Got an empty house? You may need to buy vacant-home insurance

Thirteen percent of U.S. homes are vacant, according to U.S. Census Bureau figures released in March 2011. The number of empty homes is especially high in Arizona, Florida and Nevada -- three states hit hard by the foreclosure mess.

But just because your house is empty doesn't mean you can skip home insurance. Any extended time away when your home is unoccupied can give your insurer a reason to cancel your homeowner's insurance policy, leaving your house without vital protection.

Maybe you've bought a new home and haven't been able to sell your old one. Perhaps you’ve moved out temporarily while your house is undergoing renovations. Or maybe you're a “snowbird” who splits the year between New York and Florida.

So you may want to look at buying vacant-home insurance, which can cost 50 percent to 60 percent more than traditional home coverage. Because vacant homes can be targets for vandals, thieves and squatters, home insurance companies consider them high risks and don't want to provide traditional coverage for them.

“That's because problems like theft, vandalism, fire and flood are far more likely to happen in vacant houses than in occupied ones,” says Pete Moraga, a spokesman for the Insurance Information Network of California. “And the ensuing damage could be worse because no one is home to report or fix the problem.”

home insurance vacant

Here are four things you should know about insurance if you have a vacant house:

1. Many homeowner's insurance policies include a clause that voids coverage on vacant homes, giving you a timeframe for how long your house can stand empty before an insurer cancels coverage. Most discontinue coverage if a house is unoccupied for more than 30 days; others allow up to 60 days.

2. If you're leaving your house for any reason, ask your insurance agent company -- before you move out -- how to guarantee coverage while no one's there. If you have someone house-sitting for you while you’re away, the house is considered occupied.

3. Don’t assume you can get away with leaving your house empty without the insurance company noticing. If you file a claim, the insurer can tell by looking whether it's been unoccupied at least 30 days by examining utility bills or interviewing neighbors.

4.Some insurers will work with you if have a special situation and you’re taking good care of the vacant house, such as hiring a gardener or caretaker. They’ll often grant you a vacancy permit, but it’s different from a standard homeowner's policy, as it may not cover the same threats. Most permits will cover fire and wind, but not theft, vandalism or water damage.

State Farm, the country's No. 1 home insurer, lets owners of vacant homes buy an endorsement to an existing policy. Spokesman Dick Luedke says an exclusion for vandalism and glass breakage kicks in on a standard policy after a house has been vacant for 30 days. But a policyholder who buys an endorsement can "buy back" that exclusion so the house is covered against those threats. The cost is $35 to $45 for a one-year policy period.

Is it time for vacant-home coverage?

However, not every insurer offers these endorsements. In that case, it’s time to consider buying a vacant-home insurance policy, which covers empty homes for an extended period of time and covers the threats that traditional policies won’t. But not many major insurance companies offer these policies; this type of coverage usually is sold by smaller companies that sell other specialty insurance policies.

Specialty insurers are not as prominent or as easy to find as major home insurers, so ask your insurance agent for recommendations. Then do more research by checking the firm’s reputation and financial status through an independent service, such as Moody’s or A.M. Best.

Foremost Insurance Group, which is owned by Farmers Insurance, offers vacant-home policies (except in Florida, Hawaii and Washington, D.C.) that cover your house against fire, wind and hail, as well as damage caused by vandalism and “malicious mischief.”

home insurance vacants

The Foremost coverage applies to vacant homes valued up to $1 million; there’s no restriction on the age of the home. Policies are purchased for one year but can be canceled at any time. Jim Gontjes, a regional product manager at Foremost, says policies start at $250 a year for fire-only coverage and go up from there.

American Integrity Insurance recently started offering vacant-home insurance in Florida, one of the states with a highest percentage of vacant homes. CEO Bob Ritchie says his company will sell an average of 6,000 policies for the next couple of years; the policies provide basic fire coverage.

“We’re not seeking distressed properties; we’re looking for homes that owners are diligent in maintaining but need special coverage," Ritchie says.

To qualify for an American Integrity policy, a home must be valued at more than $150,000. Policies are annual, but American Integrity offers quarterly and semi-annual payment options. Ritchie says the minimum premium is $2,000 a year for a $150,000 home (no contents coverage) and can go up to $15,000 for homes worth at least $1 million.

Exploring your options

Moraga recommends checking with various companies to see what policies would best suit your situation. “It’s like clothing. Some are too ample and some too restrictive, so find a policy that covers your exact needs,” he says.

If you can’t find a standard or specialty insurance agency to cover you, contact your state’s insurance regulator and ask about the state's FAIR (Fair Access to Insurance Requirements), which covers consumers rejected by insurance companies. California, for example, offers vacant-home coverage. Those who live in an area at high risk for crime or wildfires, for example, automatically qualify, but not everyone is guaranteed coverage for vandalism or theft. Many FAIR plans impose numerous conditions and still charge high premiums.

If the price of a FAIR plan is too high, there are other options.

“The cost of hiring a house-sitter to live there may be less than what it takes to have a vacant-home policy,” Moraga says.

For long-term vacancies, consider renting out your home while you’re away. But in that case, make sure you buy a landlord's policy, since neither a homeowner's nor a vacant-home policy covers rental homes.

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