Vacant Rental Units: Are You Sure You're Covered?

Vacation Rental Insurance

Everyone leaves their home vacant for an extended period at one time or another.It could be for going on a long vacation, a short term change of location for work reasons, because they are not in a position to occupy the house and do not want to sell or rent it out, they cannot find a buyer, or anything else. When a house is left vacant, the normal precautions are usually taken – locking everything up securely, informing the neighbors and the police, stopping deliveries etc. But what a lot of people do not realize is that when a property is left vacant for a period of time, the insurance cover may be affected.

An Increased Risk

Insurance companies feel that an unoccupied property has an increased risk over an occupied one. A vacant house is like a magnet that attracts vagrants, vandals and thieves who would not risk entering an occupied dwelling. And then there is the liability aspect. Kids climbing a fence to enter and explore a vacant building could get hurt. Or teens partying in an empty house could get into all kinds of trouble and risk a variety of injuries.

A normal home insurance policy will not cover the property if it is left vacant for an extended period of time – this is known as a ‘neglect’ or ‘abandonment of property’ exclusion. The time frame will vary from policy to policy (it is generally 30 to 60 days) but before leaving a property empty the owner should check to see for how long the property will remain covered and what will be the status after that.

Even though the home is vacant, the liability remains with the owner and this is something that a lot of people forget.

The Solution

If your home is going to be vacant for an extended period of time, it is important to inform your insurance company of the change in the status of the property. Insurance terms and conditions vary from state to state and restrictions vary according to the insurer. In most cases, insuring a vacant home is not a problem. All it requires is purchasing an endorsement to the existing home insurance policy to cover the period when the house will be empty. To not do so will not only expose the owner it the risk of substantial loss, it could be construed to constitute insurance fraud and the status of the property was changed –and the risk increased - without the insurer being informed.

When a property is empty and up for sale, it can be tempting to ignore the need for insurance.  Even if thieves break in, the damage will typically be a broken window or door. But those who enter the property could do significant damage that will affect the selling price and then there are the liability issues mentioned earlier. The risk is not worth it especially when getting vacant property insurance coverage is so easy.

Contact Your Insurance Broker

If your home is going to be vacant for any reason, contact your insurance broker and find out exactly what kind of coverage you will have during the period of vacancy and discuss with him or her the options available to you to increase the coverage and the protection you have.