Vacant Home Requires Different Insurance
REM #F740
By Ilyce R. Glink
Summary: A ThinkGlink reader bought and moved into a second home. While the house was vacant a pipe burst causing damage. Now the insurance company is refusing to pay for the repairs. Ilyce explains that most homeowner insurance is for owner occupied properties. If the home is vacant, or rented out, the owner needs to have a different type policy.
Q: We decided to list our second house for sale and signed a 3-month contract.
The property was vacant and we would stop by the house every weekend to check
up on it.
Once the contract was up, we decided to take it off the market and rent it out.
When we returned to the house two days after the contract expired, the pipes had burst. The master bedroom, hallway, and guest bathroom were soaked in water. The ceiling had collapsed.
We filed a claim with our insurance company, only to find out insurance would not cover it due to the fact that the house was vacant and the heater was not on. (There had been a freeze warning.)
Can insurance companies do this? Our primary home is also insured by the same company.
A: Unfortunately, the answer is “Yes, they can.” Please go back and read your policy.
Often, insurance policies are written to cover homes that are exclusively lived
in by the owner. If you're going to rent your property or the property is going
to be left vacant, you'll need a different sort of policy or at least a waiver
from your insurance company.
Technically, you may have violated the rules of your insurance policy, which
would give your insurance company the right to deny your claim. And as we all
know, insurance companies don’t want to pay out any more in claims than
they absolutely have to.
For more information, please talk to a competent real estate attorney.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
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