Vacant houses stand out and get noticed. Even if you live in an area with many vacant homes that are newly built or you’re in an area with a high number of foreclosures, vacant houses get noticed. By thieves, by mischievous kids and other people that should know better.
You can have your homeowner’s insurance policy canceled and a claim denied if you do not inform your insurance company that your home is vacant for a period of time. Some insurers may want to know about a home being vacant after as little as 30 days whereas others may allow up to 3 months of vacancy before they will require a status change on your policy.
A change in policy typically requires you to pay a higher insurance premium as there are more liabilities and concerns with an unoccupied home. But the flipside is losing your policy if you aren’t honest with your insurer.
Do I Need Vacant Home Insurance?
Not only do you need a vacant home insurance policy when your home is empty, you most likely actually require one too. It’s a mandatory declaration by most insurance companies these days when your home is empty for a period of time.
When I was a kid there was one house around the corner from us that was empty for a number of months. I didn’t know the people who previously lived there and I have no idea why the house was empty. I heard it was empty from a friend of mine. And it was the only house on the street that had a visibly broken window on the front side, at least until someone got it fixed. Apparently other people knew the home was vacant, too.
Word gets around when homes are vacant and it attracts trouble. Vacant home insurance policies can be tailored to take into account the fact that there are different circumstances when a home is empty and not being lived in which helps to protect you the home owner against a number of potential problems. Let’s discuss them in more detail below.
Reasons For A Vacant Home
- You have moved out of this house but haven’t yet sold it yet or are simply deciding what to do with it.
- Or you just bought this house and don’t plan on moving in right away.
- You’re between tenants and plan to rent your home again but haven’t found new renters yet.
- Your home is being renovated and you had to move out for awhile for the work to be completed.
- The long trip you have planned is coming up and you’re going to be traveling for an extended period for work or pleasure.
- You inherited the home and are figuring out what to do with it.
- It’s a rental home and the season is over or perhaps business is just slow right now.
There may be other scenarios to consider. Remember, if your house is empty and no one is living in it for a period of time, regardless of the reason, your insurer will most likely consider it vacant.
Vacant Versus Unoccupied Home
What if you are hospitalized for weeks or longer either unexpectedly or due to a planned surgery and your home is now unoccupied? What if you have a second home – like a summer home in Arizona or Florida – that you live in during the winter but that is unoccupied mostly the rest of the year?
To add another wrinkle, insurance companies generally distinguish between a vacant home and an unoccupied home.
Vacant home: A home that is vacant and empty. No one lives there and there is no furniture or indication that someone currently resides there.
Unoccupied home: An unoccupied home is generally a home that has furniture and other furnishings but does not currently have anyone living there. Think of a vacation or summer home in Florida or Arizona that is empty during the summer and perhaps only occupied in winter. Or you are hospitalized for several months and your home is currently unoccupied as a result.
For the purpose of this article Do I Need Vacant Home Insurance, we’ll strictly discuss the answer to the vacant home question but do understand your insurer may distinguish between vacant and unoccupied home status.
Vacant Home Duration
Depending on how long your home may be empty, you can approach insurance companies to get quotes and to let them know the duration of the vacant status. Don’t be surprised when they contact you shortly before the end of that duration to inquire about whether or not the house is still empty.
Also don’t be surprised if you find out from your insurer that they sent one of their inspectors to take a look at the property to see if the information you provided is accurate.
Average insurance companies often offer vacant home insurance for existing clients because they know it can happen from time to time. They want to help clients – to a degree – but they’re not in the business of adding extra risk by insuring empty homes for the long term.
These days you may find insurers willing to cover a vacant home for 30 – 90 days at a time and if you’re lucky, perhaps up to 6 months to give you some time to figure out how to fill your house with someone.
Factors Determining Vacant Home Insurance Costs
The cost of vacant home insurance can be affected by a number of factors including:
Property Value: Not surprisingly the higher the value of the home, the more you have to insure in terms of replacement cost so insurance price will go up.
Amount Of Coverage: Depending on your specific coverage, the amount your home is insured for, deductibles and other factors, your insurance price may go up or down.
Property Location: Areas with higher crime should expect to pay more. Areas that also see higher rates of claims should similarly expect to pay more for vacant home insurance.
Amount of time the home will be vacant: Many insurers will either not insure a property full stop after it has been vacant for a period of time or they may require you to pay increasingly more as time goes on. They may also require a statement from you every so often as to why the property is vacant, when you expect to fill the home with an occupant, and what you are doing to occupy the home in the case where it’s a rental property.
Home Alarm: If you have a monitored home alarm system or other security measure, you may qualify for an insurance discount.
Pool and Hot Tubs: A swimming pool or hot tub is a major liability for insurers and home owners especially when it’s part of a vacant house. It’s possible that an insurer may inquire about emptying a pool at a vacant home or perhaps covering it with a safety cover which is securely fastened to prevent humans and animals from falling in.
Is The Home Being Monitored: Are you checking on the empty house on a regular (i.e. weekly) basis? Do you have a trusted person like a loved one or property manager doing this on your behalf? This may help to lower the premium when the insurance company knows that the house is being monitored. It may also be a requirement.
Home Maintenance: What are you doing to make the home look lived in? This is a specific question we were asked in writing when our rental home was vacant. For us, I confirmed that the blinds were kept shut so no one could look inside the empty house, my mum visited the home at least once per week to check on it, and I had a lawn maintenance company mowing the lawn as required. The insurer may want to know that someone is maintaining the house, mowing lawns, clearing snow in winter, etc.
Proximity To Fire Station/Hydrant: I’ve had at least one insurer that gave a discount if we were within a certain distance of a fire hydrant in case of fire. This was a general discount that we first received on our home owner’s policy separate from a vacant property policy but the protection against fire remains so it’s possible you may benefit from it.
Switching To A Vacant Home Policy
In my experience, once you switch to a vacant home insurance status, you may not go back to the same (lower) insurance price you had in the recent past when you eventually switch back to a regular home owner’s or renter’s policy when the house is occupied again.
When we switched from a tenant insurance to a temporary vacant home insurance policy, our monthly insurance price increased by almost 100%. When we switched back several months later to a tenant policy when the home became rented again, our new tenant policy was 47% higher than the original tenant policy from only several months earlier.
To summarize, we were paying a particular rate for a tenant insurance policy. We switched to a more expensive vacant home policy that almost doubled the monthly price for 3 months to start with. When we rented the house to a new tenant and switched back to tenant insurance, it was lower than the vacant home policy price but still a fair bit higher than the original tenant policy from several months earlier.
The reason we were given is that claim prices had gone up, etc but the reality was that by switching to a vacant policy, it gave the insurer the excuse to raise our rates when we switched back again.
Vacant Home Policy Terms
Your insurer may give you an open-ended vacant home policy but current trends seem to be the opposite: Insurers may allow you to keep a home vacant for 30 – 90 days at a time and may revisit the decision for an additional period, but eventually they may require you to occupy the home or find a new insurer. These days with increasing foreclosures and empty homes, insurers don’t want to be in the business of increasingly insuring vacant houses.
When our home was insured with a vacant home policy, here are the questions we were required to answer in writing several times as the policy was in place:
- When is it expected that the home will be occupied?
- Why is the home vacant?
- Who is inspecting or managing the home while vacant?
- What steps if any are being taken to ensure the home doesn’t look vacant?
- Send us current photos of the house.
Vacant Home Insurance Coverage
A vacant home requires insurance for similar reasons as an occupied one. But an empty house adds an extra layer of liability and problems that need to be accounted for.
Water Damage
Water damage from a leaking appliance, burst pipe or other problem can be very expensive and messy even if you’re home at the time or are close by. When the home is empty it’s potentially much worse especially if no one is checking on the house regularly. And even if they are, a lot of water can accumulate in between visits.
Shut off the main water supply line when not in use to prevent the chance that a leak could result when no one is home. Other things you can do is to ensure that your heating system remains at a certain temperature in winter if you live in a freezing zone as sub zero weather can burst water pipes.
Also consider special fittings on appliances and toilets that can prevent a flood if a water hose or pipe breaks. Some products detect a sudden high water flow and shut off water supply to stop a potential flood.
Cold Weather Concerns
Cold, wintry weather brings a number of potential problems and more so when you live in a region that gets snow, ice and freezing temperatures. We already spoke about freezing water pipes in the winter. Wintry weather needs to be accounted for in a vacant house especially if the furnace breaks down. I had it happen twice in two consecutive Januaries when the igniter broke and the furnace stopped working.
There is also the issue of snow removal especially if you have a driveway and even more importantly if you have a sidewalk. An uncleared driveway shows that the house is likely empty. Someone falling on your uncleared sidewalk could create a legal problem for you if they sue.
Fire Damage
An electrical fire or other fire in your home could obviously cause significant damage and may not be immediately noticed if the house is vacant especially if you live in a remote area or in privacy where other houses are not easily visible and may not see your house either.
Theft Or Attempted Theft
While a good vacant home insurance policy will cover theft or attempted theft, you want to try your best to make your home look lived in so that you don’t experience an attempted break-in.
Even if your home is unfurnished at the time, you may have appliances and other items that could potentially be stolen. You could also have the home trashed and significantly damaged by vandals.
While a monitored home security system is a good start, you also want to avoid leaving clues that the home is empty such as having someone to pick up flyers, mail and newspapers that can quickly accumulate to the plain view of anyone walking past the house including potential thieves.
Vandalism
We just spoke about a potential break-in and possible vandalism within the house. But you could also suffer vandalism outside your house like a broken window as I referred to above. When it’s not fixed immediately it lets everyone know your home is vacant. It may be difficult to find the perpetrators too if there are no witnesses and the crime isn’t noticed or reported immediately.
Legal Costs
Some local areas have some interesting laws regarding squatters rights. As in you leave your home empty for a period of time, someone enters your home without invitation and you find that you have to hire a lawyer to legally evict this person from your own house.
Here’s a horror story
from California where many of these incidents occur. They can be costly, expensive and very frustrating.
Liability
You may not be liable for a slip and fall on your sidewalk during winter, but if someone enters your property and hurts themselves – or worse if you have a pool – you might be held liable.
Things That May Not Be Covered
Read your policy carefully and shop around before agreeing. I contacted several insurers regarding vacant home insurance and some would allow 3 months maximum coverage for a vacant house. Others specialized in helping people in this situation and would (at a price of course) be willing to cover a vacant home for a longer period of time.
Due to the circumstances of an empty house, it’s possible that your chosen insurer may not cover:
- Theft or damage that was caused by a door, garage door or window being left unlocked or open.
- A house that wasn’t checked on from time time either by yourself or a trusted person.
- Damage that was caused by a contractor or someone else entering your home with your knowledge.
- Any excuse they can come up with that is considered to be a violation of your coverage and policy requirements.
Vacant Home Insurance Tips
- When changing to vacant home insurance, double check to ensure you have adequate coverage on the home including enough liability insurance since this is a particular area of concern for insurers. It should be for you, too.
- Check with your insurer to see if you are covered for a vacant home as part of your current policy if you only expect the home to be vacant for a short period.
- Ensure that you understand whether you actually have a vacant home or an unoccupied home as many insurers distinguish between the two.
- Call around and familiarize yourself with insurers because each may have their own rules and stipulations.
- Have another insurance company or two in your back pocket that you can quickly turn to if your current insurer lets you know that you have to occupy your home by a certain day or they will terminate the coverage. It can happen.