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Vacant homes are not uncommon. There are a number of reasons a home may be vacant, ranging from moving into another home before your current home is sold, waiting for major renovations to be done to move in or not being able to find a tenant if you’ve decided to rent the home.
While these are all understandable situations, you should know that home insurance companies often consider vacant homes to be high-risk, which means it might be harder for you to find insurance coverage.
What is vacant home insurance?
Vacant home insurance is a type of property insurance that specifically covers homes that are not being lived in for an extended period, usually 30 days or more (although the period of time varies by company). Standard home insurance policies usually do not cover homes that are left vacant because a vacant home generally carries more risk of a claim than an occupied home. For example, vacant homes may be more likely to be vandalized than occupied homes. Additionally, if a storm hits, the damage could be worse than if a homeowner had time to prepare and act quickly to make temporary repairs.
Vacant home insurance is either sold as a standalone policy or possibly as an endorsement that is added to your current homeowners insurance policy. Vacant home insurance that is sold as a separate policy is usually written as a DP-1 policy form. This policy form is not to be confused with a standard homeowners policy (HO-3) or a rental property policy (DP-3).
It’s also important to note that there is a difference between vacant and unoccupied homes. Homeowners intend to return to their unoccupied homes — like a seasonal residence — in the foreseeable future, whereas a vacant home is truly not being used for a significant length of time.
What does vacant home insurance cover?
Every property insurance company treats vacant home insurance differently. Generally, vacant property insurance under the DP-1 policy form covers the physical structure of your home against perils such as:
- Hail, fire and lightning
- Windstorm damage
- Riots and civil commotion
Keep in mind that a DP-1 does not usually offer personal property coverage or coverage for water damage. Vacant home insurance endorsements might include more coverage than a DP-1 policy, as it is an endorsement added to a standard homeowners policy. An insurance agent can help you understand the different coverage options available based on if the insurer offers a separate policy or an endorsement to your current policy.
Who needs vacant home insurance?
Every insurance company has different criteria in what is considered a vacant home, including the length of time the property is empty. You may need vacant home insurance if you:
- Recently bought a house and are not planning to move in within 30 days
- Inherited property and do not intend to move into the home within 30 days
- Are selling your home and the personal property has been removed from the home
- Have moved out of your home and are preparing to use it as a rental in the future
- Are not living in your home while it undergoes extensive renovations
For homeowners who own their property outright, vacant home insurance is optional, just like standard home insurance, although financial professionals still recommend a policy. But if you have a mortgage on your vacant home, your lender will likely require you to purchase vacant home insurance.
How to buy vacant home insurance
Buying vacant home insurance is similar to buying standard homeowners insurance. You might be able to purchase a standalone policy or endorsement through your existing homeowners insurance company. Here are the steps you should take to buy empty house insurance:
The first step in buying vacant home insurance is to find the right carrier for you. Check to see if your home insurance provider offers an endorsement or standalone policy. If so, you might qualify for a policy bundling discount. If you want to buy a separate policy, shop around for providers that offer vacant home coverage in your state. Pay special attention to the coverage options, add-ons and discounts.
The next step is to get quotes from the companies you researched. For the most accurate quote, call an agent and explain your situation. They can recommend an appropriate amount of coverage, help you choose your policy limits and see if you qualify for any discounts. Get quotes from a few different companies if possible so you can compare them and see which company is offering the best coverage for your needs.
Set up a policy
The last step is to finalize a vacant home policy or add the endorsement to your current policy for your coverage to be in effect. If you are setting up a vacant homeowners insurance policy to replace your standard homeowners insurance policy, make sure to avoid a lapse in coverage. Your insurance agent will guide you through the process of how to avoid a coverage lapse.
Is there a difference between vacant home and unoccupied home insurance?
Vacant homeowners insurance and unoccupied homeowners insurance are not the same. When a home is vacant, it usually requires a separate policy or endorsement to be adequately covered should an incident occur.
An unoccupied home means that the homeowner is away from the property but intends to return. The utilities are still hooked up, for example, and there is likely furniture within the home. In cases like this, generally, a standard homeowners insurance policy will be needed to cover the home. Seasonal or vacation homes are commonly unoccupied for part of the year but aren’t truly vacant since the homeowner is still using the space.
A vacant home, on the other hand, is one that is currently unused for reasons other than seasonality. A home may become vacant when it sits on the market for a period of time after the owners have moved out, if it is undergoing extensive and time-consuming renovations or if a rental home is between tenants for a significant length of time.
Reviewing the details of your personal situation with a licensed insurance agent will help you determine what type of homeowners insurance you need for your property.