The first question that you may be asking yourself is, “When will I ever have a vacant property?” It’s surprising how common owning a vacant property is. There are four common scenarios where you may have possession of a vacant property:
- You own rental properties and are between tenants
- You’ve moved for a new job but your house is unsold
- A property is undergoing renovations
- As executor, you are selling a house to close an estate
Depending on the length of the property’s vacancy, the type of policy you are required to have will change.
Longer Vacancies Require Special Policies
Longer vacancies (usually a year and beyond) require you to purchase a special policy. This policy is traditionally known as peril protection. Peril protection covers the causes of loss listed by name in the policy documents (fire, lightning, wind, hail, explosion, and others). The upside is that this policy covers all the essentials but it doesn’t cover everything. If you have a total or partial loss, having Actual Cash Value (ACV) loss settlement coverage will settle the actual cash value of the loss reported. This ACV will take depreciation into account when settling the claim.
Policy Terms Available
- 3 months
- 6 months
- 12 months
Eligible Home Types
- The home must reflect proper maintenance
- Up to four-family construction
- Valued up to $500,000 (most states > $1M in a few)
- Renovations in the process are accepted without surcharge
Vacant Properties Are at a Higher Risk
Did you know that vacant properties represent a higher risk to insurance companies versus a property that is occupied all the time? The reason for this is the lack of an eye on the property increases the chance of damages, vandalism, or other mischief that could occur. In addition to this, the lack of regular maintenance on the property increases the chance of water and fire damages. If you are needing vacant property insurance to cover an older building that wasn’t maintained properly can increase your risk profile and premiums.
Need to add vacant property insurance to your coverages? Reach out to your local agent for more information.