For most people, there’s probably not a dime’s worth of difference between a vacant and an unoccupied home.
But Sterling Newberry, and others like him — who have moved into a new home before selling their old one — know better. And they have the high insurance bills to prove it.
“We had hoped to sell it first, but then the housing market took a nosedive,” said the 92-year-old physicist, who moved with his wife, Mary Lou, to Rhode Island in August 2006.
That’s when the couple’s homeowners’ insurance premium tripled because the house, for insurance purposes, is considered vacant.
The Newberrys put the house on the market in fall 2005.
Before they could unload it, the couple moved into the new place.
Brian Merriam of the Merriam Insurance Agency in Schenectady, N.Y., said that once you remove all your belongings, the house is considered vacant, as opposed to unoccupied.
“The difference between whether the house is considered vacant or not is if you leave any stuff behind,” Merriam said.
Designation as “vacant” can trigger the need to purchase an expensive temporary homeowners’ insurance policy.
Typically, he said, the temporary policy costs at least 3.5 times more than a policy for an occupied home. He said his agents make sure to ask clients if they are going to close on the current home before they move. If not, then he suggests they consider taking out short-term vacant dwelling policy. But it won’t come cheap.
“Here you have homes where the lights go on at night and there is one house (in the neighborhood) that is dark,” he said, making the argument that vacant homes are magnets for vandalism and theft and therefore should cost more.
Because of the exorbitant costs, some homeowners unwilling to fork over the higher premiums live by a don’t-ask-don’t-tell policy.
“Most play the odds and get by, but some get caught,” Merriam added.
Vacancy a magnet for vandals
Carolyn Gorman, vice president of the Insurance Information Institute, said the industry usually handles situations like the Newberrys’ on a case-by- case basis.
For example, insurance companies, she said, are more likely to work with long-time customers with a good history of taking care of their property and not filing small claims.
“Are they keeping it in good condition? If it looks like it’s vacant, there is a greater risk of vandalism and theft, and it needs to be properly maintained,” said Gorman, who works in the Washington, D.C., office.
She said home sellers have to be prepared for anything, given the unstable home market.
Merriam said even living next door to a boarded-up house can drive up a person’s insurance rates anywhere from 25 percent to 50 percent.
“There is not a strict dollar figure,” he said.
Anthony Gucciardo, an associate broker with Re/Max in Latham, N.Y., said houses that once sold within a month or two are now staying on the market for upward of seven months. In fact, a quarter of his listings are vacant homes. And half of the 10 he recently had under contract are empty, he added.
As a result, sellers are now more than ever willing to make certain concessions.
“The sellers are more aware the market is not as strong, so they want to accommodate the buyer and leave the house quicker,” Gucciardo added.
A chair and a table won’t fool anyone
By Steve Raabe
The Denver Post
Don’t count on leaving a few chairs in your vacant home to sidestep homeowners insurance requirements.
Such a move could result in cancellation of the insurance and subject the owner to financial liabilities.
Some homeowners find themselves in the precarious position of moving to a new home before they have sold the previous home. That leaves the owners exposed to higher premiums that most insurers charge to cover vacant properties.
Leaving furniture in the old home is viewed by some homeowners as a way to avoid the higher premiums, but don’t bank on it, advises Bobbie Baca, supervisor of the property and casualty unit at the Colorado Division of Insurance.
“During the course of an investigation, an insurance company may determine a home is vacant if no one has lived in or maintained the property regardless of whether there are personal items left behind,” Baca said.
Most insurance policies will not cover damage caused by vandalism to homes that have been vacant for 30 to 60 days, depending on the policy, Baca said.
Other risks of vacating a property include damage from broken pipes or having it illegally occupied and turned into a meth lab, said Carole Walker of the Rocky Mountain Insurance Information Association.
“There are horror stories that can happen,” she said, “and that’s why it affects insurance rates.”
Steve Raabe: 303-954-1948 or sraabe@denverpost.com
