Vacant Homes/Property: Are They Covered?
With the economy in weak condition, the rippling effect has been that there are many homes which have become vacant due to foreclosure, abandonment, or just not being able to rent the home to someone. This brings up a very important point about insurance coverage on a vacant dwelling and if your California Homeowner’s Insurance policy covers your home while it is “vacant”.
Vacancy is deemed to be when a home is unoccupied as a temporary condition. Some carriers treat a vacant home as an “abandonment of property” and this condition can affect the coverage under a typical homeowner’s policy. So why is it such a big deal? Why don’t insurance carriers like to insure vacant homes?
Statistics have proven that homes that are occupied are less likely to sustain losses because the owner or occupant is there keeping an eye on issues as they may arise. For example, the plumbing system, or the heating and air conditioning system may malfunction. A pipe may break. If the home is vacant, and nobody is there to check on these systems, a long and very large claim could occur and go on for days and weeks before being noticed. Vacant homes also be come an “attractive nuisance” as vandals will do damage to a home that is unoccupied without fear of being caught.
Some policies have an exclusion that if the home was unoccupied for a certain number of days prior to a loss, they may reject a claim based on the “vacancy” of the home. There is very technical wording in each policy about this issue. It is very important for you to know what you insurance policy wording is on this issue. It is important for you to know this prior to facing a claim that potentially is not covered due to the vacancy clause in the policy.
The bottom line is that if you are facing a situation where you home or rental property is going to be vacant for an extended period of time (over 30 days), you need to contact your agent and discuss your California Homeowners Insurance coverage to make sure that you do whatever is needed to maintain your full insurance protection. These homes can be covered, but your agent or your company may not know the property is vacant, unless you contact them to discuss the situation. So be proactive on this so that if a loss does occur, you have the right coverage in place. See additional information by Rough Notes.
Written by Gary Remland – Remland Insurance Services, Inc.