan 9 '20 at 9:38
  • Does the house have a mortgage on it? Then (at least in the US) the policy will first pay off the mortgage.
    – jamesqf
    Jan 9 '20 at 17:59
  • Also relevant (at least in the US): If a home has a mortgage and no suitable insurance protecting the lender, the homeowner is probably in violation of the mortgage contract.
    – spuck
    Jan 9 '20 at 19:33

If an insurance policy holder dies, the proceeds go to a second listed beneficiary, and if none are listed, to beneficiaries via will, or last, to the estate of the policy holder. With house insurance, as with car insurance, there can be an issue of rebuilding/repair vs the insurance company claiming total loss, but that's not quite the question here.

  • 1
    That's how it works in the US, but are you sure that's how it works in Australia?
    – RonJohn
    Jan 9 '20 at 14:48
  • It would be an interesting scenario if the house is willed to someone specific. Would the insurance payout go to the new house owner, or to the general estate of the deceased former owner? Jan 9 '20 at 16:05
  • Interesting question indeed. I would assume that since the property is still there (land the house was built on) it would go to the new owner as if the house was destroyed after it was inherited.
    – xyious
    Jan 13 '20 at 16:35

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