Do I Need Home Insurance for a Vacant House?

According to some Census Bureau figures, 13% of U.S. homes are vacant. The number of vacant homes is particularly high in Arizona, Florida, and Nevada, three states that have been hard hit by historical foreclosures.

However, just because your house is empty does not mean you should not compare home insurance policies and have something for it. Any extended period of time away from your home while it is unoccupied may give your insurer grounds to cancel your homeowner's insurance policy, leaving your home without critical protection.

Perhaps you've purchased a new home but haven't been able to sell your old one. Perhaps you've temporarily relocated while your home is being renovated. Maybe you're a "snowbird" who spends the winter in New York and the summer in Florida.

As a result, you may want to consider purchasing vacant-home insurance, which can cost 50% to 60% more than standard home coverage. Because vacant homes can be targets for vandals, thieves, and squatters, home insurance companies regard them as high risks and refuse to provide traditional coverage.

“This is because problems such as theft, vandalism, fire, and flood are far more likely to occur in vacant houses than in occupied ones,” says Pete Moraga, a spokesman for the Insurance Information Network of California. “And the resulting damage could be even worse because no one is at home to report or repair the problem.”

If you own a vacant house, here are four things you should know about insurance:

Many homeowner's insurance policies include a clause that voids coverage on vacant homes, providing you with a timeframe for how long your house can be vacant before an insurer cancels coverage. Most companies will cancel coverage if a home is unoccupied for more than 30 days; others will allow up to 60 days.
If you're leaving your house for any reason, ask your insurance agent company how to ensure coverage while no one is there before you leave. The house is considered occupied if someone is house-sitting for you while you are away.
Don't think you'll be able to leave your house empty without the insurance company noticing. If you file a claim, the insurer can determine whether the property has been vacant for at least 30 days by examining utility bills or interviewing neighbors.
Some insurers will work with you if you have a unique circumstance and are taking good care of the vacant house, such as by hiring a gardener or caretaker. They will frequently grant you a vacancy permit, but it is not the same as a standard homeowner's policy and may not cover the same threats. The majority of permits will cover fire and wind damage, but not theft, vandalism, or water damage.

State Farm, the nation's largest home insurer, allows owners of vacant homes to purchase an endorsement to an existing policy. According to spokesman Dick Luedke, an exclusion for vandalism and glass breakage kicks in after a house has been vacant for 30 days on a standard policy. However, a policyholder who purchases an endorsement can "buy back" that exclusion, ensuring that the house is protected against these threats. A one-year policy costs between $35 and $45 dollars.

Do I really need vacant-home coverage?

However, not all insurers provide these endorsements. In that case, it's time to think about purchasing a vacant-home insurance policy, which covers vacant homes for an extended period of time and covers threats that traditional policies do not. However, not many major insurance companies offer these policies; instead, this type of coverage is typically sold by smaller companies that also sell other specialty insurance policies.

Because specialty insurers are not as well-known or easy to locate as major home insurers, ask your insurance agent for recommendations. Then, conduct additional research by checking the firm's reputation and financial status with an independent service like Moody's or A.M. Best.

Farmers Insurance's Foremost Insurance Group offers vacant-home policies (except in Florida, Hawaii, and Washington, D.C.) that cover your home against fire, wind, and hail damage, as well as vandalism and "malicious mischief."

The Foremost coverage applies to vacant homes worth up to $1 million; there are no age restrictions. Policies are purchased for a one-year period but can be cancelled at any time. According to Jim Gontjes, a regional product manager at Foremost, policies begin at $250 per year for fire-only coverage and increase from there.

In Florida, one of the states with the highest percentage of vacant homes, American Integrity Insurance has recently begun offering vacant-home insurance. CEO Bob Ritchie predicts that his company will sell an average of 6,000 policies over the next two years; the policies provide basic fire protection.

“We are not looking for distressed properties; we are looking for homes whose owners are diligent in their maintenance but require specialized coverage,” Ritchie explains.

A home must be worth more than $150,000 to qualify for an American Integrity policy. Although policies are only valid for one year, American Integrity offers quarterly and semi-annual payment options. According to Ritchie, the minimum premium for a $150,000 home (no contents coverage) is $2,000 per year, and it can go up to $15,000 for homes worth at least $1 million.

Exploring your insurance options for vacant properties

Moraga suggests contacting several companies to determine which policies would be most appropriate for your situation. “It's similar to clothing. Some are overly generous, while others are overly restrictive, so find a policy that meets your specific needs,” he advises.

If you are unable to find a standard or specialty insurance agency that will cover you, contact your state's insurance regulator and inquire about the state's FAIR (Fair Access to Insurance Requirements), which covers consumers who have been rejected by insurance companies. California, for example, provides coverage for vacant homes. Those who live in a high-risk area for crime or wildfires, for example, are automatically covered, but not everyone is covered for vandalism or theft. Many FAIR plans impose a slew of restrictions while charging exorbitant premiums.

If the cost of a FAIR plan is prohibitively expensive, there are other options.

“Hiring a house-sitter to live there may be less expensive than having a vacant-home policy,” Moraga says.

Consider renting out your home while you're away for long periods of time. However, in that case, make sure to purchase a landlord's policy, as neither a homeowner's nor a vacant-home policy will cover rental homes.