The Dreaded Vacant Rental Dwelling

How Does Vacancy Affect Insurance Coverage?

Despite an owner’s best efforts, your rental dwelling is going to be vacant from time to time. Obviously, you have a big incentive to replace a tenant so that you’re earning income from your investment, but until that new tenant occupies your home, certain precautions should be taken to reduce the chance of damage to the dwelling.

Most property insurance policies reduce coverage on a dwelling if it has been vacant for more than a specified period of time, usually 30 days. Coverage for Vandalism & Malicious Mischief and certain types of Water Damage usually ceases if the home has been vacant or unoccupied for more than 30 days. Clearly, this restriction arises from the fact that these two types of losses occur with more frequency and severity in homes that have no occupant to discover broken pipes or to discourage vandals.

Vandalism and Malicious Mischief

A vacant dwelling is an attraction for kids with time on their hands. Windows become targets for rocks. Breaking in and exploring an empty home is more temptation than some adolescents can resist. Vandalism to flooring, mirrors, cabinets, and such are the most frequent examples of property targeted by vandals. If they damage plumbing, the resultant water damage can cost thousands of dollars that may come out of your pocket, damage that may not be covered if the dwelling has been vacant longer than 30 days.

Reducing the Chance of an Uncovered Vandalism Loss

Give the dwelling the appearance of being occupied. This may mean leaving a car parked in the driveway; 2. Make sure the tenant has stopped newspaper delivery and empty the mailbox often; 3. Make frequent and visible trips to the dwelling during daylight hours. If children are milling around the property, introduce yourself, ask their names and make it clear the home is off limits; 4. Keep the exterior of the home in good condition, with grass mowed and trash removed; 5. If possible, furnish rooms that are most visible from the outside or draw curtains to conceal the empty rooms, and leave a light on at night. If you have a spare radio for the home, turn it on so it can be heard from the yard; 6. Have someone spend the night at the house occasionally, visibly so.

Water Damage

If your dwelling is insured by a DP3 form, also known as a “special form”, sudden bursting of water pipes and resultant water damage is insured as a property loss. When a home is occupied, such damage is kept to a minimum since it’s usually discovered quickly. In a vacant home, water from a broken pipe could flow freely for several days before it’s discovered, causing an enormous amount of damage to a home. In areas subject to extreme cold, pipes can freeze and burst when the home is unheated. Again, if the home has been vacant for more than 30 days, the damage may not be covered under a dwelling fire policy.

Reducing the Chance of an Uncovered Water Damage Loss

If possible, shut off the water at the main valve in the ground or have your water utility representative perform such a task. Turning off the water via the valve next to the house is good, but a creative vandal (usu. an adolescent) may go to the effort of turning this back on and then damage plumbing to wreak havoc upon your home; 2. Empty the toilets after the water is turned off; 3. After turning off the water at the main valve, run the inside and outside faucets to drain as much of the water in the home as possible to further prevent severe leaks from broken pipes due to vandals or freezing.

Common Questions from Owners About Vacant Dwellings

What if a vandal sets fire to my home, is this covered? ANSWER: Fires, save those set by OWNERS, are usually insured, even if the home has been vacant for more than 30 days. Such a loss is categorized as a fire claim, not vandalism;
If I have someone stay overnight in the house once per week, won’t that meet the definition of “occupied”? ANSWER: Unless you can show income from a tenant, or make a good case that someone is actually residing in the home daily, this interim “tenant” may not meet the occupancy requirement and coverage for vandalism or water damage may be excluded after 30 days;
Does vacancy affect liability coverage should someone claim injury at the dwelling site? ANSWER: If your dwelling fire policy includes an endorsement for liability, liability coverage is not restricted by vacancy;
If the insurance company discovers the dwelling is vacant, will they cancel coverage immediately? ANSWER: This varies by insurer, but they may choose to cancel the policy prior to the expiration of coverage.

Some insurance companies may treat vacant homes differently, so consult your policy to see how your insurance addresses this important topic, but all rental dwelling owners can greatly reduce the likelihood from out-of-pocket repair expense to a vacant dwelling from vandalism or water damage. If you DO have such a claim after a dwelling has been vacant for more than 30 days, contact your insurance agent to discuss your options, just as you would if the dwelling were occupied by a tenant.

Randy Brown is an agent for McDowall and Keeney Insurance, 865 Howe Ave, Sacramento, CA. He can be reached at 916-567-3233, or via e-mail at rbrown@mcdowallandkeeney.com . He specializes in rental dwellings and apartments and welcomes your questions on these and other personal and commercial insurance topics.

McDowall and Keeney Insurance Associates family has been delivering results since 1922. Our goal is to provide both a superior customer experience and tremendous value for our customers.

McDowall and Keeney Insurance

865 Howe Avenue

Sacramento, CA 95825

916-567-3233