NAIC Warns Public of Added Insurance Risks of Vacant Homes as Numbers Grow

Vacant or unoccupied homes can leave a homeowner exposed to loss and liability that may not be covered by their insurance, according to the National Association of Insurance Commissioners. The latest Pending Home Sales Index released by the National Association of Realtors, dropped 2.6 percent to 75.7 based on contracts signed in June from 77.7 in May, and is 18.6 percent below June 2009 – another sign of the stagnant housing market.

"In many cases, people who have been trying to sell their homes for awhile have moved forward with their plans regardless, leaving a vacant home on the market," said NAIC President and West Virginia Insurance Commissioner Jane L. Cline. "Having an unoccupied home can create several insurance implications that typically are not covered under a standard homeowners policy."

Because vacant and unoccupied homes pose a higher risk for damage than occupied homes, insurance companies insure these properties differently and usually at a higher price, NAIC explained. These risks include:

Break-ins: When a home has been unoccupied for awhile, it can show signs that nobody is around – unkempt lawn, full mailbox and no lights on – that can tip off burglars to an easy target.

No emergency response: Without anyone home to call 911 or respond to emergencies, a manageable problem – such as a small electrical fire – can turn into a much larger, more costly disaster.

Property liability: There is no one present to prevent others from entering the property or to supervise activity, which could increase the likeliness of an accident on the premises or property damage when the owner is not there.

"Before you decide to leave a home vacant or unoccupied for a long period of time, talk to your insurance agent or company to learn how they define vacancy and unoccupancy, and whether the company will pay claims if a house is unoccupied," Cline said. "Be honest about your situation, because while an extra policy might cost more, it could save you money down the road should there be an accident or damage to the home."

Many insurance companies offer an endorsement, NAIC advised, that will provide coverage for a dwelling that is unoccupied for an extended period of time. Vacancy policies can also be purchased for different term lengths to cover a few months to a year, depending on the need.