The insurance risks and liabilities associated with owning a vacant home can be extensive, and to ensure you are adequately protected, it is important to know these risks. In addition to purchasing comprehensive insurance coverage, there are numerous preventive strategies for maintaining vacant homes to reduce risk and liability.
Insuring Residential Properties
Most homeowner’s policies can be impacted by an occupancy change of 30 days or more. This leaves the property owner financially vulnerable for all the risks previously noted. However, many insurance companies do offer vacant property insurance (also known as vacant building insurance or vacant dwelling insurance). If your property will be vacant for 30 days or more, please notify us so we can find the solution that works best for you.
Potential Risks of Vacant Homes
There are a host of risks and concerns associated with owning vacant property. Vacant homes are an obvious target for theft, trespassing, and vandalism. In addition to any loss or property damage that may occur, keep in mind that the owner of a property can be held liable for criminal activities or accidents that take place on the premises.
In addition, vacant properties are susceptible to undetected damages, such as fire, water damage, electrical explosions, wind or hail damage, and mould. Many of these incidents occur in vacant buildings due to small, undetected maintenance issues (where someone in an occupied building would have recognized and handled the problem before it caused a larger loss).
Other Ways to Mitigate Risk
In addition to extending coverage, there are some simple steps that owners of vacant property can take to limit their risk and liability.
- Prevent vandalism – Notify local authorities of vacated properties so they can watch for criminal behavior. Maintain an “occupied” appearance to the property—mow the lawn, have mail forwarded or picked up regularly, and install light timers and/or a security system.
- Limit liability – Make sure property is free from significant hazards (broken railings or steps, broken windows, etc.) that could cause injuries to anyone on the property—this could include police officers, maintenance workers, firefighters or even trespassers.
- Avoid damage – Performing regular maintenance on the property can decrease the odds damage. Make sure the heating system and chimney are cleaned and inspected regularly. Have the plumbing system winterized to prevent frozen pipes. Periodically inspect roof, insulation, attic, basement, gutters and other areas of the house for any necessary repairs, mould, damage or other problems. Consider installing smoke detectors that are tied to a centrally monitored fire alarm system so the fire department will be notified in case of an alarm. Remove all access material and combustibles from in and around the building.
Unoccupied Commercial Building Insurance
Vacant commercial buildings are more difficult to insure because they present greater risks, including an increased chance of theft, malicious damage and burst pipes. It is important to disclose all relevant facts when seeking insurance, including the reason for the property’s vacancy and a schedule of any works to be done on the property.
Because of the increased risks and liabilities associated with a vacant property, these types of insurance tend to be costly, ranging from one and a half to five times the cost of a property insurance policy. It is important, though, to look beyond the price and consider the suitability and comprehensiveness of the coverage being purchased.
For more information about vacant property insurance and other strategies to help protect your assets and mitigate loss, contact us today.