Whether you just bought a new home and have yet to sell your old one, or you're going on a long vacation, a vacant home can lead to serious insurance problems. Your absence increases the likelihood of theft, vandalism and utility-related damage -- and your home insurance provider likely either will refuse to cover it or charge you higher premiums.
Options for insuring a vacant home
Nearly 15 percent of U.S. homes were vacant in the third quarter of 2009, according to Census Bureau numbers cited by the Insurance Information Institute. Insurers often discontinue coverage on a home if it remains unoccupied for more than 30 days, according to the Insurance Information Institute.
Homeowners can acquire something called vacant home insurance, but this coverage is relatively expensive. Expect to pay as much as 50 percent or 60 percent more for insurance on an unoccupied home compared with a regular home insurance policy, according to the Insurance Information Institute. This special insurance also probably won't cover critical perils like fire, wind, glass breakage, water damage and theft.
Another option -- home staging
Fortunately, owners of newly vacated homes have an alternative: home staging. Home staging companies specialize in making sure your home is lived in while you are trying to sell it. Here is how this service works:
- Once you sign up, a resident manager moves into your home to take care of the premises and reduce your potential insurance risk.
- Because your home is now occupied, insurance companies are more likely to reward you with better coverage and lower insurance premiums, and they will not exclude arson, vandalism or broken glass as perils. In addition, your insurance no longer will be at risk of being canceled after 30 days.
- The resident manager will take care of utilities and maintain the property. According to Show Homes, a nationwide home staging service, these managers will move in their own furniture if necessary. Vacant Home Caretakers, another staging company, promises that its home managers will maintain landscaping.
Home staging services can get expensive. You may have to pay a setup charge to help the resident manager move in, as well as a small percentage of your home sale price, which can be deferred until closing, according to the International Risk Management Institute. For homeowners who plan to vacate their residences for only a short time, requesting a vacancy permit from your home insurance provider (in exchange for reduced coverage) may be a better option.
But if you're not sure how long you will retain ownership of the vacant home, or are trying to make it more attractive to potential buyers, the home staging option may make a great deal of financial sense.
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