Vacant homes may need special insurance coverage.
Homeowners insurance is designed to protect your primary residence against financial losses associated with theft, fire, and other covered perils. If you own a home that sits vacant for extended periods of time, you may be wondering whether your policy will still cover the property if damages occur. It’s possible that your standard policy may not be sufficient to cover a property that isn’t being lived in. You may need to purchase a vacant home insurance policy to fill a coverage gap.
KEY TAKEAWAYS
- Your regular homeowners insurance policy may not extend to a home that’s vacant.
- Vacant home insurance policies are designed to cover homes that are vacant because they’re in the process of being sold, undergoing repairs or renovations, or otherwise not being lived in on a full-time basis.
- Vacant home insurance can be its own policy or added on to an existing homeowners insurance policy as an endorsement.
- Coverage limits, covered events, and premiums for vacant home insurance policies can vary greatly.
What Is Vacant Home Insurance?
To understand whether you need vacant home insurance, it helps to know what it is and when it may be necessary. Vacant home insurance can be purchased as its own policy or as an add-on endorsement to an existing homeowners insurance policy. It is designed to protect homes that are vacant for an extended period of time. This is different from traditional homeowners insurance, which covers you for as long as you own and live in the home.
The amount of time required for a home to be considered vacant can depend on the insurance company. For instance, some insurance companies may deem a home to be vacant if no one lives in it for at least 30 days. Other insurers may extend this to 60 days or more before a home is considered vacant.
Important: Insurance companies distinguish between unoccupied homes and vacant ones. A home is considered unoccupied, rather than vacant, if your personal belongings are still inside and you could return to live in it any time.
What Does Vacant Home Insurance Cover?
Vacant home insurance is designed to offer protections that are similar to a standard homeowners insurance policy. For example, your vacant home insurance policy may cover you for damage from things such as:
- Theft
- Vandalism
- Fire
- Explosions
- Wind
- Hail
- Lightning
Your policy should spell out a complete list of covered perils while also mentioning any exclusions from coverage. Vacant home insurance can cover the most essential types of damage that could occur when no one is living in a home, though it doesn’t cover everything. For example, you may need to purchase flood insurance separately if the home is located in a flood plain.
Vacant home insurance policies can come with flexible terms ranging from three to 12 months, depending on the insurer. Your insurance company may have specific guidelines regarding the types of homes that can be covered. For instance, you may be able to get vacant home insurance for up to a four-unit dwelling or be limited to insuring a single-family property. Insurers take into account how the home is being used and why it’s sitting vacant, as well as its age, overall condition, and estimated replacement value.
A vacant home represents a higher risk to insurance companies versus a home that’s being occupied full time. That’s because with no one there to keep an eye on the property, it’s more likely that damages related to vandalism or other mischief could occur. And without someone performing regular maintenance and upkeep, the risk of water and fire damage also increases. Needing vacant home insurance for an older property or one that wasn’t maintained properly before you bought it could increase your risk profile and your premiums.
Who Needs Vacant Home Insurance?
Vacant home insurance is typically something you only need in specific situations in which a home you own will be empty for an extended period of time. Some of the situations that may require vacant home insurance include:
- Selling a home that you no longer live in because you’ve moved into a new property
- Owning a rental property that sits vacant during the off-season
- Performing extensive renovations or repairs on a home that make it temporarily inhabitable
- Being hospitalized for an extended period of time for medical care
- Owning a vacation home that you only use a few months out of the year
You may also need vacant home insurance if you’re on active duty military service or traveling for an extended period of time. Remember, though, for the home to be considered vacant, it typically means that it has to be completely emptied of all personal belongings.
Tip: When purchasing vacant home insurance, ask about refund policies if you have to cancel your coverage before the policy expires. Some insurers will refund premium amounts paid up front if you end your coverage early.
How to Purchase Vacant Home Insurance
Before purchasing vacant home insurance, it’s important to decide if you need a separate policy or whether you can add an endorsement to an existing homeowners insurance policy instead. An endorsement can be used to modify an existing policy to cover the home for temporary vacancies. Say you own a rental home, for instance, and your tenant has given their notice. You expect it to take a month or two to find a replacement tenant and get them moved in. You may be able to use an endorsement to alter your current policy’s coverage until the home is occupied again.
The next step is comparing rates and coverage options for vacant home insurance policies. Every insurance company is different when it comes to things such as:
- Property types
- Vacancy reasons
- Covered and non-covered perils
- Coverage limits
- Premiums and deductibles
- Coverage terms
- Status definition (“unoccupied” versus “vacant,” for example)
In terms of what vacant home insurance can cost, this also varies based on the insurance company and the details of your policy. If you own a four-unit rental property, it will likely cost more to insure compared with a single-family vacation home. Fielding quotes from multiple insurance companies can help with finding a policy at an affordable rate.
There are some things you can do to reduce the home’s risk profile and help make a vacant home policy less expensive. Installing smoke alarms, carbon monoxide detectors, and/or a security system could qualify you for discounts offered by the insurer. Having someone keep up with outdoor landscaping and maintenance or check on the home regularly could also help reduce the risk to the insurer and bring down your premiums.
When purchasing insurance to cover a vacant home, consider carefully how long you’ll need it. This can be tricky if your home is listed for sale and you’re waiting to receive a viable offer. If you’re purchasing a vacant home that you eventually plan to rent out, ask your insurance company whether the policy can be converted to a landlord policy once the property is occupied. These tips can help you avoid paying for more coverage than you need or the wrong coverage type.
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