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How an empty home could kill your insurance

By Posted : 04/29/2016

Empty home insurance

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Your home may be considered “vacant” or “unoccupied” if it is left empty for 60 or more days, according to the National Association of Insurance Commissioners.

If you leave home for several weeks, you could potentially void your homeowners insurance coverage. This is because vacant or unoccupied houses are at greater risk for vandalism, theft, weather-related perils and fire, but your policy premium is based on a lower-risk scenario where your property is occupied. Contact your insurer before leaving town for a lengthy period to make sure you have the unoccupied home insurance coverage you need.

Empty home insurance scenarios

There are various reasons a property might be empty, and each scenario may have a different insurance solution.

Scenario

Insurance options for empty home

Dividing time: primary and vacation home

Many insurers offer special seasonal and vacation home coverage for your vacation property, but you may also need additional coverage for the unoccupied primary residence. Consider a packaged deal that covers your part-time residency in two or more homes.

 

Medical treatment

Extended recovery from an accident, illness or surgical procedure may require you to be away from home for weeks. Ask a family member with power of attorney to check with your insurance company about what arrangements may be necessary while you are away.

 

Renovating

If your renovations are extensive enough to require you to move out, contact your agent about your coverage. Construction sites create special hazards: They can be very attractive to thieves who steal everything from light fixtures to appliances to copper wire and pipes. Building materials and equipment, as well as the normal disarray of home remodeling can also increase your liability risk.

 

Renting or selling

Rental homes can be empty for some time while owners clean and repair the property, advertise the rental and screen potential tenants. "Most insurance companies require either an endorsement or a separate, new home insurance policy for a dwelling left vacant while the owners try to rent or sell it," says Russ Dubisky, executive director of the South Carolina Insurance News Service.

Traveling

Homeowners who take extended trips may need to purchase an endorsement that provides additional coverage for their unoccupied residence.

Address anticipated scenarios with your insurance agent before your home is empty. You don't want to find out, after-the-fact, that a claim won't be paid or that your insurer won't renew your policy.

Important definitions: unoccupied home versus vacant home

Insurance companies draw distinctions between homes that are unoccupied and those that are vacant.

    • Unoccupied home. The property has been left as if the owners will return at any time.
    • Vacant home. The property is entirely empty, without any personal property inside.

    Defining a vacant vs. unoccupied home

    Unoccupied home

    Vacant home

    If the home is immediately suitable for occupation, it's considered unoccupied.

    The owner's personal property remains inside, the utilities are on and appliances are functioning.

    If a home renovation is limited enough that the furniture and other personal property can be left behind, the home is unoccupied.

    If you're on vacation or in the hospital, your property is also unoccupied.

    If a home is vacant, the owners have removed their personal property.

    The utilities may be shut off. This is more common when the property is on the market or being rented.

    Vacant homes pose significantly higher risk to insurers, and the price and coverage of vacant home insurance reflects this.

     

    empty home endorsementHome insurance companies have various rules about how long a house can be unoccupied before the insurance is canceled or an endorsement is required. That's because whenever a residence is empty, the property is at a higher risk for damage. For example, if the plumbing backs up or the roof springs a leak, extensive damage can occur because no one is on the premises to shut off the water or call an emergency repair service.

    Insuring an unoccupied home

    Home insurance companies typically require you to contact them and request an endorsement or a special permit for a home that will be unoccupied for 30-to 60 consecutive days. The time limit should be stated in your policy's vacancy clause. In some cases, you may be charged for a permit or endorsement, but unoccupied home insurance coverage is much less expensive than vacant home coverage.

    If you routinely divide your time between a primary and a vacation home, you may choose to purchase a package covering both properties when you are and are not in residence.

    Vacant home insurance

    A vacant home is harder and more expensive to insure. "A vacant home will require either an endorsement or a separate policy, depending on the insurance company," Dubinsky explains. "Some insurance companies will not insure vacant homes at all."

    "Coverage for a vacant home will be more restricted than regular home insurance, covering standard perils such as fire and wind, but not perils, such as water damage due to frozen pipes, glass breakage or vandalism," says Richard Caughron, a senior product manager at MetLife.

    Cost to insure an empty home

    Coverage limits and premium costs for unoccupied and vacant homes vary, based on how long the dwelling will be empty, its vacant or unoccupied status, and the steps you take to protect your property. For example, an unoccupied home may be covered with the addition of a permit or endorsement, and this typically costs less than $100. Without it, damage that occurs while you're away is unlikely to be covered.

    empty home 2

    Vacant home insurance, on the other hand, is considerably costlier--between 1.5 and three times as much as standard insurance for occupied properties. However, the higher rate is an annual one. Most property doesn't stay vacant year after year, and many vacant property insurers recognize this, allowing you to prorate the annual cost and only pay for the time you need.

    Be honest about your empty home

    Don't try to pretend that your empty home is occupied. Never lie to your insurance company when you are buying homeowners insurance; it could provide grounds for denying a claim and may result in the cancellation of your policy. It's not difficult for an insurer to tell if the damage you're claiming happened because no one was there--how else would vandals have been able to shack up in your living room, or a small water leak turn your basement into a swimming pool?

    If you fail to inform your insurer that the property is vacant, and your company cancels or declines to renew your policy, your new policy is likely to be even more expensive-- our-to-five times the cost of a standard policy, according to Jack Hunglemann, author of Insurance for Dummies.

    How to save on empty home insurance

    Asking a house sitter to watch over an empty home may help reduce your insurance cost. Individual insurance companies vary in the way they view house sitters. Dubisky says that having a house sitter or neighbor check on your property may not make a difference to your insurance company, since the property is not occupied by the owner.

    On the other hand, "MetLife views a home with a house sitter as occupied, so no surcharge is applied while the sitter is in residence," says Richard Caughron, a senior product manager at MetLife.

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