Insurance for unoccupied properties, sometimes called vacant home insurance or unoccupied property insurance, is a specialized form of landlord insurance coverage that protects homes left empty for an extended period, generally 30 days or more.
Standard homeowners' insurance policies typically do not cover damages or losses while a property is vacant or unoccupied beyond this period due to the increased risks associated with such situations.
Risks Associated with Unoccupied Properties
Unoccupied or vacant properties have heightened risks compared to occupied buildings. The absence of regular oversight and maintenance makes these properties particularly vulnerable to several threats:
Theft and Vandalism:
Vacant properties are prime targets for thieves who may steal appliances, copper wiring, pipes, or other valuable materials. Vandalism is another concern, as empty buildings are easy targets for graffiti, broken windows, and other property damage.
Trespassing and Squatting:
Unoccupied homes may attract trespassers and squatters seeking shelter, leading to property damage, waste accumulation, and potential legal issues if injuries occur.
Fire Hazards:
Fires are a significant risk, especially if squatters light fires for warmth or arsonists target the property. Unattended electrical faults or heating systems can also spark fires, which may go undetected and cause extensive damage.
Water Damage and Maintenance Issues:
Leaks, burst pipes, or other maintenance problems can go unnoticed for extended periods, leading to severe water damage, mold growth, and expensive repairs.
Weather and Environmental Damage:
Unoccupied properties are more susceptible to damage from storms, wind, hail, or freezing temperatures, especially if utilities are disconnected or maintenance is neglected.
Liability Risks:
Property owners are legally responsible for injuries on their vacant property, even if the injured party was trespassing or squatting.
Loss of Income and Declining Property Value:
For landlords, vacancy means a loss of rental income and can lead to declining property values due to neglect, increased crime, and neighborhood blight.
Special Insurance Clauses for Unoccupied Properties
Unoccupied or vacant properties are subject to unique insurance clauses and limitations that differ significantly from standard homeowners insurance. Here is an overview of the most common and essential clauses:
Vacancy and Unoccupancy Clauses
Most standard homeowners insurance policies contain a vacancy or unoccupancy clause that limits or excludes coverage if the property is left empty for an extended period, typically 30 to 60 consecutive days.
Coverage Limitations and Exclusions
- Peril Restrictions: Coverage may shift from “all risks” to only a limited set of named perils, such as fire, lightning, windstorm, and hail.
- Vandalism and Theft: Most policies suspend or severely limit coverage for vandalism, malicious mischief, and theft once they exceed the vacancy period.
- Water Damage: Most policies exclude coverage for water-related damage.
- Glass Breakage: Policies often do not cover damage to windows and other glass.
- Personal Property: Coverage for personal belongings is often reduced or excluded.
Vacancy Permit or Rider
Some insurers offer a vacancy permit or vacancy clause rider as an add-on to extend or modify coverage for a property that will be unoccupied beyond the standard limit.
Cost of Coverage
Vacant or unoccupied home insurance typically costs 50% to 60% more than a standard homeowners policy.
For example, the average annual premium for a standard home insurance policy in the U.S. is about $1,411. In that case, the average cost for unoccupied or vacant home insurance ranges from $2,117 to $2,258 per year.
Stay Protected with Landlord Insurance
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