Insuring Your Vacant Home

Posted January 13th, 2010
by Staff (no comments)

In the current real estate market, it’s not uncommon for a home to go unsold for months, or even years in some cases. During that time, sellers often move out of the property into a new home, forcing them to leave their home vacant. In addition to the financial burden of paying on two separate homes, there is another challenge specific to folks in this situation: insuring the vacant home.

Homeowners insurance is a must in this day and age. It goes without saying that, if disaster strikes, you want the home you live in as well as its contents protected in the event of a disaster. However, your homeowners insurance may not automatically cover damage that occurs to a vacant property. In fact, an insurance company may even choose to drop the homeowners policy coverage once a home is vacant.

Why are vacant homes such a problem for the insurance companies? Well, a vacant property can be a serious risk. An empty house is an attractive nuisance. All sorts of unsavory folks, such as vandals and thieves, are drawn to vacant homes. In addition, vacant homes create a higher degree of liability than a home that’s occupied.

When you have a vacant property, you’re typically left with two options. First of all, you could add an endorsement to your current homeowners policy that will cover the vacant home as well. This kind of endorsement would cover the vacant home as well, but at an additional premium. You may be eligible for a variety of discounts on this endorsement, as well, depending on your insurer and your situation.

The other option you have is to purchase a separate homeowners insurance policy for the vacant home. This isn’t necessarily the best option for most people, as the cost of a separate policy will typically be significantly higher. Still, if your insurer won’t add the vacant home to your policy as an endorsement, this is how you’ll have to handle it.

The main thing is to notify your insurance company when you vacate a property. Your homeowners policy likely has an exclusion for things like “neglect” or for “abandonment of property.  If there is damage to your vacant home, the insurance company many not cover it if the home was empty at the time. Alternatively, if you don’t notify the insurance company that the home was vacant at the time of the claim, you could be liable for insurance fraud.

In some areas, there are now also vacant home insurance policies, specifically designed for this type of situation. Check with your insurer to see what options are available to you.

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