Vacant Homeowners Insurace Refund

Hi, one of the big things you want to look at when you go out and purchase a special vacant home insurance policy or vacant dwelling policy, is to make sure you understand the refund provision. For example, if you have moved out of your home and buy coverage for 90 days, and then unexpectedly, the home sells in 20 days, how much will the carrier refund back to you? This can vary among carriers.

One carrier advertises you only need to buy 1 day of coverage, but all will have minimum premium amounts that cannot be refunded.

Most companies do a nice job returning "unearned premium" but this is a provision you should understand before you do business with a specialty insurance company that provides insurance for vacant homes and vacant buildings.

Mark

Vacant Home Insurace: Be Careful What you are Buying

A big difference in the quality of policies is the difference between a policy that pays on a actual cash value basis "ACV" and one that pays on a replacement cost basis. ACV is defined as replacement cost at the time of loss minus physical depreciation. Replacement cost is the amount it would cost to replace the property at the prices in effect on the date of losss. Depreciation is the cost of wear and tear on the property.

A policy that pays on a replacement cost basis will replace damaged property wtih like kind and quality without taking into account depreciation, and is therefor superior.

A policy may also call for losses to be paid on a functional replacement cost basis. Functional replacement cost is just an alternative form of valuation of property that is used in some insurance policies. It is used when the original insured property can be replaced with a functionally equivalent property, but not physically idential, at a lower cost. This is a step up from ACV but not as good as a full replacement cost policy.

Most vacant homeowners (or vacant dwelling) policies are ACV and the buyer must be wary.

Get Everything In Writing from your Insurance Company

Hi, this is just a quick note to everyone, going back to what you learned in your first business class in high school. Trust no one and always get it in writing. When it comes to special situations you may be in regarding homeowners insurance, in many cases your agent will not know the answer and even people on the customer service line at the insurance company may not understand the issue fully.

When we left our home in Flowertown PA for 3 months to spend time with my wife's sister in Phoenix Arizona, we actually did inquire with our agent about the insurance coverage while the home was empty and vacant.

We were told everything would be fine, and basically to "have a nice trip." I had to fly back home after we found out some kids had broken into the house and ransacked the liquor cabinet. The damage they caused was only about $10,000 (it could have been much worse).

We were told by the insurance company that there would be no coverage at all because the home was being considered vacant and we did not put special coverage on the home call vacant home owners coverage. They told us they do not provide vandalism coverage on empty or unoccupied homes.

Next time, we will get everything we need in writing.

This was taken from an email sent to one of our employees;

We want everyone out there to know that property management services are not a substitute for the proper insurance coverage or a vacant homeowners insurance policy. When our employer moved us to The Woodlands Texas last Spring, we had a very hard time selling our home in Boca Raton, FL.

The company offered to buy the home for about $40,000 less than what we thought we could get, so we chose to retain the risk ourselves, and take the additional time to sell the property. The company provided Property Management Services through Prudential Relocation, their moving and relocation company. From what everyone told us, property management services is all we would need and these included a landscaping company company coming by the property every Tuesday to cut the lawn, clean up leaves, etc.

We never even thought about insurance. On day 108 of the house being empty we had a very violent tropical storm blew threw (we had been living in Texas) and a small section of the roof was blown off. Rain soaked much of the 3rd bedroom.

The problem was, no one here knew about it. The rain was not taken care of and quickly turned into a $60,000 mold and mildew claim. To make a long story short, the insurance company was willing to pay $10,000 but would not pay the balance of the claim because the house was unoccupied. Let me tell you, property management services on your home for sale does not mean you do not need a vacant home insurance policy.

Don't let your kid's neighbor housesit without the proper insurance

Two years ago, my husband's job took him on a temporary assignment of 5 months to Prague to finish up a large computer project for the Czech government. Of course it was the opportunity of a lifetime to go with him and I figured a way to take leave from my job (...no loss if they fired me anyway) to join him in this amazing city, which was untouched by the destruction left behind in WWII.

Siteseeing aside, we asked the 20 year old son of a neighbor to "housesit" while we were away. What's the worst that can happen, spilled beer? We felt better withsome living in the house and we could avoid that expensive vacant home insurance, or so we thought. Because we had someone to stay in the house we had no idea we would not rely on our current homeowners insurance policy which was paid up until the end of the year.

While we were away (in the 4th month) a large tulip poplar tree fell on the house during a windstorm. Jason acted quickly to get the hole repaired using the credit card we had left him, but I had to fly home to see to the contractor arrangments etc. The claim we submitted to the insurance company for over $40,000 was totally denied because they told us we did not have the right insurance on the house. We had needed to write a special policy why we were away called a landlord tenant policy (also called a tenant boarder policy).

As you can guess, we had no idea we needed to do this and didn't even think to call our agent. It was a total disater and all the extra money my husband made by taking the overseas assignment quickly was eaten up in this massive repair.

Bait & Switch Vacant Home Insurance

When we leave our home in Radnor Pennsylvania for the winter to spend 4 or 5 months in Scottsdale Arizona, we typically can find someone to "sit" in the house while we are away. Last winter we found no one, and spoke to our agent about how to insure the home.

We were advised that we were in luck, and our regular homeowners insurance company would be able to insure our vacant home at an additional premium. In February of that year, we had a major claim when vandals broke into the house, stole some items, but even worth left about $20,000 of damage in the house.

When we filed the claim with our insurance we were in for a big shock. We had assumed the coverage was pretty much the same because it was the same insurance company. We quickly learned we had no coverage for this incident because the new policy was a reduced level of coverage. Our agent told us "you just can't get the same level of coverage when a home is not being occupied" and this is what people live with. Basically.. we had no other choice?

However, no one explained the coverage was to such a lesser degree. Our advise, when you put on a vacant dwelling insurance policy make sure you know exactly what you are buying.

Parent in Nursing Home Don't forget the Vacant Home Insurance

When we recently put mom and pop into the Menonite Home in Lancaster PA, the house in East Petersburg was sitting empty for several months while we decided what to do with it and while we were selling the furniture and giving other items away to family and charity.

A friend who is a real estate agent informed us that the home was probably without insurance coverage because it had been sitting empty for so long. We called our agent, and to our horror the house would have been totally exposed if there was a total loss because the house was no longer being lived in.

We acted quickly and had to find another carrier that would take the vacant homeowners insurance risk but we had no idea that the house was sitting without any insurance coverage because we knew the policy was paid in full for the year. A major claim like a fire would have cost us almost $350,000.

Lesson learned.