It can happen unexpectedly. Maybe you took an extended vacation. Perhaps you placed your home on the market and moved into a new one. Or maybe you’ve gone into a nursing home temporarily. If you’ve moved out of your home for any reason – including renovation – your home insurance policy may have moved out, too.
Unfortunately, a common clause in home insurance policies says that coverage is void on vacant homes – and you probably won’t realize your home insurance has vanished until it’s too late.
Most home insurance companies will give you a time frame for how long your house can be vacant before coverage vanishes. According to the Insurance Information Institute (III), most insurers discontinue coverage on a home if it’s unoccupied for over 30 days. Some may allow up to 60 days.
What’s the deal? Insurance companies label vacant homes as high risk. Unoccupied homes are more likely to become victims of theft, vandalism, fire and water damage.
Having no one in the house can leave potential problems undetected for a long period of time. Who knows when someone will report a leak in the basement or the electrical problem that can lead to a fire and, depending on the neighborhood, there’s the potential for squatters.
Before you vacate your home, take a good look at your insurance policy and ask your agent for guidance. Some insurance companies will grant you a “vacancy permit,” provided it’s requested before the vacancy goes into effect. However, the permit does not cover the same perils as your home insurance policy. According to III, it will cover perils such as fire and wind but not theft, vandalism or water damage. Vacancy permits vary from company to company. Check with your agent for specifics.
If you want to insure your vacant home against the same perils that your standard policy would cover, you’ll need to purchase “vacancy insurance.” This would include theft, burglary and vandalism. However, not all insurance companies sell it.
We have companies that specialize in vacancy insurance that will cover you for fire, wind, and hail in addition to “vandalism and malicious mischief.” Upon request, the policy could also include liability coverage in the event someone is injured on your property. If you do vacate the house, always arrange for someone to check on your home regularly.
Vacancy insurance can be expensive – expect much higher premiums than for a standard policy. You could pay 50 or 60 percent more for a policy on an unoccupied home as compared to a regular homeowners policy.
Saving money by renting out
There may be a less expensive option to buying vacancy insurance. You could consider renting out your home while you’re away. You will have to buy a landlord policy that generally costs about 25 percent more than a standard home insurance policy because landlords need more coverage than a typical homeowner. But that’s still much less expensive than buying a vacancy policy – and you’re collecting rent.
How will your insurer know?
Insurance companies do not need to spy on you to determine if your home has been left vacant. In most cases, it will become obvious when you make the claim. For example, if your home was vandalized by squatters (who made it their own home for a few weeks), that will appear in a police report. You may tell your insurer that you’ve only been gone for 29 days (to allude the 30 day vacancy deadline), but if police question your neighbors who say you’ve been gone for months, you may find your claim denied – and policy terminated. It’s always best to be honest with your insurance company.
Source: Foremost Insurance