Halloween is just around the corner, and that means another season of ghosts, ghouls, goblins and other scary creatures. If you own property that’s currently vacant, the last thing you want from that property is a haunted house of insurance nightmares.
The devil is in the details.
Maybe you’ve moved on and are waiting for your last home to sell. Perhaps you enjoy a vacation home a few times a year, but it sits empty the rest of the year. Or maybe you’re searching for the right tenant for your rental property. Regardless of the reason your property is unoccupied, one of the biggest hobgoblins you face is insurance.
That’s because uninhabited properties are inherently risky, whether it’s vandalism, fire, theft, weather-related perils, water damage or slower emergency response times. And most homeowners policies won’t cover losses from these risks if the property has been vacant for 60 days or more. Some drop coverage after 30 days. That means you’ll be paying for damages out of your own pocket.
Here’s another frightening reality: if your standard homeowners policy has been canceled or nonrenewed due to vacancy, you may have a hard time finding insurance for that vacant property. When you do, it may have limited coverage with a reasonable premium, or standard coverage levels at sky high premiums.
5 ways to prevent a vacant property insurance nightmare:
- Understand “vacant” vs. “unoccupied.” Your property is “unoccupied” if it has furniture, appliances, hooked up utilities, etc. and is ready to use as a residence. Your property is considered “vacant” if it’s entirely empty with no personal property inside. It’s an important distinction for insurance purposes, since a vacant home is a higher risk than an unoccupied home.
- Insure early on. If your home is going to be uninhabited for 30 days or more, get unoccupied or vacant home insurance. You can get it as a separate policy or as an endorsement to your existing homeowners policy. Unoccupied property insurance can be pretty reasonable. Vacant property coverage is more expensive, but in many cases, you can reduce the expense by reducing risks as outlined below.
- Avoid the exclusion trap. Want to avoid all of those nasty little vacancy exclusions and restrictions, and avoid having your policy canceled or nonrenewed? Keep enough furniture in your unoccupied property so it can’t be defined as “vacant.” If your home is already empty, consider renting furniture or having your realtor furnish the home with prop furniture for showing to potential buyers.
- Reduce the risks. Take measures such as installing an alarm system that monitors for fire, smoke, burglary and temperature; renting your home month to month; or getting a friend to act as a live-in house sitter. Any of these measures can lower your premiums.
- Take nothing for granted. Even though these measures will lessen your risks, don’t ever assume you’re covered without knowing the details. Insurance coverage decisions are ultimately made on a case-by-case basis, so discuss your situation and your options thoroughly with your insurance agent.
Don’t get caught in a costly web of risk with your vacant property. Talk to the insurance pros at Higginbotham today.