Vacant and Unoccupied Homes – Homeowners and Dwelling Insurance

Vacant HomeDo own a vacant home?  Do you own any unoccupied homes?  Do you renovate dwellings and then subsequently rent them out?  Any of these situations may have unintended consequences on your insurance policies.

Insurance companies are very clever in the wording of their policy forms (which is why its important to read your policy forms!).  They sneak exclusions into the policy that only apply if the dwelling is unoccupied or vacant.  For example, if you buy a rental dwelling with the intent to renovate prior to renting it to tenants, several coverages are excluded until the home is occupied.  For example, theft and vandalism is excluded if the home is vacant for more than 30 days.  Damage caused by freezing pipes is another common exclusion among vacant or unoccupied homes.  Please note that each insurance company will treat their vacancy exclusions differently, so it is important to read your insurance forms for exact coverage.  More importantly, it is essential that precautions are taken to prevent any of the above losses from happening.  Many common precautions are:

  1. Keeping the heat level high enough to prevent freezing pipes

  2. Installing a security system to prevent any break-ins.  Other simpler measures are to lock all door and windows and have a neighbor or relative check the house daily.

  3. Have motion detecting lights installed outside

  4. Install lights inside on a timer system to give the appearance that the home is occupied

  5. Shut off the water in the home while unoccupied to prevent any catastrophic water damage

Furthermore, many of the same exclusions apply if you own a home with no intention of renting it out, but rather plan on occupying it yourself.  However, as many homeowners can attest to, many owners don’t move into their homes right away.  Many existing homeowners or renters insurance policies will extend coverage for personal property to their new location for a temporary time period (i.e. 30 days); however, no coverage is extended to the dwelling, structure, or detached structures.  So a new home that is bought but unoccupied may be susceptible to the exclusions listed above.

It is important to be upfront and honest with your insurance professional on the expected timeline of occupancy so that they can determine what coverage may be best for you.  Also, keep them up to date on any changes to your timeline for occupancy so any needed action may be taken.  Some companies do offer specialized, short-term (one, three, or six month) policies specifically designed to cover vacant or unoccupied homes.  If you plan on buying a new home – whether it be for yourself or for a tenant – it is very important to consult with your insurance professional to determine if any of these exclusions may apply to you.