Not every real estate transaction lines up perfectly. During the transition, you may find yourself in the position of owning two houses should you buy a house before your current one is sold. In this instance, it may be wise to obtain vacant home insurance.
While a standard homeowners’ insurance policy covers your home while you’re living in it, a vacant home insurance policy does the exact opposite. Simply put, vacant home insurance is specifically provided for clients whose property is now vacant, meaning no one is living there and there’s no personal property in the home. Customarily this involves people who have moved away, gone overseas for work, or passed away.
“Most homeowners’ insurance policies have a clause where, once the home is vacant, after 35-40 days the coverage under that policy is minimal to none,” says Bryan Baker, regional manager for Long & Foster Insurance. While there are instances where you could extend your homeowners insurance to cover the gap of time between when the home is vacated and when it’s filled, having a vacant home insurance policy will protect against vandalism, theft and other structural damage.
Baker says the most important thing homeowners need to know is that vacant home insurance is more expensive, explaining, “There’s a greater risk with a vacant home so it’s not uncommon for policies to cost around $1,750-$2,000 for 12 months or $400-$750 per quarter.” Should you choose to leave your home unprotected, you’re liable for any damage that happens to your property and will have to pay for it out of pocket.
Something to keep in mind is if a mortgage lender is still involved. Baker states that if there’s still a mortgage on the property the “lender will place an insurance policy on the property that could be two to three times more expensive yet provides inferior coverage.” By having the correct insurance policy you will avoid any trouble with your mortgage lender.
In order to avoid a lapse in coverage, make sure you know the timeline of when you plan to vacate your home and when the next tenant or owner is expected to move in. Knowing these details will make it easier for your insurance agency to set up a vacant home policy or adapt your current homeowners’ insurance policy to accommodate these changes. In some cases a vacant home insurance policy might not be needed at all.
The first step toward getting a new insurance policy for your vacant home is contacting your insurance agent. Each scenario is different so explaining the situation to your agent will enable them to figure out the best solution for you.
Not sure where to start? Learn more by visiting LongandFoster.com/insurance or calling 1-866-275-4534.