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Old 02-04-2010, 10:49 AM
 
20 posts, read 96,932 times
Reputation: 13
Default Vacant Home Owner's Insurance Policy

Hi,

We presently have our single family house on the market for sale. We have moved out of the state, so the property is presently unoccupied. Our realtor and two neighbors help us keep a tab on the property. I spoke to our home insurance company and they said that since it is no longer our primary residence, they cannot honor the policy anymore. They have been very nice and willing to work with me till I find an alternative. I have spoken to couple of major national carriers (like Liberty Mutual and All State) and they said that they cover only primary residences.

I called Geico and they quoted me a price of $5K to insure a single family house (they work through an independent provider (Foremost), they themselves donít underwrite vacant homes).

I just wanted to see...
- If anybody had a similar experience and what did they do?
- If anybody has any experience working with an insurance company which covers vacant homes and if you can suggest a decent company
- Can you please let me know what was the increase in the home-ownerís policy (you donít have to tell me the exact, but by how much the premium increased. In my case I was quoted a price which was 8 times my regular HO policy)
- Do you have any idea of how much it should or may cost to insure a vacant home in NJ
- Do you have any tips or suggestions for getting a decent quote

Any help will be greatly appreciated.

Thank you!
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Old 02-04-2010, 12:57 PM
 
Location: Northern NJ
354 posts, read 885,140 times
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Vacant homes or commercial buildings present a difficult underwriting challenge for insurance companies. Standard companies, once made aware of a vacancy, will generally cancel mid-term or non-renew. All of the arguments in the world about "checking on the house" will fall on deaf ears; don't bother.

After a house is vacant, usually 60 days, your property coverage gets highly restrictive, even if the carrier stays around. Water damage and theft coverage (copper pipes, you name it) goes away. Companies would rather not have to fight with policyholders over those changes, so they usually elect to get off.

That leaves the Surplus Lines market. Far less-regulated carriers like Lloyds of London, Scottdsdale, and others who will charge much higher premiums and offer far more restrictive coverage. You need to work with an independent agency that is comfortable with this market, not the direct writers you mentioned, who focus on occupied property. Your deductible will probably be much higher; Replacement Cost might not be available; and your property perils might be stripped to Basic Form (fire, lightning, windstorm, and a few other things.)

Surplus carriers are a pain but they are generally your only option unless you can put a tenant in there on a month to month basis. That might allow you to get a Dwelling Policy (not a Homeowners on a tenant-occupied house) in a standard market. However, if that's not going to happen, it is best shop around and see if anyone can offer you anything in the admitted, regular market. Foremost is actually a pretty good choice.

You should be able to add your old home to your new Homeowners policy for Premises Liability coverage, meaning that all you should have to replace is the property coverage. Talk to your present agent about that.

Don't be surprised if the NJ agents you call are less than enthusiastic about helping you. Some thrive on Surplus business, some avoid it like the plague. It's a lot of work and they will know it's a short-term relationship if you are insured elsewhere, out of state, for your primary coverage.

Rhys
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Old 02-04-2010, 01:34 PM
 
20 posts, read 96,932 times
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Hi Rhys,

Thanks a lot for your detailed response. I thought maybe I am missing something, maybe there are some things that I can do to mitigate the situation. But reading your post I realize that this may be quite common for folks who have to leave their houses 'vacant'. I will shop around and see hat I get offered. I will return to this thread and post my findings.

In the meantime if anybody has some good information/insight to offer, please let me know.

Thank you.
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Old 02-04-2010, 01:46 PM
 
1,310 posts, read 2,167,969 times
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I had USAA for my old homeowners and when I moved it became a vacant home. (while for sale)
I called thinking my policy will be so much cheaper. OH BOY was I wrong. My $800/yr policy jumped to like $2k+. forget exact numbers but nevertheless I stuck with them and thankfully only had to pay 2-3 months worth of the new higher premium policy.

Good luck. So if you can get USAA I suggest it.
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Old 02-04-2010, 02:53 PM
 
20 posts, read 96,932 times
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Hi NatasNJ,
Thanks for sharing your experience and valuable feedback. I will call USAA to get a quote.

By the way just wanted to let folks know that I got one more quote for $1500 for 6 months. The underwriters are 'Lloyds of London'.
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Old 02-04-2010, 04:04 PM
 
Location: Cranford NJ
988 posts, read 2,253,404 times
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My company will insure your home if it is listed with us. I had a similar listing and the owner was concerned about listing the property because of liabilty concerns. Our company came through and I had it insured and listed within a few hours. Check with your brokerage firm and inquire about their affiliated insurers.
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Old 02-04-2010, 05:10 PM
 
20 posts, read 96,932 times
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Hi Sergio,
Thanks for the tip. In fact while interviewing Realtors, I was told by one agency that they offer a service which insures vacant homes. I did speak to my Realtor and she is in the process of getting some recommendations for me.
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Old 02-04-2010, 05:33 PM
 
Location: Northern NJ
354 posts, read 885,140 times
Reputation: 150
Forgot to mention....if you do end up with a Surplus Lines carrier such as Lloyds, ask what the minimum earned and retained premium will be. A six month policy is good idea if you expect to sell in that time frame. Even so, try to get a low mimimum earned premium percentage (25% is as good as you'll probably find.) That way if you sell quickly you'll at least get some of your unearned premium back, usually around 90 days later. Some surplus carriers are notorious for sneaking in terms that allow them to hold the entire premium. Insist on seeing the Surplus broker's quote sheet to the retail broker, which will divulge all terms, fees, and commissions. Read the fine print and ask questions.

Also, these policies are generally not available on installments. Payment is generally required up front and in full print to binding unless you use Premium Financing at fairly high interest rates. That's another reason the minimum retained premium level should be understood.

Rhys
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Old 02-04-2010, 07:25 PM
 
Location: Cranford NJ
988 posts, read 2,253,404 times
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The broker will allow you to pay at closing.
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Old 02-04-2010, 08:14 PM
 
Location: Northern NJ
354 posts, read 885,140 times
Reputation: 150
Quote:
Originally Posted by Sergio M View Post
The broker will allow you to pay at closing.
He's not dealing with any type of real estate or loan closing; he's facing either mid-term cancellation or non-renewal. Full payment on most agency-billed policies would be required prior to binding.

Rhys
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