Do You Need Vacant Home Insurance?

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Vacant Home InsuranceAs normal homeowners, we sometimes need to move before we sell our old house. Similarly, real estate investors sometimes hold a house vacant because they don’t want to rent it out or are putting together plans for renovation. Whatever the reason, it may be wise to consider vacant home insurance so any theft, fire or water damage, will not destroy our investment property.

Homeowners insurance will cover losses that occur when a house is temporarily vacant because the occupants are on vacation or away on business. It will not cover losses when a home is vacant for an extended period of time since the risks of insuring an occupied property are different from those of insuring a house that is in use. Vacant home insurance is designed to cover property that is unoccupied for a prolonged period of time.

When Do You Need Vacant Home Insurance?

Most homeowner’s policies have a provision that terminates coverage if a house is empty for more than 30 days. If the property owner contacts the insurer within the 30 days, he may be able to get a coverage extension. When a homeowner thinks that a house may be empty more than 60 days, it is best to terminate the policy and buy vacant home insurance. The current economic climate has slowed real estate sales and houses can remain vacant and on the market for months.

Named Perils Policies

Most vacant home policies are named perils policies which only cover damage from causes specifically listed in the policy. Typically, the named perils are fire, wind, hail, electrical surge and lightening, and vandalism. Since unoccupied homes present a greater risk of loss to the insurer than homes which are occupied, vacant home insurance may be more difficult to obtain than a standard homeowners policy. Many major insurance companies do not offer vacant home coverage.

Covered Property

While standard homeowner’s insurance provides coverage for the contents of the home and for detached permanent structures on the property, vacant home insurance generally only covers the house itself. It is recommended that all valuables be removed from a home that will be empty for more than thirty days since vacant homes are easier targets for thieves and vandals than occupied properties. Permanent fixtures in the home are covered, but items that are not affixed to the building are usually excluded.

Condo Insurance

Since condos are located in occupied buildings, unoccupied condos present less risk to insurers than single family residences. Neighbors are likely to notice and report any damage to adjacent units or empty condos, and since many buildings have their own security guards and monitoring systems, condos are difficult targets for thieves. Insurance for condos generally have lower rates and the same coverage limitations as homeowner’s insurance on contents usually apply.

Rates/Cost

The vacant home insurance rates are typically 50% to 60% higher than standard home insurance rates because the risk of damage to the home is greater. If pipes freeze and burst and water floods the basement, no one is around to turn off the water or report the damage. A hole in the roof caused by storm or hail damage may cause significant water damage in an empty home before the problem is discovered. It may be possible to get cheaper home insurance quotes by having the home monitored regularly by a security system, neighbor, or house-sitter.

Monitoring Your Home

A comprehensive home security system that notifies a remote location, like a security company, can monitor the home when it is unoccupied. Since the system runs on the house electricity, power to the house cannot be disconnected and the system should be checked periodically to make sure it is operational. A friend or family member can monitor the house by walking through at least twice a week to check for any damage. Empty homes should be winterized professionally to minimize the chance of damage from burst pipes.

Liability Insurance Coverage

Since many unoccupied homes are for sale, liability insurance is an important component of any policy. Liability insurance protects property owners against lawsuits arising from injuries that occur on the property. Realtors, potential buyers and home inspectors will be in and out of a house that is for sale and this exposes the property owner to potential injury claims. The liability limit varies between companies, but property owners should choose a policy that offers at least $100,000 in coverage.

Vacation Homes

Vacant HomesSome people own homes they only occupy for a part of the year. If any home is empty for long periods, it needs vacant home coverage to cover damage that is not covered by a standard homeowner’s policy. Even if the home is leased during a portion of the year, a landlord’s insurance policy is needed to provide protection since homeowner’s policies do not usually cover property that is not occupied by the owner. If a home is not occupied for at least a part of each month, vacant home insurance is needed to cover damage to the property.

Lower Rates By Raising Deductibles

It may be possible to lower the rates for vacant home insurance by selecting a higher deductible on the policy. The deductible is the amount that the property owner must pay in damages. If a home policy has a $1,000 deductible and it suffers $2,500 from a covered loss, the insurer pays $1,500. Policies with deductibles of $2,500 or $5,000 have lower rates than policies with $1,000 deductibles but if the home suffers damage, the property owner must pay more out his/her pocket for repairs.

Home Insurance Quotes Online

Vacant home insurance may be difficult to find, but some websites online provide free quotes from several different insurance companies. Instant insurance quotes online allow consumers to compare the rates for different policies to find the best coverage at the most affordable price.

Whether a home is unoccupied because it is for sale or because it is a vacation home that is occupied only part of the year, standard homeowners insurance does not provide the financial protection property owners need. Vacant home coverage can help property owners cover themselves when their property is unoccupied for any reason.

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