Vacant Home Insurance: What Is It and Do You Need It?
What happens if homeowners have to vacate their properties for a few months? Perhaps they are military members who were deployed overseas before they could sell their homes. Or maybe they are homeowners who have moved into a new house but haven't found a buyer for the old property. Landlords may also find their investment property vacant for weeks, even months.
Whatever the case may be, a standard homeowners insurance policy will not cover a home if it's been vacant for 30 or more days. You'll need special policies called unoccupied or vacant home insurance to protect vacant homes.
Vacant vs Unoccupied Properties
Your insurance company defines a home as vacant or unoccupied if it's left empty for 30 or more days. There are slight differences between an unoccupied home versus a vacant home.
Unoccupied homes have personal property inside and utilities are turned on. Vacant homes must undergo significant preparations before they become habitable. These homes have no furniture or belongings inside. Utilities may be shut off.
These are several reasons that a property may be vacant:
- Homes that were recently sold or put on the market.
- The owners may have moved away from the property and not put it on the market.
- Houses that must undergo major renovations or repairs are often left vacant.
What Is Unoccupied and Vacant Property Insurance?
Unoccupied and vacant insurance are specialty insurance products. These coverages provide protection for uninhabited homes against covered damages and losses.
A standard homeowners insurance policy doesn't cover vacant properties because they pose a greater financial risk to insurance companies: Crimes and emergencies in vacant homes can go unnoticed or unreported. Thieves target unoccupied homes for their appliances and valuables. Squatters also use unoccupied homes as places to stay and may cause damage. People may vandalize a home's interior and exterior walls or arsonist can ignite a fire that causes extensive damage. The homeowner would have to pay for these expenses without the help of home insurance coverage.
Unoccupied and vacant property insurance is the only type of home insurance that will protect your properties from named perils. However, many insurers charge higher premiums for these at-risk properties.
What Does Vacant Home Insurance Cover?
A vacant home insurance policy covers the same situations as a standard home insurance policy, except it covers uninhabited homes.
Your plan may cover the following perils as the source of loss:
Coverage options and rates vary depending on the vacant home insurance provider, your insurance profile and the home's location.
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Do You Need Vacant Property Insurance?
There are several situations when you should consider vacant house insurance.
- You're selling your home or renting – Consider vacant property insurance if you've purchased a new home, but your old home is still vacant as you search for a buyer. Also, consider it if it's a rental property that is uninhabited for an extended period of time (more than 30 days).
- You're renovating your home - You have bought an older home that needs renovations and repairs before you move into it.
- You're using a home as a vacation property – If you own a second home in a vacation spot, you may need second home insurance. If you leave the home unoccupied for an extended amount of time, consider a vacant home insurance policy.
- You're undergoing medical treatment that will leave you hospitalized – If you will spend weeks or months in a hospital, consider purchasing vacant home insurance while you're gone. (Under some circumstances, they may allow you to keep your standard home insurance policy.)
Standalone Policy vs Endorsement Add-on for Vacant Home Insurance
You can purchase unoccupied or vacant home insurance as a separate policy or endorsement. Standalone vacant home policies can cost up to three times what a standard policy costs, but a limited endorsement can be as inexpensive as $100 more per year on a standard home insurance policy.
Endorsements: An endorsement is an an add-on coverage to a standard home insurance policy.
What Is the Average Cost of Vacant Home Insurance?
You will pay 50 percent more for unoccupied or vacant home insurance than a regular homeowners insurance policy. More homeowners will pay about $500 more annually for unoccupied and vacant home insurance, which will increase premium costs.
For example, the average homeowner in Florida pays about $3575 per year but would pay $5363 for a standalone vacant home insurance policy; in California, where the average home insurance policy is around $986 a year, the vacant home insurance would go up to $1479.
Does a Landlord's Policy Cover a Vacant Home?
Standard landlord policies cover common perils including fire, wind, lightning and tornadoes. An all-risk provision expands this coverage to include vandalism, theft, malicious mischief and other events.
For instance, if an unhappy tenant vandalizes your home by stealing your appliances and spray painting your home's exterior, the all-risk provision will protect you.
Most landlord policies have vacancy requirements. They may reduce or cancel coverage if the property is vacant for more than 30 days.
Tips To Protect Your Vacant Home
Is your former home still on the market? If so, your vacant property could become damaged by natural elements, vandalism, and theft. Take the following steps to lessen risks from these dangers.
- Maintain your home's exterior – Make sure your home looks inhabited and well-maintained while it's on the market. Hire a lawn service or contractors to keep your home looking its best. Trim bushes and remove branches that could fall onto your roof during storms. Next, make sure you mow your lawn regularly in the spring and summer months. Clean leaves and other debris from gutters to prevent damage.
- Take precautions to protect your interior – To prevent thieves or squatters from entering your home, place working deadbolts on all exterior doors. Make sure that your windows are secure and locked. Your thermostat should remain at a constant temperature to prevent your pipes from freezing. Replace your thermostat battery if necessary. Additionally, seal all pet doors to prevent pests, like raccoons, mice and other animals from entering your home.
- Increase security – Place motion sensor lights and entry alarms around your property. Trim hedges to eliminate hiding places for criminals. Next, close the blinds to stop people from looking in. Add timers for lights and add a unit that simulates a flickering television to deter thieves.
- Enlist watchers -Ask your neighbors and friends to monitor your vacation property. Ask them to occasionally park in your driveway to make it seem occupied. Notify the fire and police department that your home will be vacant and leave your phone number.
- Get a vacant or unoccupied home insurance policy - It will protect your property in case the unexpected happens.
Buy a Vacant Home Insurance Policy to Protect Your Uninhabited Home
Standard home insurance policies don't protect vacant or unoccupied homes, because they have an increased chance of damages due to fire, theft and other named perils.
You'll need a vacant or unoccupied insurance policy to protect your home if you will be away for more than 30 days. Although these policies are slightly more expensive, they will provide you with peace of mind and financial protection.
You can search for an affordable vacant home policy using SmartFinancial's insurance comparison engine. Best of all, the service is free. Just enter your zip code below and answer a few questions to find the right insurer in your area.
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