Brian, when should my seller's cancel their homeowner’s insurance?

To be safe sellers should not cancel until the deed is recorded, the payoff is received, and they have proceeds in hand.

 Sellers want to cancel as soon as possible because they get the balance of their premium refunded.  But they should make sure they are no longer deemed to be the owners of the property because they run the risk that they will be responsible for a loss without insurance to pay for it (a house fire for example).

So, when are the sellers no longer the owners? Since the contract says the “seller bears the risk of loss until settlement” it might well be that once all the conditions of the contract, the lender, and the Wet Settlement Act are met that “settlement” has occurred, but it makes no sense whatsoever to test that theory in court with one’s fortune at stake.  Rather, prudence would dictate that they wait until the three conditions I noted above are met.  Typically, these are completed within 7 days.

Use that as an opportunity to touch base with your seller.  Remind them not only to cancel insurance, but also to look for an escrow and excess payoff refund from their lender (and perhaps pursue an MIP refund also).

I would think they would feel very well represented if you do.  And so they should.