Vacant Dwelling Insurance
Many property owners own homes that may be vacant from time to time. A vacant home presents additional risks that an owner occupied home doesn’t. This is typically the reason most homeowner insurance policies contain specific language regarding the coverage for homes that remain vacant for 30 days or more, especially if there is no one checking on the dwelling on a regular basis.
For example, the typical homeowner insurance policy has language regarding frozen or broken pipes during the winter if a home is vacant for 30 days or more. The language can exclude coverage for this peril if the home is vacant. Many insurers also have exclusionary language for vandalism and malicious mischief if the home is found to be vacant for longer than a thirty-day period.
For property owners who have homes that will be vacant for long periods of time, there is a specific type of policy that can be purchased that will accommodate this risk. First of all, if you have a home insured under a standard homeowner’s policy and you know that it will be vacant for an extended period, you should call your agent and notify him or her so that they can advise you regarding restrictions on your policy. The insurer has a right to know that the risk has changed substantially, and it is your duty to notify them.
If you purchase a home on speculation and know that it will be vacant for at least 90 days or if you plan to remodel the vacant home in the future, you should obtain a vacant dwelling insurance policy. This policy differs from an owner occupied policy by having certain exclusions included and an increase in premium to accommodate the risk. Vacant dwelling policies are usually written on 4 or 6-month basis, but can normally be renewed if the home remains vacant. In most cases, the vacant dwelling policy will not provide coverage for theft, water damage or vandalism and offers coverage on an actual cash value basis rather than the full replacement cost.
There are a few carriers that welcome the vacant home and will provide coverage on a replacement cost basis. These carriers will also provide a policy insured against many of the same perils as a normal homeowner policy as long as the insured is willing to pay the premium required.
Definition of Vacant Home
According to case law, a home is considered vacant if it does not contain enough furniture to accommodate a resident to live reasonably there. This means the home must contain a bed, somewhere to sit, and the customary appliances, dishes and silverware. A furnished home is not considered "vacant”, it is referred to as "unoccupied” if no one is living there. For this reason, the property owner should contact us for advice regarding their particular situation so that they can depend on insurance coverage in the event of a claim.