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My wife and I moved last summer, and our former home is still on the market. We were recently informed by our homeowners insurance company that because the house is no longer owner occupied, they will not renew our policy when it expires in a bit more than a month. I talked to the agency we used and they said they didn't have anything else to offer us; it's just not a company policy to insure houses that aren't owner occupied.

This leaves me at a bit of a loss, though. I can probably find a company to insure the house when this policy expires (assuming it hasn't sold by then), but I don't know what I'm looking for. Is it still homeowners insurance, just from a company willing to insure not-owner-occupied structures? (The theory being that this just isn't a business our current insurance company wants to be in, but someone else might be.) Or is there a different name for this kind of insurance?

If it makes a difference, the house in question is in New York State.

  • What you really want to avoid is the ripoff "force placed insurance" the bank puts on the property if you can't find coverage. – MrChrister Jun 13 '13 at 1:53
  • People insure vacation homes even though they may only be there a few weeks of the year. – mhoran_psprep Jun 13 '13 at 2:15
  • @littleadv Unfortunately in NY, it is different. By law they can drop you on in most cases if they can establish that the property has been vacant for more that 30 days. Also it's on the market and they'd see that. – JAGAnalyst Jun 13 '13 at 17:41
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What you need will depend on a number of factors that aren't clear from the question. This coverage is simply called "Vacant home insurance", but not all companies are willing to offer this coverage. Unfortunately, in New York, insurers can also legally drop your standard homeowners' coverage if they become aware that your property has become vacant for 30 days or more.

The Insurer's Concerns

Typically, a "standard" homeowners policy will have an exclusion clause for vacant homes. The insurance company's concern is that without someone in the home, they will be at risk for break-ins, squatters and vandalism. If you've ever seen "Flip Men" on Spike, you'll know this is a serious concern (great show, by the way). They will use a risk model to calculate an estimated risk for the property (this is why a seasonal vacation home in a sparsely-populated area is often less of a concern than a family home in an urban area). If they estimate the risk to be low, some insurance companies will allow to you buy back that exclusion so that vacant properties are covered. In your case, they have probably decided that either:

  1. They think the risk of damage that would result in a claim is too high, or
  2. They already have too much exposure to vacant homes, or
  3. They don't have the expertise to properly assess the risk, or
  4. They aren't in a financial position to cover the extra risk

Your Options

First, you need to find a company that is comfortable with taking on the extra risk of a vacant home. This will vary quite a bit by location, but the main ones are Farmer's (they use the Foremost brand name in New York) and Castle Rock. There are lots of insurance agencies that also advertise these products, but most of them are middlemen and use one of these two companies to actually write the coverage.

Additionally, since this is a specialty policy, make sure you understand all of the details of the policy, and how they vary from a regular policy including:

  1. State-specific eligibility requirements for what is legally consided "vacant"
  2. Return of Premium - if you sell the house before your coverage ends, will they refund any portion of the premium for the months on which you don't need coverage?
  3. Policy duration - some companies may only be willing to write short-term policies
  4. Variations in covered Perils - some companies don't cover certain risks you may consider essential (such as vandalism). Make sure you can afford to cover a worst-case scenario before you agree to take on any excluded perils.
  5. Cash versus Replacement Value - make sure you know what your reimbursement would be under both scenarios
  6. Higher Cost - according to Castle Rock's website, coverage for vacant properties can be 150% to 300% of the cost of a standard homeowners' policy. Ultimately, you will need to make a decision on how to balance all the costs of maintaining a vacant home versus how much you'd lose if you were to sell the property quickly but below it's true market value.

How to Reduce your Premium costs

These are general tips from the Murray Group's website (an independent broker in NY) on how to lower the additional cost of vacant coverage:

  1. Make sure you have a centralized security system including fire alarms installed such that authorities will be notified in the event of a fire or break-in
  2. Have deadbolts on every entry point
  3. Winterize the house, especially the water pipes to avoid bursts
  4. Board up the windows to avoid glass breakage and unauthorized entry
  5. Hire a monitoring service to check up on the house and inspect regularly

This may sound expensive, but these steps will all reduce the risk of something really bad happening when you're not there.

Additionally, do you know anyone you completely trust (relative, unemployed friend) that might want to live in your old house rent-free for a while? This could work out for you if they are willing to keep the place 100% clean around the clock so that you can show the house at any time.

If you have additional/specific questions, you should be able to find an independent insurance broker in your area that would be willing to advise you on your specific situation for a flat fee.

Best of luck with getting the home covered and sold quickly!

  • Ooh, this is helpful, thanks. With the house on the market, boarding up the windows isn't a practical step, but I should be able to take several of the other steps. I didn't want to give too many details, because I don't want to broadcast the specific location of an unoccupied house on the internet... not that the for-sale sign and online listings don't already do that... – pjmorse Jun 13 '13 at 18:15
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    @pjmorse Good call. Having the lights on timers might also help, like vacation. Also, if you don't board up the house, at least draw the shades or curtains so that people can't look inside and see that it's empty. That may help a bit. – JAGAnalyst Jun 13 '13 at 18:28
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Just a thought to add to the excellent response JAGAnalyst gave above: contact your real estate agent for some help with this. After all, it is to his/her benefit to keep the house in top condition. Almost all agents keep a list of handymen, contractors, gardeners, & other professional types who make a living doing these sorts of things. The agent may even recommend an insurance company.

However, if the agent blows you off or otherwise is unwilling to help you keep the house in sellable shape, that is a big warning sign that you need to find another agent. After all, this is how the agent makes his/her living, & if they aren't interested in helping to get the house sold -- which is something you should expect -- they aren't doing their job.

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