Competition in the Vacant Home Insurance Market?

Many people call us and ask, why are there only a few insurance companies in my State that will offer vacant homeowners insurance? There are over 10 insurance companies that want to sell me regular homeowners insurance when I am living in the home, but when the home goes vacant or empty, I only have 2 or perhaps 3 choices in my State. Some States may not have even three choices.

The first reason is, none of the large "major" homeowners insurance companies offer a vacant home insurance product. The big guys just don't want to be in the business. The next logical question we get from customers is, why don't they offer a product? The main reason, and at least the reason they want you to believe, is there is too much additional risk in vacant home insurance and it requires special underwriting. We do agree a carrier takes on additional risk when they are asked to insure a house that is empty or vacant and needs vacant home insurance.

Vacant home insurance Now offers a very high quality vacant home insurance program. VHIN used to offer what much of the market now offers, a lower level of insurance for vacant home insurance, however we have found the premium to be very close between a high quality insurance program and a low quality program. The result: it just is not worth it to offer reduced and "watered down" coverage when high quality programs are available for perhaps just $100 more per year.

Are there big differences in insurance coverage, absolutely! All risk coverage is far superior over named perils which may only offer insurance coverage if 1 of a select few named perils occur. Offer a reduced and limited coverage can just lead to denied claims and unhappy clients.

Vacant Townhouse Insurance not The Same Process As Insuring an Empty Condo

Vacant Home Insurance now, in addition to providing vacant homeowners insurance to single family homes also provides vacant townhouse insurance and vacant condo insurance.

Unlike an empty or unoccupied condominium that needs special insurance coverage, a townhouse that is not being lived in needs much more coverage when writing vacant town-home insurance. If you are, by legal definition, living in a condo there is a master association policy that covers the part of the structure that the condo owns, typically the roof, grounds, and outside walls. When securing vacant condo insurance it's usually only necessary to insure the walls in.

Although someone that lives in a townhouse also pays dues into an association, there is no master insurance policy that covers any part of the persons townhouse (in most cases). The owner is responsible for insuring 100% of the dwelling up until the legal barrier where the other townhouse starts next door. Unlike a condo, providing vacant townhouse insurance means the dwelling will need to be insured for an amount that will be very close to the sale price unless there is extraordinary value in the real estate location.

When you need to insure a condo, the sale price can be hundreds of thousands of dollars more than the amount you need to insure for.

Winterizing a Vacant Home

Vacant Home Insurance Now provides free information and advice for homeowners that have a vacant or empty home, and need to purchase vacant homeowners insurance. When someone places vacant homeowners insurance, certain things need to be done for the policy to remain in effect and not be cancelled. The empty house needs to be maintained to a certain standard of care. Let's examine winterizing an empty home.

Winterizing is essential for a vacant or empty home. Frozen pipes is one of the top 3 causes of homeowners insurance claims for a vacant or unoccupied home. In the Mid-West, or North-East a homeowner has two choices:

1. All the pipes can be drained of all and any water, and this would allow the heat in the house to be turned off or turned very low to save on energy. Pipes can freeze in a home even if the heat is set to 60 degrees or higher depending on the outside air temperature, how close the pipe is to the outside air, and how much insulation is on the pipe and in the wall between the pipe and the outside air. In most cases we recommend some heat be left on in the house. Having the inside air in a house below freezing is not a good idea and can weather and destroy more than just the pipes.


2. One can leave water in the pipes but keep the heat above 60 degrees to be safe. A frozen pipe with a pipe burst can destroy a home if the damage is left untreated and water on in the house turns to mold and mildew. If the heat in left one, someone should come to inspect the empty house once every week or so.

The owner of a vacant home insurance policy has the responsibility of making sure the house is property winterized, or if the insurance company can prove a reasonable degree of care was not achieved, the vacant home insurance company can deny the claim.

How to Value a Condo for Vacant Condo Insurance

When one seeks quotes in the market for vacant home insurance, one of the most important things is getting the value of insurance right. The value a vacant home needs to be insured for is not the sale price, but rather the rebuild or reconstruction cost assuming there is a total loss.

This can be very difficult when valuing a condominium. A "condo" is a condo by definition because the homeowners or condo association owns at least part of the dwelling. For example, it's common for the homeowner to own from "the studs inward" meaning the condo association owns the walls, roof, support beams, trees, shrubs, etc.

When the owner of a condo finds himself needing vacant condo insurance, the best formula to estimate the value of what the condominium needs to be insured for would be the following:

Cost of the flooring, electrical, plumping, kitchen cabinets, kitchen counter, bathrooms, lighting "fixtures," appliances, and drywall (with all labor costs) = insured value.

For most condos that sell for $150,000 the rebuild or reconstruction cost will be at least $60,000 and may be much higher, however the number should be well below the rebuild cost of a single family home.