Insurance Companies Not Doing the Right Thing Regarding Vacant Home Insurance Risk

As we move into 2010 continuing to insure vacant apartments, vacant houses, and vacant townhouses as our specialty, we unfortunately can still say that 9 out of 10 customers had NO IDEA their existing homeowners insurance company does not provide vacant homeowners insurance. In other words they came to us out of last minute desperation. The fact that clients are continually blindsided and blown away proves the homeowners insurance companies are not doing enough to communicate to their clients that they do not insure vacant homes and vacant town houses.

We propose the industry inform clients of their exact policy regarding vacant home insurance at the time of the initial sale. In many instances, the policy document may not even address the terms and conditions regarding vacant home insurance but long term customers will be promptly cancelled if a house becomes empty or a town home becomes unoccupied for just 60 days.

Because of this "don't ask don't tell" policy as we see it in the industry, we estimate there may be over 10,000 homes across the United States that are either not covered at all, or not covered in full because of a vacancy situation and the customer does not know they are at risk.

Vacant Home Insurance on the Rise in 2010

Vacant Home Insurance now (.com) saw a massive influx of empty and unoccupied houses in 2009 due to the current economic conditions. The trend is not expected to decrease in 2010 as the amount of homes that sit on the market that cannot be sold is not decreasing in most real estate markets in the United States.

Vacant home insurance is needed when a seller of a home has moved out, and the home has been unoccupied for over 60 days in most instances. What's more, most sellers do not think there is any problem with this situation and do not even inform their existing homeowners insurance company that the house in vacant! The big homeowners insurance companies don't do a good job informing clients that they are not going to insure empty homes either. People are caught off guard.

What we see is homeowners finding out they need vacant home insurance by accident, contacting the existing insurance company due to a change in conditon or to respond to an inquiry at renewal time, and even to report an address change.

"When they make this call the last thing they expect is to be cancelled."

It's at that time they are given the word they are being cancelled and told the existing homeowners insurance company cannot provide vacant homeowners insurance coverage.

Vacant Apartment Insurance New York

What you don't hear about very often is how hard the real estate market is hitting New York City and vacant apartments are on the rise. With the housing crisis, you generally here about San Jose, Miami, or Detroit where some homes are down 40%. However, New York City has a major problem as well.

What most people call a condo, many in New York own "apartments." However, these homeowners have the same issues as the rest of the country when it comes to vacant home insurance. Vacant apartment insurance, a product carried by vacant home insurance now (.com), is absolutely necessary for any New York apartment that is empty or unoccupied for over 60 to 90 days. With some insurers, vacant apartment insurance may be necessary after just 30 days.

When we speak to clients in New York that, after understanding what they needed to do, put vacant apartment insurance on the owned property, here were the biggest misconceptions:

1. Vacant apartment insurance was unnecessary if anyone went by the property to check on it every few days (false).
2. Vacant apartment insurance is not needed if you go and stay in the property a few times a month (false).
3. You may not need vacant property insurance if the New York apartment is fully furnished and is being shown by a realtor. (false).

When we say (false above) we are saying this is generally true in most situations with most insurance companies. No "regular home insurer" in New York offers a vacant apartment insurance product so going to a specialty market like Lloyd's of London is necessary.

Vacant Commercial Building Insurance from Vacant Home Insurance Now (.com)

Vacant Home Insurance Now has teamed up with Pennock Insurance, Inc. of Chadds Ford PA to bring a high quality vacant commercial building insurance product to the markets we serve as licensed producers.

A vacant home insurance product cannot be used to provide coverage to a vacant commercial building or empty warehouse. A special product needs to be employed for commercial purposes. Vacant factories and warehouses not only need dwelling protection, they need a lot of quality liability insurance in case of lawsuit where the owners are found negligent.

Vacant Home Insurance Now would like to inform customers that they can come to VHIN with all of the following vacant insurance needs:

1. vacant warehouse insurance
2. vacant commercial building insurance
3. vacant factory insurance
4. vacant commercial land (liability only)

Of course, our focus will still be strong insurance for vacant residential dwellings employing all risk and replacement cost coverage.

Lloyd's of London for Vacant Home Insurance and Vacant Building Insurance

Getting a Lloyd's of London quote for vacant home insurance. The fact is, most Americans think that Lloyd's of London is an insurance company. This is untrue. Lloyd's of London is an insurance market made up of over 60 "syndicates." For our purposes, these syndicates can be thought of as it's own insurance company each taking all or part of various risks presented to the market.

Lloyd's of London syndicates do provide vacant home insurance and vacant building insurance in the United States. Local P&C agents have to access a surplus lines wholesaler in order to get vacant home insurance quotes from the Lloyd's market.

Vacant building insurance is also a specialty of several syndicates in the Lloyd's market. The most common vacant building insurance is carried on old or abandoned wherehouses where the liabiliy component of the vacant building insurance is more essential than the property or dwelling protection.

Finally, if you get two Lloyd's quotes on vacant building insurance, do not assume they are the same thing, just because they both came from Lloyd's of London. Chances are they are completley different vacant building insurance quotes.

Vacant Home Insurance for Resort Communities

Your author just returned from a resort community in Flordia, where there were over 200 homes on a remote island accessible only by boat. There was a tremendous amount of confusion regarding vacant home insurance and landlord tenant insurance on the island, and most homes were not permanently occupied. Here are the most common problems we discovered for these "second homes."

1. Not knowing vacant home insurance was needed for many of the homes that were empty more than 3 months a year.


2. At times, the homes were covered as second homes or vacation homes by the insurance company of the primary dwelling, but at times the homes were rented out thus violating the policy.


3. Some of the homes that did carry vacant lot insurance, were also rented out from time to time and most vacant home insurance policies do not also act as landlord policies.


4. Vacant home insurance was needed because the owner lived in a State (or country) where the insurance company carrying the primary homeowners insurance was not licensed in Florida and thus could not pick up the second home as an extension.


5. Having vacant homeowners insurance in place that did not provide the proper wind protection needed in Florida. Flood protection does not need to be provided in a vacant home insurance policy and can purchased through the federal government program.

Anyone that maintains a second home in Florida, or any other resort community outside of their home state should make sure they do their research to see what type of policy will be needed, and if the home will be rented for income, making sure the vacant home insurance policy will allow for renters when not empty.

Expatriates Don't See the Vacant Home Insurance Risk

After working with expatriates for over 15 years, we have released the results of what can be called an informal survey on vacant home insurance for expatriates living outside of the U.S. for 1 to 5 years. Here is what was found.

1. About 92% of expatriates believe they can remain with their existing homeowners insurance company while they are living overseas, even if the home is empty, and don't see the need for a vacant home insurance policy. (The facts: these 92% are exposed)


2. 60% believe, if they had a claim on a vacant home in the U.S. while they were on overseas work assignment, and there was an uncovered claim, their employer would pay for at least some of the claim. (The facts, this is a false assumption and employers can't pay personal claims).


3. About 60% do find out they need vacant home insurance at renewal time when they inform their homeowners insurance company they are abroad. (The facts: Most of these people realize they have been uncovered for many months and need a vacant homeowners insurance policy).


4. 80% believe if they, or a family member lives in the house for over a few weeks a year, or comes back to the U.S. from time to time, they don't have a problem with the existing insurance company (The facts: this is a false assumption)


5. 95% believe they can have a friend or "other relative" live in the house and they don't have to make changes to their homeowners insurance policy. (The facts: even if you have a cousin living in the house or house-sitting, you need to make a change to the existing insurance policy. A cousin is not in the nuclear family.


6. 98% of expatriates say their employer does not bring the vacant home insurance risk to their attention before the expat assignment.