Insure for Full Rebuild Cost on Vacant House

When a house becomes vacant or empty and vacant homeowners insurance is needed, one of the most important things to remember is the home needs to be insured for the true rebuild and reconstruction cost.

Often, even after someone understands the need for vacant home insurance, they ask to be insured just for the amount they owe on a loan, or if they are selling, they want to insure for a low value in order to keep their premium payment lower because the cost of vacant home insurance is much more than regular homeowners insurance.

This practice is dangerous. First, any reputable insurance company needs to insure a vacant home for the full rebuild cost assuming there is a total loss. Most people don't realize if this is not done, there can be severe penalties at claim time if an insurance claim is filed on a vacant house.

Any company willing to insure you for less than the true rebuild cost using like or the same materials should be avoided.

Vacant Condominium, Careful Not to Overinsure

The biggest challenge when someone has an empty or vacant condo that they need to insure, other than the fact that people do not know the terms of their existing homeowners insurance company regarding vacant homes, is getting the value right.

Every respectable insurance agent and company that insures vacant properties needs to insure for the full replacement cost. This can be very difficult when insuring a condo. It depends on who owns what. Are the walls and ceiling owned by the resident or the condominium association? The answer is "it depends."

One should always have a conversation with their condo association to see exactly what the condo association policy covers and what the owner needs to cover. When the owner is living in the condo this is not as important because insurance premiums are low. For vacant homeowners insurance this is more important because premiums for vacant home insurance for condos are more expensive, and driven by value.

Also, if one under insures a vacant condominium, there can be big problems with the insurance company if one needs to file a claim.

Note to Estate Executors, Do Not Forget the Vacant Home Insurance

Vacant Home Insurance Now is reporting that a much larger portion of inquiries and recent requests have to do with insuring the home of a deceased relative. This is very important information for anyone that could be in that position someday.

Family members acting as executors of an estate need to understand the responsibilities they have with a vacant home, and most do not understand if the house sits empty for over 30 to 60 days, the "existing" homeowners insurance policy may begin to reduce or totally eliminate coverage. One of the first thing executors should do is investigate vacant homeowners insurance, and communicate the fact that the home is empty or vacant to the existing homeowners insurance company.

They will soon get a termination notice from the insurance company, but that is actually a good thing! How can this be? An estate executor that is holding a termination notice that says the insurance will be cancelled in 30 days due to a vacant building, at least knows coverage is in place for 30 days on the vacant property and has time to secure vacant homeowners insurance.

People that let months go buy or simply "hide the fact" from the insurance company are probably in for a rude awakening if there is a claim on the vacant home. Being an executor is a difficult and stressful time. What a catastrophe when the executor has to report to other family members that there has been a homeowners claim, and they failed to properly protect the interests of the family through vacant home insurance

Why a Seasonal or Rental is Not a Vacant Home

Isn't a seasonal property or a beach property a vacant home, and why do some homes need vacant home insurance coverage and this is not required on vacation homes or homes rented out?

First, the word is just beginning to spread that if you have a house that is empty or unoccupied for over 60 days, chances are you are losing or have lost insurance through your regular homeowners insurance company and you need to put vacant home insurance or vacant homeowners insurance coverage on the home. Those that don't realize this are risking much.

However, someone that owns a property on the ocean, say at the New Jersey Shore, may watch it sit empty for 10 months a year, and these properties do not need a vacant home insurance policy in most cases. Investment properties that are rented for part of the year can be covered under standard landlord/tenant dwelling policies. Insurance companies do not see these properties for rent as the same risk as a vacant home. Properties that are for rent are kept up well, and may often get visitors from owners, realtors, cleaning people etc.

A "second home" also may sit empty for 10 months a year, yet rarely requires a vacant homeowners insurance policy either. In fact, in most cases, the same company that provides homeowners insurance on the primary home will also extend "all risk" insurance to a seasonal or second home. We admit, this is a bit of a paradox. One home is empty or vacant and only expensive vacant homeowners solutions can be offered. Another home sits unoccupied in Scottsdale AZ as a second home and there are no problems securing good coverage at a lesser price. We will continue examining this one.