When Nobody's Home

Jeanne Buysee - American Family Insurance

Have you ever tried to explain something to someone, only to be met with a vacant gaze? It is the look commonly known as: “The lights are on, but nobody’s home”—a mere lapse in concentration. But when the lights of a permanent structure, like a home, are not on and it is empty, it can be a real problem for the owner.

In the first quarter of 2013, the Census Bureau reported more than 133 million housing units in America, of which 10.7 percent—more than 14.2 million—are vacant. Houses are abandoned for any number of reasons: loss of a job, inability to keep up on mortgage payments or simply because a home is impossible to sell. Mortgage companies require proof of home insurance, but when a home is vacant, the homeowner coverage changes.

A vacant home is one where the resident has moved out and his or her belongings have been removed. An unoccupied home is one in which the resident is not staying, but furniture and other belongings remain. Vacant and unoccupied homes pose a higher risk for damage than occupied homes, including an increased likelihood of:

  • Break-ins. An unoccupied home shows signs that nobody is around—lawn not mowed, no lights on.
  • No emergency response. With no one home to call 911, a small electrical fire could turn into a costly disaster.
  • Property liability. When no one is present to prevent others from entering the property, there is greater potential for an accident.

Basic homeowner insurance policies vary in coverage for vacant homes. For example, there is no loss to property covered on insured premises if a dwelling is vacant for more than 30 consecutive days immediately before loss. (Some extend that requirement to 60 days.)

While insurance policies are available for vacant and for-sale homes, there is a tremendous difference in coverage compared to a standard homeowner policy. Many policies do not cover vandalism, accidental water damage, theft or liability. Before you leave a home vacant or unoccupied for too long, talk to your insurance agent to see how your policy defines vacancy. Some companies offer an endorsement that provides coverage for an unoccupied dwelling for a definite period of time.

Vacancy policies can be purchased for different term lengths depending on your needs. Costs are higher than a typical homeowner’s policy due to the overall increase in risk. It is important that you purchase from a company that includes personal liability. Vacant home policies are also available for those who purchase vacant properties intending to make them viable rentals. The premium on these types is less because time of vacancy is shorter.

So if you are one of the many people who purchase a new home before your current one is sold, what do you do? It’s important to find out all you can about the coverage you need to protect your assets and personal liability. It is a serious predicament, and you obviously will have many questions. Call your insurance agent—hopefully their “lights are on” and somebody is “home” to help. iBi

This column features information provided by the National Association of Insurance Commissioners.

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