If you have moved, or tenants have vacated, you will require some changes to your insurance policy and coverage. Many times owners of a vacant property may not realize the need to advise the insurer, but in reality, this is a significant change to the conditions of your existing insurance coverage and has a major impact regarding the risk involved.
You may be at the location regularly doing repairs, updates, renovations or simply checking up on things, but that is not the same as being occupied as a principal residence and both your insurance coverage and the premium will reflect the difference. Your policy typically has a clause which requires you as the policyholder and owner to advise the insurance company of a vacancy.
In most cases, this will not be a major concern to your insurer at the time the vacancy begins. It is pretty typical to have properties sit empty for a period between tenants or during the move and relocation of your family, but there will be a limitation and timelines to consider. Expect that changes will need to be made in the coverage, a vacant property no longer qualifies for some of the basic homeowner coverage or commercial insurance previously included. Deletion of vandalism coverage and sump pump backup could have a serious impact should a claim occur while vacant, your insurance policy will not respond to these types of loss. Also, a packaged policy will no longer qualify for this risk meaning an adjustment in premium and automatic read-ins such as contents or personal property coverage. This is due entirely to the change in risk now being insured compared to the risk which was originally accepted by your insurance company when the property was occupied.
Dwellings or buildings which remain vacant for longer than a year are considered poor risks for both the owner and the insurance company, this is not a good situation for either party. Expect your insurance agent to be asking some serious questions as to why the vacancy continues and what your intentions are with regards to the property. Do not be surprised if the insurer decides they no longer want to continue on this risk after a yearly term, that would not be in their best interest and I would suggest that a vacant property is not in the best interest of the owner either considering the loss of rental income and fluctuating real estate market. The dwelling or building may now require further maintenance and financial investment to rent or sell.
If your home or rental buildings become vacant make the commitment to selling or renting as soon as possible. Not to say you should expect less in the way of selling price or your expectations of a responsible tenant, but do not become complacent and leave a property vacant for an extended period. Do the maintenance, spend the money for updates and get the sale or new occupant at your earliest opportunity.
Article Written by Darcy Johnson
Erie Mutual Insurance Manager – Sales, Marketing & Business Development
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