Does Your Homeowner’s Insurance Cover Your Vacant Home?
Your homeowner’s insurance covers damages to your home from specific perils and certain expenses of visitors who get hurt at your house. But that’s only if you’re living there. If you move out and put your vacant home on the market, it is generally no longer insured unless you take action to keep your coverage. Here’s what you need to know.
What insurance covers and what it doesn’t
When you put your home on the market and continue to live in it during the sales process, your insurance remains in effect. If a potential buyer falls and breaks an arm, your policy should cover it, no problem. If a windstorm rips part of the roof off, you are covered.
However, if you move out of your home while you still own it, your homeowner’s insurance may no longer cover such costs. Many policies stipulate that if no one lives on the property, the policy is no longer in effect. How long the house must be unoccupied to affect the coverage differs by state and the insurer.
The reason for the termination of coverage is that homeowner’s insurance is meant for occupied homes. If damage occurs to a property while someone lives there — a burst water pipe, for example —the resident can intercede to shut off the water and repair the pipe before the damage becomes extensive. Water could flow undetected for days or weeks in a vacant house and cause substantially more damage. An empty house also attracts vandals or squatters who take up illicit residence there. If these intruders go undetected for some time, the damage could add up.
A claim for an occurrence in a vacant house will likely be denied. If the insurance company discovers that the house is vacant, it could cancel the policy even if you haven’t filed a claim.
Adjusting your coverage for a vacant home
If you intend to vacate your property before you sell it, you must inform your insurance company and get the proper changes made to your policy. The insurance company can offer a different policy designed for a vacant property or may be able to add a rider to an existing policy. In either case, be prepared: Your premium will increase.
You might think, “what are the chances something will happen?” Actually, they are greater than you might think. It’s not that the risk of a covered event increases, but your absence means undetected damage could worsen and become more expensive.
If you will be vacating your home while you still own it, check your homeowner’s policy and talk to your agent. It’s worth the extra premium cost to get the proper coverage and avoid an expensive loss.