Several years ago I had the home to the right as one of my listings. The owner had an ill spouse and had to move rapidly to another state. His daughter came to help him, and they were able to get a private plane to take his wife to their new home. Movers emptied the residence. Nothing was left inside.
The home sat vacant for quite a while since the real estate boom was over. It did finally sell, but during that time I was always worried about whether or not the owner's homeowners policy would or would not cover it. As far as I knew, his insurance company thought he and his wife were still occupying the home. I asked a few agents here, and got some very iffy answers. Luckily, nothing happened and the new owners got coverage.
Here is the problem, when you buy a home and get insurance coverage, they will ask you if you will be occupying the property and base their premiums partly on that fact. If you have a mortgage your bank will require coverage on the home. If not, you should still get a policy to protect this important investment.
Now for that problem I mentioned. If you decide to sell the home and move before the property has sold, it will be sitting vacant for at least a while. In today's market, now more than ever. That means there could be more risk of vandalism, weather damage, broken pipes, fires, etc. If there is damage, you put in a claim, and the insurance company finds out the home was empty, that could be a problem. Maybe a big one. We all know the belief that insurance companies love to collect premiums, but hate to pay out for claims. So when the company investigator comes to see about the fire that took place, for example, and the neighbors or the fire report tell him that the place was empty, what will the company do? I do not know for sure, but if it were me, I would prefer not to have to find out.
The same could occur if the insurer thinks you are living in the home, but instead you are renting it out. They might think a "fast one" has been pulled on them. Homeowners might take better care of the home than tenants would in their minds. Therefore, creating more risk for the insurance people. It pays to be truthful to the companies when you are insuring your properties.
It is a good idea to speak with your insurance agent if you are not going to be occupying the home to make sure that you will continue to have coverage while the home is vacant or leased out. At least you can then make an informed decision. The new policies could cost you more, but that is better than losing a valuable asset due to a slip-up or oversight on your part. Your insurance agent should be able to guide and advise you.
On a side note, do be aware that in Florida when hurricanes are approaching our state, insurance companies will stop writing new policies until the danger has passed. Be sure that before you close on your home purchase that you have adequate coverage. Your bank will require it if you are financing your purchase. Our current contract forms even have language to cover this contingency.
Another thing is flood insurance. This is not automatically included in your homeowners policy. You have to purchase it separately, and there is a waiting period so it will not go into effect immediately. If your home is located in a designated flood zone your lender will likely require coverage. If you are paying cash, the choice to accept or not accept the risk of flooding is yours. Even if you are not in a flood zone you can get flood insurance at a better rates, just in case. Keep in mind that sometimes, even non-flood zones do get flooded. Usually the rates are pretty low in these "low risk" areas. See your insurance agent for detailed information.
John Elwell - REALTOR at CENTURY 21 Bill Nye Realty, Inc. Tel: 813-783-4444 or e-mail at: jelwell1@tampabay.rr.com
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