Vacant Home Insurance or Builders Risk Insurance? What to buy

There seems to be a lot of confusion from customers about when they need to purchase a vacant homeowners insurance policy vs. when they need to buy a builders risk insurance policy or contractors policy.

Most insurance companies that insure vacant or unoccupied homes have what we call "residential" products. If the work on the home during the period of vacancy is going to be minor or cosmetic such as putting in new hardwood, painting, or redoing a few bathrooms, then most vacant home insurance polices will apply.

However, if the work or renovations that are going to be done during the vacancy time are going to be extensive, a builders risk or contractors policy will almost always be needed. What is the basic definition of extensive renovations:

1. Where any work is being done on the roof


2. Window replacement throughout the house


3. Extensive plumbing or electrical work


4. Removal of load bearing walls


5. Other major renovations

You do not want to be holding a residential vacant home insurance policy, have a large claim, and have the adjuster tell you they are denying your $50,000 claim because you had taken out the wrong policy or misrepresented the situation to the insurance company!

Real Estate Agents Not Doing Favors for Clients Re Vacant Homeowners Insurance

A recent but informal survey of real estate agents by Vacant Home Insurance Now finds that real estate agents are not doing their clients any favors when it comes to making suggestions about vacant home insurance. Over 90% of home owners do not understand that they cannot keep their home insured with their existing homeowners insurance company if the house becomes empty. The problem is, more than 60% of the Realtors we polled feel the same way and are not recommending vacant home insurance solutions.

In fact, the advice of many real estate agents have actually been very detrimental to the clients best interests and we have found these kinds of suggestions:

1. "Just keep a few items in the house and in front of the windows so it appears that someone is living in the house."


2. "Just have someone stop by the house every few days so it can stay insured."


3. "Put a light on a timer so it always seems like someone is home."


4. "Don't tell the insurance company you are not living in the home, because if you do they will cancel you."

All of this is potentially catastrophic advice. If a home is empty or unoccupied it needs a vacant home insurance policy.. period. There is no way to game the system or get around this. The advice real estate agents give their clients needs to be, "if your home will be empty for longer than 60 days you should immediately look into vacant home insurance quotes because this is the only way the house can remain covered, can we cannot sell the house without good insurance."

Is Vandalism Included In Your Vacant Home Insurance Quote

At Vacant Home Insurance Now, we want to remind anyone shopping for a vacant homeowners insurance quote to always make sure it includes vandalism. First, many vacant home insurance quotes are limited named perils coverage and vandalism is not even on the list of covered items.

In most cases, vandalism and malicious mischief can be added to the policy, but in most cases it is not standard. Vandalism and malicious mischief is the # 1 cause of insurance claims on empty homes that are not occupied. We provide an "all risk" insurance solution for vacant homeowners insurance so with our programs, one does not need to ask if vandalism is on the list because it's always covered.

However, 99% of the market if you are seeking other quotes, is limited named perils (like fire, wind, hail, lightning, smoke, aircraft, etc) and vandalism may or may not be on the list. If you are willing to take the risk of going with a limited policy, we do recommend you pay the extra premium and get vandalism added back into the policy.

Why this is so important, is vandalism can lead to larger claims that will not be covered without vandalism protection. If kids throw a rock through the window, and that night the area receives a downpour of rain, the $20,000 of damage that could follow to the hardwood and drywall will not be covered because the broken window was the cause (assuming this person did not add vandalims and did not choose an all risk insurance solution!)

Vacancy Clause after a Death of a Loved One

Vacant Home Insurance Now would like to remind everyone that after the death of a loved one, each insurance company will have a different extension of benefits clause for a vacant home.

In some instances, a few homeowners insurance companies will insure a vacant home, and essentially provide vacant home insurance for up to a full year. In most situations, this "run out" period may far more limited and may only be 30 or 60 days. The most important thing to remember when dealing with an unoccupied home is not to leave anything to chance, and to contact the insurance company as soon as possible and report the circumstances to them.

Ask them if they offer vacant home insurance. Most will not. Ask if they have an extension of benefits provision for a vacant home after a death in the family. Some insurance companies will not immediately terminate the insurance in this instance. However, in all instances get the extension of benefits in writing and do not trust anyone that tells you the home is still covered even though the house is empty. Always collect this documentation and proof of coverage.

Chinese Drywall Causing Vacant Homes

Homeowners that have the now infamous Chinese Drywall exposure problem will need vacant homeowners insurance while they are not living in the house, and while the situation is fixed. However, securing vacant home insurance for this situation is not easy, and many carriers will not provide vacant home insurance quotes for homeowners in this situation.

There have been problems reported with certain Chinese drywall shipped into the United States. It is said to emit some sort of gas or odor that can cause health problems for the owner of the home. It all started after hurricane Katrina where, because of the extent of the damage, there was a drywall shortage in the U.S. and drywall had to be shipped over from China. It's unclear if the problem has totally been corrected, and if existing drywall coming from China could contain the same toxic element. The main symptom is a sulfur-like smell and certain respiratory problems that cannot be explained.

People who experience this problem may be forced out of their house, thus they will need vacant homeowners insurance. However, carriers that supply vacant home insurance are fearful of the Chinese drywall problem and many will not provide vacant home insurance coverage.

Also if extensive renovations are anticipated, like ripping out all of the drywall to replace it, many vacant home insurance carriers will not provide coverage, and a builders risk, or contractors policy will be needed.