The High Cost

If you go shopping for a  a policy for a vacant home, you will soon realize that the cost of insuring the same building  occupied is double or even triple in the amount. The reasoning behind this is unoccupied or vacant (no furnishings) homes are considered a higher risk by insurers because no one lives on site to maintain and protect the property. We’ve all seen news reports of abandoned or foreclosed homes that have been stripped of their fixtures, overrun by squatters or simply vandalized. All of which push up the premium.

Another items to note is a lot of companies won’t touch these types of policies. They are seen as “specialty policies” and therefore there is less competition, which means less competitive pricing.

One tip that investors can take is contact your real estate company or agent to figure out whether any policy provisions are offered at a discount. Leverage your broker to find ways of getting lower-priced options for a customer as part of the “package deal” that property sale and transfer is.

Coverage Limits

It also varies what each individual company considers vacant. Be sure to check with your company on the specifics of these types of policies.  Most insurance companies make the following distinctions between homes that are unoccupied and those that are vacant:

*Unoccupied home. The property has been left as if the owners will return at any time.

*Vacant home. The property is entirely empty, without any personal property inside.

Also keep in mind coverage limits and premium costs for unoccupied and vacant homes vary, based on how long the home will be empty and the steps you take to protect your property, such as winterizing the home or installing smoke detectors and alarm systems.

Home insurance companies have rules about how long a home can be unoccupied before the insurance is cancelled or an endorsement is required. That’s because whenever a home is empty, the property is at a higher risk for damage. For example, if a pipe burst and someone lives in the house, they will turn the water off right away. That’s not going to be the case in an unoccupied house.

For further info check out these other articles:

http://www.huffingtonpost.com/jason-alderman/empty-homes-need-addition_b_1370308.html

http://www.foxbusiness.com/personal-finance/2011/04/27/home-kill-insurance/

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