Nicolas A. DAlleva

Why Most Insurance Companies will Not Take A Risk on a Vacant Home

Many insurance companies will not insurance a vacant home because the risk of damage to the home is greater. This is typically why insurance underwriters will not allow policies to be written for vacant homes and why vacant home insurance is typically more expensive than traditional home insurance.

If you think about the risk to the insurer, it's easy to understand why a vacant home policy will offer insurance coverage that is more expensive. Looking at fire for example, if a fire occurs when someone is in the house, the fire department can be called and a total loss can be limited to a partial loss or a small loss. If no one is in the home, a total loss cannot be prevented.

There are many other examples, with the most common being a water leak or washer hose break. The amount of damage caused by running water for 7 hours (the amount of time before the owner returned from work for example) and 17 days (the next scheduled visit from your neighbor to look in on an empty home) is enormous, with the latter being a several hundred thousand dollar claim, as all the walls will be infested with mold. In order to repair a house that has had water running for several weeks, will take several weeks to over a month, with most of the drywall having to be stripped off the studs because of potentially toxic mold. The mold and mildew in the house needs to be treated and killed as well by a specialist before the new drywall can be put back in place.

This is the reason why homeowners insurance policies will pay for expenses you incur just after a loss has occurred in order to prevent additional damage. If a tree falls on your house, most policies will reimburse you for the service of a tree company that will immediately come out to the house and remove the tree, so the hole in the roof can be covered with a tarp and additional damage can be controlled and limited.

Homeowners need to plan ahead and when they know their home will be empty, unoccupied, or vacant, they need to cancel their existing policy in most cases, and implement a new policy designed to meet these needs.

The current situation involving the high rate of mortgage foreclosures causing many vacant homes to be sitting on the market while they attempt to sell, is not helping insurance companies become more eager to accept this risk. In certain areas with a high amount of foreclosures, there is a tremendous amount of vandalism on these properties including looting of pipes and even the homeless living in the houses.

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