Do you know that an insurer can drop your current policy when the property insured is vacant? During tough economic times, it is a common contention among rental property investors to be embroiled in insurance issues as policies often cover only up to a maximum of 60 days. Insurers usually put a red flag on a home insurance policy when this happens and pertinent actions will be done. While this may not be happening to your rental property right now, it is best to understand the basic contention of why a vacant property insurance policy is a must-have.
When it comes to “vacancy”, the first thing that may come to mind is the absence of a tenant. A more legal take however, states that vacancy can happen to a property when it does not include enough furniture for a tenant to reasonably inhabit such a space. A rental property is considered vacant unless there is sufficient furniture like tables and chairs, a decent bed, and kitchen appliances like oven or stovetop to make the place habitable.
When dire consequences happen, an insurer can refute your claims owing to delays or worst, extra expenditure on lawyer fees to handle such disputes. After 30 days, it is common knowledge that vandalism claims will be removed and then, fire damage after 60 days. It’s because vacant properties are at a higher risk of being embroiled in arson, burglary or theft, vandals, water or heating damage, moulds and pest formation, and many more calamitous situations detrimental to insurers’ interest. This is where a vacant property insurance coverage comes in.
Vacant Property Insurance
While other property owners find ways to prevent insurance penalties by simply providing enough furniture to a rental property or, in some cases, “staging” a home with furnishings, it can still be contested in court by an insurer. The risks involved in an unoccupied property, residential or otherwise, can be higher than an inhabited or tenanted one. As gross as it may sound, intruders who may even get hurt due to shard glass or broken floor boards can file a claim or sue you in court—and your current insurance policy may not hold an option for you.
Vacant property insurance coverage is a specialized type of insurance policy which can be added to your current landlord insurance policy or as standalone coverage. Some of the most common coverage offered by top-rated insurers are the following:
- identified/named peril like lightning, explosion, fire or hail
- malicious mischief
- optional liability
- total loss settlement
- cash valuation for partial losses
In various cases, specialized insurers can offer a full year policy designed with flexible payment system and pro-rated cancellation. This is quite handy particularly to owners who are still undecided on what to do with their property. This short-term vacant property insurance allows you enough leeway to think things over while keeping your investment protected. The key here is to find a reliable insurer who can craft such a policy for you and when a tenant moves in, easily endorse you for an occupied policy without cancelling or underwriting a new one.
Need help protecting a recently vacated property? Landlord Insurance HQ offers flexible vacant property insurance policies to assist in your long or short term requirements. Call us on 1300 815 344 for a consultation or request a quote online NOW!