VACANT HOMES POSE INSURANCE RISKS
Houses are Left Unsold, Owners of Unoccupied Property Should Review
Homeowners Policy and Consider Vacancy Protection Options
KANSAS CITY, Mo. (Aug. 3, 2010) — As the U.S.
housing market struggles to rebound, many homeowners are stuck with
hard-to-sell properties longer than expected. Some frustrated home
sellers who must relocate for a new job opportunity, want to
downsize or simply want to buy a new place have left homes empty.
Vacant or unoccupied homes can leave the homeowner exposed to loss
and liability that may not be covered by their insurance, according
to the National Association of Insurance Commissioners (NAIC).
The Pending Home Sales Index, released today by the National
Association of Realtors, dropped 2.6 percent to 75.7 based on
contracts signed in June from 77.7 in May, and is 18.6 percent
below June 2009 – another sign of the stagnant housing market.
“In many cases, people who have been trying to sell their homes
for awhile have moved forward with their plans regardless, leaving a
vacant home on the market,” said NAIC President and West Virginia
Insurance Commissioner Jane L. Cline. “Having an unoccupied home can
create several insurance implications that typically are not covered
under a standard homeowners policy.”
The Added Risks of Vacant Homes
Homeowners policies are meant to insure homes that are occupied,
so they generally include exclusions for neglect or property
abandonment on a home left vacant or unoccupied for a specified
number of consecutive days.
In insurance terms, a vacant home is one the resident has moved
out of and taken his/her belongings with him/her. An unoccupied home
is one where the resident is not staying at the home, but the
furniture and other belongings remain.
Because vacant and unoccupied homes pose a higher risk for damage
than occupied homes, insurance companies insure these properties
differently and usually at a higher price. These risks include:
- Break-ins: When a home has been unoccupied
for awhile, it can show signs that nobody is around – unkempt
lawn, full mailbox, no lights on – that can tip off burglars to an
- No emergency response: Without anyone home to
call 911 or respond to emergencies, a manageable problem – such as
a small electrical fire – can turn into a much larger, more costly
- Property liability: There is no one present
to prevent others from entering the property or to supervise
activity, which could increase the likeliness of an accident on
the premises or property damage when the owner is not there.
Keeping Your Vacant Home Properly Insured
The definition of vacancy and unoccupancy can vary from policy to
policy. Some insurers may not pay claims if a home is vacant for 60
days or more. Some policies might automatically shift to a different
amount of coverage (e.g. liability insurance only) after a specific
number of days unoccupied.
Many homeowners policies have a “vacancy clause” that can be
triggered if the homeowner is gone for an extended period of time.
If this happens, the homeowner could violate the terms of their
contract and some or all of their coverage may not apply in the
event of a loss.
“Before you decide to leave a home vacant or unoccupied for a
long period of time, talk to your insurance agent or company to
learn how they define vacancy and unoccupancy, and whether the
company will pay claims if a house is unoccupied,” said Cline. “Be
honest about your situation, because while an extra policy might
cost more, it could save you money down the road should there be an
accident or damage to the home.”
Many insurance companies offer an endorsement that will provide
coverage for a dwelling that is unoccupied for an extended period of
time. Vacancy policies can also be purchased for different term
lengths to cover a few months to a year, depending on the
The cost of vacancy coverage depends on the company and state in
which the property is located, but costs usually are higher than a
typical homeowners policy due to the overall increase in risk.
For More Information
Homeowners can always get more information or explanation about
their insurance policies from their state insurance department.
for contact information of your state insurance
department. Get smart about your insurance
needs. For more information about auto, home, life and health
insurance options — as well as tips for choosing the coverage that
is right for you and your family — visit www.InsureUonline.org.