When homeowners move out of their house before selling it, most think they have no real risk of loss, since they are keeping their homeowners’ insurance policy in force. There are two major traps created that can catch the unwary. If homeowners worry at all, it may be that vacant properties are at more risk of vandalism, as well as damage from an undiscovered leak from a loose plumbing fitting or a frozen pipe.
Insurance companies know those risks are real, which is why (trap one) they usually require a change to a more expensive policy to cover vacant properties. By asking for a change in policy form, the homeowners may face a bigger bill, but avoid the horrible pitfalls described below.
The disturbing truth, however, is that most homeowners in this situation do not realize that their unoccupied house may not be insured at all if a major loss such as a fire happens!
How can this be? Most homeowner insurance forms exclude coverage for a house which has been unoccupied for as few as 30 days. Having furniture in it does not count- someone must be living there! Many homeowner insurance forms use policy definitions that result in the home being insured (trap two) only as long as that named homeowners are living there as their primary residence. Even moving to a new house and letting a family member move into your prior home can leave you without coverage.
Will the insurance company be sure to warn you of this? The unfortunate answer is no. It is hidden in the fine print. Insurance companies won’t bother to check up on whether you have moved out or not. They will simply continue to collect your premiums payments until you report a major loss. Then an insurance adjuster will investigate whether the insurance company is legally bound to provide coverage to you. If you fall into one of these unrecognized traps, it is then too late to fix the problem.
Bert Lyles is CEO of Showhomes Franchise Corp., America’s largest home staging provider.
Judy Fobes has been a commercial insurance agent for over 30 years and since 2001 has owned PenEx Insurance Agency. PenEx focuses on Interior Design, Architects and Engineers and Real Estate Staging. To date, PenEx insures thousands of Real Estate Stagers. PenEx is nationally licensed.