Your house may be vacant for several legitimate reasons, but did you know that its vacancy may cause it to be uninsured? Many home insurance policies have a provision that requires the home to be occupied to remain insured. If you violate that provision, your home may end up uninsured in the event it is damaged or destroyed. You should carefully review your home insurance policy’s conditions to verify you aren’t leaving yourself exposed when the house is unoccupied for any reason.
According to a recent story by NBC News, there are about 14.3 million year-round vacant homes in the U.S. in cities including Virginia Beach, Colorado Springs, San Antonio, San Diego, Fresno, an increase of 43.8% since 2000. All of these vacant homes present a hazard to the local community in that they are a magnet for vandals and transients. Unfortunately, many vacant homes are the result of the recent economic downturn that has hit the real estate market particularly hard. It’s probable that some of these vacant homes will soon be foreclosed upon. If you are going through the foreclosure process on your home, you should consult an expert to understand what your legal liabilities are and the potential need to continue maintaining home insurance.
Other than foreclosure, there are also homes that remain vacant simply because the owners do not reside in them full time. Many families own vacation homes that they leave empty for months at a time. When insuring a vacation home, you need to make sure your insurance company understands the exact use of the home. If the policy has an occupancy requirement, you will be faced with a coverage exclusion in the event of damage, so make sure the requirement is removed. Sometimes the occupancy requirement is overcome just by keeping the house fully furnished, even if you aren’t living there full time. As a side note, if you intend to rent your vacation home to others, be sure to let your insurance company know as well since that presents different liability exposures.
If you are in the process of selling your home and have already moved to another location, this is a good time to read through your policy. Some policies’ occupancy provisions have a time period of 30-60 days before being triggered. If your home will be sold within that timeframe, you will not have a problem. If the sales process is longer, though, contact your insurance company and explain your situation. They may be able to work out a solution with you that will allow your home to remain fully insured while it’s being marketed for sale. Also keep in mind that a house on the market may present you with increased liability exposure due to the number of people entering to tour the house.
A vacant home is particularly vulnerable to vandalism and burglary once people are aware that no one is watching the home. To minimize your exposure, you can enable an alarm system or hire a caretaker to regularly check on the property. A home that has the appearance of occupancy may also meet the occupancy test of some insurance policies.