21 Jun Insuring Your Vacant Properties
Insuring Your Vacant Properties
CAUTION: VACANCY CAN BE HAZARDOUS TO YOUR FINANCIAL INTEREST
One of the recurring comments I hear from potential clients when discussing their insurance coverage for vacant properties is, “The agent didn’t ask if it is was vacant” or even more concerning, the agent told me “Vacancy is not a problem.” Even worse – your agent tells you to place a little furniture in the property and call it occupied.
The single most important clause for you to read on your insurance policy is the Vacancy Clause. Every policy has a Vacancy Clause. The following is an example of the Vacancy Clause wording: “Coverage under this policy will be suspended effective 60 days after the building becomes vacant. This coverage will remain suspended during such vacancy.” If you purchase a policy for a vacant property which has the above clause in the policy – do you think you have coverage in place?
Unfortunately, most of the calls I receive from clients needing insurance coverage immediately is due to an inspection by the insurance company that discovered the property is VACANT.
The policy is cancelled immediately. Even more unfortunate is when a claim is filed and denied due to the property being vacant.
Insuring vacant properties is specialty coverage. Does it cost more to insure vacant property? Yes, it does. Common sense tells you the risk of a loss is higher. For example, if a fire starts in the middle of the night, most likely the whole building will be involved before anyone notices – IF anyone notices.
Other increased hazards of concern for insurance companies:
- Theft of wiring, piping, fixtures, etc.
- Water leak or roof damage going unnoticed
- Drug house for the neighborhood
- A “home” for vagrants
- Attractive nuisance for children – makes a great play house for kids or party house for teenagers.
Things you need to do to protect your property:
- Secure all doors and windows –sure all broken windows are repaired.
- Window covering/blinds – only board up if required by local ordinances and board up from the inside behind the window coverings. (Exterior boards are easily removed and almost an invitation)
- Mow the lawn regularly – make it look like someone is living on the premises
- Winterize the property – keep the heat on or drain all pipes.
- Inspect the premises on a regular basis – keep the inspection reports on file.
Do you have the right policy for vacant properties? Even more important – Are you working with an Insurance Agent who understands your special needs?