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Insurers Reacting to Vacancies

Even with the increasingly improved real estate market, there are lots of homes still standing vacant.  And, insurance companies are starting to charge even more for coverage for vacant homes; they also are starting to restrict the availability of theft & vandalism coverage in the vacant property insurance market.

 While a limited number of insurers will offer a policy for vacant property which includes coverage for Vandalism, they will charge mightily for it.  Even so, they are getting hammered as the real estate marketplace continues to have lots of vacancies. 

 With vacancies come lots of claims.  If you can get vandalism coverage for a vacant home, you may experience claims for things such as “flash-raves” that cause a tremendous amount of vandalism damage to unoccupied homes. Other prevalent claims include interior & exterior graffiti. And, if you have the coverage, you are still going to stand a large deductible and possibly a depreciated claims settlement.  

 And as many homes still sit vacant, often a reflection of the time it takes to modify mortgages, negotiate short-sales, and generally enter into the repossession market (and many homes are simply just left vacant by lenders).   So, we  are seeing policies appearing with less protection, higher deductibles, and at more premium with fewer competitors. 

 If  your property is vacant, be aware that after 30-60 days of being unoccupied (check your policy) your standard policy coverage is going to restrict the kinds of claims that will be covered.  Again, vandalism & theft typically are coverages that cease once a home is deemed to be vacant, and water & glass damages are also voided in vacancy.  In many policies, particularly commercial forms, Fire coverage is severely curtailed and in many cases voided. 

 So, whether you own your home, rental property, or commercial real estate, be aware of the impact of vacancies on your protection.  Now, your decision is whether to buy a policy – at an enormous premium – which will cover vandalism claims, or if you’ll just hang in until the property is rented or disposed of.  Do you feel lucky?  Well, do you?    

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