Homes become vacant for many reasons. Maybe your home is for sale but you haven't found a buyer yet. Or you've purchased a new home but won't move in for a while. It could be a rental property that's between tenants. Whatever the cause, there are some insurance risks that you should keep in mind.
You may be thinking, why get vacant home insurance when you already have regular homeowners insurance? Well, most homeowners policies exclude or limit coverage if the home is vacant, so you'll need more specific coverage.
Insurance coverage is extremely important for a vacant home, because there are lots of dangers that threaten vacant homes in particular. If you're debating whether or not you need a vacant policy, talk to your insurance agent! Here are some things to ask about:
Vacant home insurance typically costs more than regular homeowners insurance due to potential risks like weather threats, fires and vandalism. However, you may be able to get a discount by installing security systems around the house. Even if your insurance company doesn't provide a discount for extra security, it's a good idea that will make your home safer!
Each vacant home insurance policy is different. Many cover damage caused by fires, lightning, wind storms, hail, vandalism and theft. Check with your insurance company to see what options you have. (Remember to ask if flood damage coverage is an option!) There are also different time lengths for policies. Many are 12 months long, but they could go up to four years, so find out what will work best for you. You'll also want to consider Liability coverage, which applies if anyone is hurt on your property and you're found legally responsible.
Many insurance companies have different definitions of what is vacant and what is unoccupied. Additionally, there may be a specific time length distinction for the type of coverage. Restrictions can also be based on the age or value of the home. Discuss these variables with your insurance agent to find the coverage that works best for you!
Still not sure if vacant home insurance is for you? Contact Lallis & Higgins Insurance to learn more and get a quote! Overall, don't be afraid to ask questions about insurance. Let us know if you have any questions in the comments.
Why buy a vacant home? One of the biggest perks is being able to make the home whatever you want it to be. You can make it your new home, create a vacation home, rent it out, or fix it up and sell it to someone else. In some cases the seller may be willing to sell a vacant home cheaper than an occupied home. This is good news for you because you can save some money, but it could also mean something might be wrong with the house. It may need a little love, attention and renovating. Before you purchase a vacant home, here are a few things to do and watch out for:
Ask for an inspection from a professional and take notes on what they discover. You'll want to know what's broken, what needs to be fixed and what could possibly go wrong. (Note: Be prepared to pay for the home's electricity to be on for the duration of the inspection).
Since vacant homes can sit for quite some time, critters may come in and make themselves at home. Although they are usually small animals such as mice or bats, they can cause damage to a vacant house. Those unwanted critters can eat at the floors, carpets, walls and wiring. Be aware that you may need to hire a pest control service, and this could be costly based on the number of animals and the amount of damage.
There may be plumbing issues that have caused dried and cracked seals, slow faucets, leaks and other issues. If the heat hasn't been on and the temperatures dropped, the pipes could be at risk to freeze or burst (if they haven't already).
The previous owner may not have unplugged their indoor appliances, such as refrigerators and freezers, or let them dry out. There may be mold inside from the moisture being trapped. Having appliances plugged in with no one there could result in a fire (if the electric was on). Appliances in the house may become unusable due to long periods of sitting with no use, which means you will need new ones.
Remember, molds can grow on more than just appliances! Check for mold in the walls, floors, pipes…everywhere! Some molds may cause health issues, so if mold is found during your inspection, you may want to rethink purchasing the home. Talk with your inspector about the extremity and presence of mold, and evaluate the safety risks.
There are other potential sources of damage. For example, break-ins are more likely when a home appears empty, and windows, doors and other items could be damaged by the intruder. Storms are another danger. Debris could hit the home and cause damage that may have gone undetected. Always thoroughly inspect the home before buying!
There are a lot of things to do and watch out for before purchasing a vacant home, but the possibilities of what the home could be are endless. If you are looking to buy a vacant home but haven't found one yet, there are a few ways to move forward. Look online, talk to neighbors, get a realtor or simply drive around. There are more vacant homes than you think…happy hunting! For information on Vacant Home Insurance, contact Lallis & Higgins Insurance.
Are you considering renting your property? Remember these tips before you take the plunge.
Have you been bitten by the income property bug, or are you moving and planning to rent out your old home to a new family? Or do you simply want to lease out your home on weekends or when you’re away on vacation? There’s a lot to consider before you take the leap into becoming a landlord. Get the know-how now, and avoid surprises later.
Of course it’s about the money. But the money is probably not going to be rolling in for a while. If the home is paid off, you’re going to be enjoying the dough a little bit more than someone with a mortgage. When I decided to move and rent out the home I owned (with a mortgage), I knew most if not all of the rent was going to be filtered back into the banks and taxes for 15 more years. The opportunity for equity is there, especially if you can use the rental income to pay off your loan faster, but you may not have that luxe vacation funded by your rental property for quite a while.
This critical comment was given to me early on when I decided to rent my home. It didn’t make sense at the time, but it does in hindsight. To effectively and objectively manage the property, it’s helpful to position the property as something bigger than just you. This is no longer your house, this is a house owned by a business — with legal obligations — and you need to separate the business needs from emotional needs, such as if a tenant is a week late with rent.
As part of the rental process, you’ll consult with lawyers, insurance companies and accountants, and you should use their business advice to help guide you through complex (and emotion-driven) situations in defense of sustaining the business. For example, you can say "I’m sorry, I’m required to charge you a late fee if rent is more than 24 hours late. It is processed by my accountant, so I don’t have control over it". Or, "Unfortunately, our insurance doesn’t cover damage caused by BB guns, and if the behavior is reported again I will be required to evict."
For a small-owned operation, bookkeeping is something you can easily organize yourself. Keep a detailed archive of all events — things you purchase, vendors you pay and materials you purchase to maintain the home.
Everything should have a paper trail, digitally or handwritten. If it’s handwritten, do yourself the service and digitize it for good measure. Bookkeeping is a lot of work, but dedication to organization is where it’s at.
Speak to an accountant or tax planner with experience in filing taxes for landlords. This expert will help advise on how you need to organize your expenses, what documents you’re going to need at the end of every tax year, and how you should go about paying yourself for this side hustle (It’s important to know upfront how that extra income is going to affect your federal and state taxes). If it’s helpful to you, they can run numbers before you rent to make sure you’re charging the correct amount. This is the ultimate reality check to determine how well your business might work for you.
Applying for a Certificate of Occupancy (COO) will introduce you to all housing laws you need to be aware of before you rent your space. The office staff at your town or city’s housing department will be a wealth of knowledge, so befriend them, and always be on the up-and-up with respect to inspections and licenses.
Consulting with a lawyer is always advisable too; you may not need to retain them, but having someone reviewing the language used in your lease and terms will surely put you at ease. Shop Around for Insurance
Homeowners insurance on dwelling properties is higher than it is on your primary residence for various reasons, but shop around and you’ll be surprised how much the quotes can vary. If you keep all home insurance policies at the same company, they may be willing to offer you a discount. Furthermore, if you explore liability insurance (which you should), an insurance agent can help you write a good umbrella policy to protect yourself, your property and your family.
Quite simply, let your tenants know you are only available to answer your phone during certain hours. Allow it to go to voicemail outside of that, and only respond to the message if it’s an urgent matter. Avoid texting with your tenants because the expectations of immediacy will surely disrupt your night out.
Or, do at your own risk with firm guidelines and expectations. It’s easier to evict a stranger.
I always said I felt lucky to have rented to people who I would legitimately befriend — couples and individuals who were friendly and seemed honest and didn’t give me reason to worry. The truth is, don’t let your guard down. Even the friendliest of people can have quirky habits, like always being a few days late with rent or hop-skip-jumping to a new job every four months leaving their security to question.
A few things to consider asking for during the application process:
State this in the lease, and more importantly, stick to your guns. Make the terms suitable to your needs, so you can keep up with overhead costs related to your rental property.
Have all of the terms in writing, including how and when the lease needs to be renewed, and what costs will be incurred if a lease is broken. Many landlords plan their renewals around spring/summer to make it easier to re-lease the space, but if a tenant decides to leave in the winter, the landlord might enforce extra penalties if it’s deemed harder to fill a residence. That said, there are always people looking for homes, so be optimistic. There will undoubtedly be moments of stress when a tenant decides to leave.
This is also a good time to note a policy about subletting, which is common, but not always allowed. Think about it, and define your stance.
If you take it on yourself, remember to consider how much your time is worth. You might find that contracting out seasonal tasks like the below is a better value for your budget:
After a long, cold winter, gardeners are anxious to be outside and get their hands in the dirt. As memories of harsh winter storms fade in the warmer days of spring, it’s time to think about waking up the garden for the new growing season. With so much to get done, it’s easy to feel overwhelmed on where to begin. By planning ahead and getting yourself organized, spring chores can be a snap. Here are some tips to get you started.
Start seeds of vegetables and annuals indoors 6-8 weeks before you plan to set them out. Make a planting schedule so that seedlings are mature at the optimal time for your region. Once soil temperature reaches 40 degrees F, crops such as greens, radishes and peas can be directly sown. Wait until soil temperature warms to 50 degrees F to plant cabbage, onions and Swiss chard. Summer vegetables can be sown in late spring.
Now is the time to prune roses, (some) shrubs and perennial vines. Remove dead branches and shape plants once new growth appears. Research proper pruning techniques and timing for each variety, and hold off on pruning spring bloomers until after they flower.
Once new growth appears, it’s a good time to divide perennials. Transfer extra clumps into bare spots or give them away to friends. If you belong to a neighborhood gardening group or club, organize a plant swap. It’s a great way to try out new plants for free.
Remove dirt and debris from water features and clean or replace filters. Turn on pumps and make sure water is circulating properly. For natural water gardens such as ponds or bogs, add beneficial plants or apply other algae control methods to maintain a healthy ecosystem.