A Vacant Home's Insurance Policy
Many people don't realize that most home insurance policies have clauses in them that remove some or all of your coverage if a home is left vacant for a certain amount of time. Every company has a different meaning of vacant and different amount of time in which a home is considered to be vacant, but almost all companies will begin to remove coverage for a home in which there is no occupant.
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Meaning of Vacant
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Some insurance companies define vacant as simply not having an occupant; other companies define it as having no occupant and no contents. Also, some policies begin to remove coverage after 30 days and some might allow for 60 days. You can learn about your specific policy's definition by reviewing the "definitions" and "exclusions" sections of your policy. Also, your insurance agent or company can help you better understand how this can affect your policy. Insurance companies are able to determine how long a home has been vacant by reviewing police reports, inspecting the condition and upkeep of the home and by interviewing neighbors.
Coverage Changes
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After the home has been defined as vacant and has passed the amount of time specified in the policy, the coverage on the policy begins to change. Policies will exclude some or all of the following perils: vandalism, theft, malicious mischief, water damage, freezing pipes and glass breakage. Some policies might even exclude all coverage if a home has been vacant for their time limit. These coverage changes happen because insurance companies view vacant homes as being high-risk homes. Vacant homes have less upkeep and attention paid to them, and are easy targets for burglars and vandals.
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Vacant Home Policy
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In order to have all of the coverage your typical home policy covers, you must purchase a vacant home policy. There are additional underwriting criteria for these policies and generally they require that you keep the utilities on, lawn maintained and someone must inspect the property on a regular basis. Some vacant home policies will require higher deductibles, co-insurance and might only cover for actual cash value, which is for the depreciated value.
Rental Dwelling Policy
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Some people prefer to rent out a house that they no longer live in. In these situations you will also lose coverage and risk being denied for claims if you keep your standard home insurance policy. Rental homes require a rental dwelling policy. These policies cover the additional risk of having a person living in the home who does not own the home. Generally tenants do not care for a property as well as the building owner would. Also, these policies have a lower amount of personal property coverage, as most of the personal property on the premises belongs to the tenant. You are also covered for loss of income on these policies, which pays you the fair rental value if you have a claim and are not able to rent out the home while it is being fixed.
Cost
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Homeowners insurance is the least expensive policy, but you risk losing coverage if you are not personally living in the home. Rental dwelling policies are typically more expensive that home insurance, but they are less expensive than a comparable vacant home policy. Regardless of price, you should choose the policy that best fits the living situation of the home in order to have coverage if something happens to it.
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References
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