Over the years I have worked with several clients that decided to buy a new home and then lease out the home they currently live in or they leave their home vacant while it sells. Many times those folks will tell me that they are not going to notify their insurance agent of these events because it may or will cause the homeowners insurance to increase. BAD IDEA ! The article below was written by my good friend and personal insurance agent Rhonda Runge with Serna Insurance. With her permission I am republishing this article.
If you rent out your current home or vacate it for a long period of time, would your homeowner policy still cover you in the event of a loss?
The answer would most likely be a resounding NO! As a homeowner living in your property, the insurance carrier typically would determine that you would have less risk. Why? It is because you or some other family member is constantly going in and out of the home. Thieves are less likely to bother a home where there is a lot of activity. Also, just be being in your place of residence, you are more likely to fix things more quickly such as water leaks, fires, etc which would reduce the cost of a possible claim.
When your property is occupied by renters (someone who is paying you money to live there), there is less risk for suspicious activity such as theft because there are people coming in and out of the dwelling. However, a renter may not be as quick to notify you of a leaky pipe or other issue that could result in a large claim. Thus the carriers build in this additional type of risk into what is called a “rental dwelling policy”.
If you move out of your home and leave it vacant for more than 30 to 60 days, a carrier can consider the property to be “vacant” and you would need to have a “vacant dwelling policy”. This is because the home has a higher risk of being vandalized and/or having critical maintenance items that may not be addressed in a timely manner resulting in a larger claim amount due to no one being aware.
Recently, there were two claims situations where the homeowners neglected to inform their agent and/or carrier of a change in residence status for the property. (One where the home was converted to rental property and the other where the buyer never moved in to the property at all). In both cases, a fire was the culprit completely destroying the property. When the “homeowners” went to file a claim, both claims were denied based on improper disclosure of occupancy.
Remember that individual policy and carrier guidelines do vary so it is always important to discuss any changes like this with your agent and/or carrier prior to making them. Unfortunately, you do not want to find out after the fact that you may not be covered.
Rhonda Runge – Serna Insurance 713 515 8928 or rhonda@sernainsurance.com http://rhondainsuresme.com/
For more information on leasing or selling your home call Connie Vallone at 713 249 4177 or connie@knowsrealestate.com
www.vallonehomes.com www.houstonenergycorridorhomes.com
