Our InsuranceOne agent, Annette White, talked recently at a sales meeting at our office about a big risk that many homeowners are taking with their biggest asset. In the current real estate market it has become more and more common for homeowners who want to (or need to) move to a different house (up-sizing, down-sizing or maybe just moving closer to a job) to resort to renting out their current home. Most of the time it’s because they are underwater on the current home or just don’t want to sell for what the current market can bear. In any event, many of them buy the new place and move there, with the plan in mind to fix up the old homestead and then rent it out.
That’s all well and good; however, if the renovation of the old house is going to take longer than a couple of weeks, the owners need to talk to their insurance agent about switching the insurance coverage on that house to a vacant house policy for that fix-up period. Most normal homeowner’s policies have vacant house clauses in them that state that the house must be occupied or the coverage might be invalidated. Why? Because and empty house is an easy target for vandals or thieves. The vacant house policies are a little pricy, but they cover the owners, should something happen while it is vacant and being renovated.
The vacant house policies usually have a three month minimum, with no refund if you get the renovation done early and get renters in. The policy should be changed again when the renters are in to become master policy covering the structure. The renters should have a separate policy covering their belongings and any damage that they might cause.
This same issue arises if the place is for sale and the owner has left or maybe it is an estate sale being conducted by out-of-state relatives of an owner who has died. It’s still a vacant house, even if there’s lots of the owner’s stuff still inside. Just having some furniture and other stuff inside doesn’t make it an occupied property and if the insurance company finds out from neighbors or others that the place hasn’t been occupied for some time (usually more than 2-3 weeks) they may balk at paying a claim if something happens.
Call Annette White at 248-795-9152 and talk to her about vacant home insurance.