Empty house may cost more to insure

Homebuyers are finding tougher guidelines and higher premiums from insurance carriers, and there certainly aren't any bargains for sellers who need to move or would simply like a change of scenery.

In a recent case, owners decided to sell a three-bedroom, three-bath primary residence and move into a nearby rental property they owned that better fit their needs. The primary residence, on a gorgeous acre with wonderful landscaping and a couple of ponds, demanded more time and maintenance than the owners had to give.

"We put it on the market in February and the place still hasn't sold," said Pat Hanrahan, who admits not all families are devoted gardeners with the time and interest to maintain such a place. "We were just going to continue to leave it vacant and try to sell it, until we found out how much it would cost to insure the place."

The Hanrahans had an excellent relationship with their insurance carrier and had a flawless history with the two homes, two cars and a boat. However, because the primary residence was now unoccupied, vacant and for sale, the insurance premium had jumped to nearly eight times the normal rate.

"The premium for the previous year was $528, and the least expensive insurance that we could (find) once it was vacant was $4,000 a year," Pat said. "I couldn't believe it, but a friend told me he had the same experience with a home in his family."

Insurance companies simply do not want to deal with unoccupied, vacant and for-sale homes. Their history charts show that these places stand a much greater risk of vandalism than an occupied home, and problems occur that are created by neglect. A slow leak in a cold, unoccupied home has a greater chance of resulting in burst pipes and subsequent dry rot than in a home that's lived in every day.

So, what's the insurance grace period when selling a home? If an employee is forced to relocate with little notice, put his wife, family and belongings in a moving van and go, how long will the vacant home be covered? Many insurance companies will give 60 days for a transitional "vacant" period as long as the premiums are paid. (Some states require that insurance carriers give 45 days' notice when coverage is canceled midterm. A 30-day advance is generally given for renewal notices, but companies often allow 60 days to make up for mail time and weekends.) ...CONTINUED

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