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Vacant Buildings: The Top 4 Insurance Issues Clients Struggle With

Buildings can become vacant or unoccupied for a variety of reasons. You may leave your old home unoccupied after moving to a new home or because you spend different seasons in an average year in different parts of the world.

Foreclosure is another possible reason for buildings becoming unoccupied. However, the fact that your property is vacant or unoccupied does not reduce your insurance fears or worries, but raises them. Here are top four insurance issues that most clients have to deal with.

1. Insurers’ reluctance to cover vacant or unoccupied buildings

Insurance companies are often unwilling to provide coverage for vacant or unoccupied buildings. This is because such buildings are assumed to be extra risky to insure. Empty buildings attract all sorts of problems. They are at a higher risk for fire, vandalism and burglary, amongst others. Some insurers often include clauses in home insurance policies that can invalidate coverage on a home once it is unoccupied for a certain length of time.

2. Uncertainty about definition of a vacant building

Another issue that clients often struggle with is how a vacant building is determined. Your property may not only be considered vacant when it is not in use at all, but also when less than 30 percent of it is put to use. Some insurance companies will stop insurance coverage once a building remains vacant or unoccupied for 30 days. But some others may allow up to 60 days for the property to be put to regular use again before discontinuing protection. It is advisable that you read and fully understand the provisions of your homeowner’s insurance before leaving your home vacant for an extended length of time.

3. Costly vacant-home insurance

Some insurers do offer a special type of insurance to those who intend leaving their property out of use for an extended period of time. This is called a vacant-home insurance policy. The problem with this particular policy is that it is usually more expensive. You should expect to pay about 50 percent more than you would for regular home insurance.

4. Vacant-home insurance restrictions

Many clients still have to deal with restrictions on their vacant-home insurance policies despite their higher premiums. Losses resulting from occurrences such as water damage may still not be covered by some insurance companies. Therefore, you will need to study your policy documents very well before appending your signature.

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