Understanding Insurance Policy Language: Vacant Home Insurance
In the world of insurance, there are many different types of insurance policies. Each of these policies has coverage for that specific policy type such as an automobile, home, and life policies. Insurance is important and sometimes required by law. People know this requirement, so they purchase a policy. The question is, do they really know what the policy covers or does not cover? Probably not. There are insurance companies who care about their clients and believe that if they are going to spend the money, the policyholder should know what’s included in coverage and if there are any restrictions. Vacant home insurance is one of those that you need to pay attention to.
Let’s talk specifically about insurance coverage for your properties. This could be your home that you live in and is a homeowner’s policy, or you could be a property investor who buys a home, fixes it up and sells it or rents it out as in investment. Either way, you need to have coverage on these properties in the event of a loss.
Investment Property Insurance
If you are a property investor, chances are, you have had a property that has been vacant at one point or another while getting another renter or in the process of selling. Vacant properties seem to attract problems, so you need to be sure you know what you’re paying for. A vital piece of every property insurance policy is the vacancy clause. This is a section of the policy that addresses what will and won’t be covered when a property becomes vacant. This clause will either restrict your coverage or your coverage will become null and void. This is particularly important when you have investment property where you either rent or rehab the property.
So, what is vacancy defined as? Well, that depends on your insurance company. It could be 30 days, it could be 60 days. The point is, when a location is vacant, it is at higher risk for a loss because there is nobody there to call the police or the fire department in the event something occurs, and the property is damaged. You may have a completely empty house, or you may have a few items that are going to remain in the house when you sell it. Appliances might be an example of this. But what about those things you don’t think about? Like the copper piping from the air conditioner? Copper is valuable and people will break into an empty home and steal whatever they can sell for some money.
How many times has your rental property been left vacant by a tenant that took off in the middle of the night? Yes, it happens. If you, as the owner, are not local to these rental home and you don’t have a property manager watching the place for you, a property can go vacant for over a 30-day period before you even realize what has happened. This might be more common with investors who have multiple properties and they are in different locations around the country.
How Do I Protect Myself?
You purchase a Vacant Home Insurance Policy. This coverage is available from companies like APIA who help people all over the country protect their investments with vacant home coverage. A policy of this type will require a monthly inspection of the property, but this inspection can be from a trusted 3rd party so you can get someone to handle that for you if you are not in the same location as your investment.
Wouldn’t you rather have peace of mind knowing that you have protected yourself from a loss such as vandalism or fire? It’s easy to keep your investment safe and not go broke because you must pay out of pocket for a loss you couldn’t afford. It happens more times than you would think.