The Homeowners Insurance Vacancy Clause and Unoccupancy Clause- What You Need to Know
If you are a homeowner and have purchased home insurance to protect your property, you must get familiar with the ‘homeowners insurance vacancy and unoccupancy clauses.’
To understand more about the homeowner’s insurance vacancy and unoccupancy clause, here are some terms you need to know:
According to Merriam-Webster, a vacancy clause is typically defined as an amendment made to the property insurance coverage that doesn’t allow the property to be vacant beyond the period mentioned in the contract.
When included in the homeowner’s insurance, the vacancy clause would limit the insurance coverage for your home during the period of vacancy either partially or fully.
If your home stays vacant for a period exceeding 30 or 60 days, as mentioned in the insurance agreement, the property will not be covered by your homeowner’s insurance during the vacancy period. The number of days is defined in the policy agreement and is specific to the insurance company insuring the home. It’s important to read your policy.
The term ‘vacancy’ has varied meanings depending on your insurance. Most insurance companies define vacancy as ‘no people, no contents’ for 30-to-60-day period.
In such case, in the event of any loss or damage to your home, like damaged pipes, theft, or vandalism, while the property lay vacant, the insurer will decide what constitutes vacancy and apply the coverage limitations accordingly.
Unoccupied House Vs. Vacant House
As per the insurance companies, there is a distinct difference between an unoccupied house and a vacant one. The homeowner’s intention to return is the primary consideration while distinguishing them.
Where the home is left in a manner that suggests that the owner would return shortly, it is an unoccupied home. In the unoccupied house, the power and utilities are left on. The homeowner’s furniture and other belongings remain inside.
Unoccupied homes are provided with less limited coverage than a vacant home. But there are limitations, nonetheless. Of note, some policies covering secondary or vacation homes may have a shorter time frame for unoccupancy. Check your policy to better understand any limitations for properties covered by homeowners’ insurance policies.
Where the property is free from any belongings, it can be considered a vacant home for insurance purposes. Vacant properties face a higher risk of loss as no one is around to look after the homes for an extended period.
Most homeowners’ insurance policies restrict coverage when the house is left vacant for a while, usually between 30 to 60 consecutive days, depending on the insurance company’s policy form.
For example, suppose you lived your entire life in the Northern United States but, after retirement, chose to live in any state down south and sell your home. You mover out with all of your personal belongings and turn off all utilities. Your house would be considered vacant for insurance purposes.
If the pipes burst, causing water damage to your house, you may not claim such damages under your homeowner’s insurance as the property was vacant for an extended time, attracting the vacancy clause in your insurance contract. More than likely, your coverage would not be renewed at expiration, and you’d need to buy a vacant home policy.
Significance of the vacancy clause:
If a house is vacant during the time of loss or damage to the property from theft, vandalism, water, fire damage, etc., the insurance company will not cover it.
When the property lies vacant for an extended period, no one is around to protect it from theft or vandalism. Where there is water damage from broken water pipes, no effort could be made by the house owner to shut off the water to reduce the damage caused to the property.
A vacant property carries a higher risk for the homeowner’s insurance policies. Specialty vacancy insurance policies are available at a higher premium to cover houses during the vacancy.
What to do when you attract the vacancy clause?
If your house stays vacant for a period exceeding the time frame stated in your policy, your homeowner’s insurance policy will not cover the damages incurred after that time period during the vacancy period.
Tips to mitigate the risk of damage during a vacancy
If you plan to keep your home vacant for a long time, you can take the following steps to prevent damage to your property during the vacancy period.
- Install video surveillance/cameras on your property to prevent damage from theft or vandalism.
- Decide on the utilities that are necessary to maintain your house and shut down those that are not required while your home is vacant to prevent damage.
- Check your plumbing systems thoroughly before leaving to prevent breaking of pipes and avoiding water damage to your property. Turn off your water.
- Make sure your fire protection systems and HVAC systems are working correctly.
Insurance policies often come with varying conditions, coverages, exclusions, and limits that can overwhelm and confuse you.