What Types of Property Need Vacant Property Insurance?
Homes, rental properties and business buildings can be unoccupied for several reasons. The previous homeowner might have been evicted, for instance, and the property might be sitting empty while it awaits a new buyer or lessee.
Or maybe a home’s current owner has already moved into a new home but hasn’t yet sold the old house. Perhaps a business owner has invested in extensive upgrades to her building, requiring it to be unoccupied during the renovations. Maybe a military member stationed overseas owns a home in the US that sits empty most of the year. Or maybe an apartment unit is empty while awaiting a new tenant.
Standard Home Insurance & the Owner-Occupied Provision
Standard home insurance policies are written under the stipulation that the insured property be “owner occupied.” This means the person or at least one of the persons paying the mortgage and the insurance premiums must actually live in the building year-round.
Generally speaking, most home insurance policies will contain certain exclusions that start to apply after a home has been unoccupied more than 30 days. In some cases, a home insurance policy might be completely voided for insufficient owner occupancy.
Insurance policies for business and rental property typically include provisions requiring some form of occupancy, too. These work similarly to those found in home insurance.
Vacant Dwelling Insurance: Designed for the Unique Risks of Vacant Property
Occupancy requirements are included in standard property insurance policies because unoccupied buildings—be they homes, businesses, apartment complexes or something else—face a higher risk of certain perils compared to occupied buildings:
These differing risk levels are why insurance companies have created and issue different policy types for vacant properties and owner-occupied buildings.
Why Can’t Homeowners Insurance Take The Place Of Vacant Dwelling Insurance?
Some insurance carriers allow homeowners to add a vacant property as an addendum to an existing policy. However, such coverages aren’t standard, so you’ll need to review your policy or call your agent to know for sure. If you own a vacant property, it’s extremely important to carry the proper policy type.
If you insure a vacant property with standard home or business insurance and file a major claim, it will probably be rejected once the insurance company realizes you’re carrying the wrong coverage. In fact, the entire policy will probably be voided, leaving you on the hook for all the property damages.