vacant property insurance

Anyone have a referral for a good company to provide insurance on a vacant residential (townhouse) property?

Contact a local agent in your area.

You might find something here

I’ve never heard of an insurance company concerned on whether it was occuppied by a tenant now or later. My insurance agent has never asked that question, only if I will be living in it or a tenant. They won’t care if it is vacant.

Good and vacant property insurance (builders risk insurance) is an oxymoron and should never be used in the same sentence. It is expensive as heck and if you ever have a claim, they always look for ways that the loss is not covered. You have to have it, but it stinks.

My insurance agent warned me about this very issue when I started rentals, i.e., for regular hazard insurance, the insurance company would seek to deny a claim if they know the property is not occupied continuously for 60 days, and it is in the fine print.

This is why I advocate making friends with a “local independent insurance agent” because the insurance company sure is not going to explain the fine print to you.

My insurance agent is very inexpensive, but he is an idiot. I have seven properties with him and he can never remember my name or even who I am when I call. So it doesn’t surprise me that he never told me about this rule.

Sorry for the bad advice.

I have to say…you guys should not be relying solely on an agent. You should be reading your own policies and understanding them. Your agent is nothing but a sales guy.

They’re your assets and your money is paying the premium. You should take the hour or so and read through your program and then question something you don’t understand. Unless, you’re big enough to hire a risk manager to read it for you?

You’re right. Sometimes, you just don’t know what you don’t know, and at the time, I thought as Iron Range, insurance was insurance, not realizing the dangers posed by vacant units. In fact, I should find out if companies have tightened up on requirements these days.

Unfortunately, “Iron Range’s” experience is not unique, and most customer service is dominated by the “don’t know, don’t care” variety.

I’m fortunate to use the same agent my dad and grandad used, and the current owner is the grandaughter of the founder, and some of the staff’s been there over 30 years, so I don’t know if they take better care of me, more experienced than most, or a combination thereof.

I actually needed special insurance for a business I owned, which they’re not up on, and told me so, and I was able to buy the exact policy neeed carried by my trade association.

Almost 30 years ago, when I was a young driver, had a few accidents. and I called the agency up to find out what to do. They actually had me describe the accident. fill out the accident report for me, mail in over for my signature, with a self addressed envelope to return it to them to forward on to DMV.

I used other insurance agents thru the years, and found few that can match these people for the service.

Yes I just had property insurance on the 2 unit I just rehabbed and had to have non occupied insurance and it cost me over 1k per year.(insane!) Anyway I got the property fixed and tenanted within 2 months informed my insurance company and they dropped my insurance rate down to 408 per year.

It’s true it seems as though I have to know everything. The Realtor’s, Mortgage Officers, Insurance Agents, etc. don’t seem to really know what’s going on. The part that is annoying is the property I bought a few weeks ago was vacant, and the insurance agent knew it, but said nothing. I’m going to call him on Monday and ask him if he likes having seven properties (plus my future properties) or if I should bring my business somewhere else.

I have grown to tolerate very little from the “professionals” that work around Real Estate. Thanks for the information.

While we’re on the subject, not only do we have to contend with “incompetent” professional, but “crooked” ones as well. This even includes insurance professionals.

For my summer job in college, I worked as an accounting clerk in an insurance company, and this short job stretched to close to eight long years. I noticed an insurance agent who often files a claim on behalf of clients, only to discover he FORGOT to remit the premiums months before, and now I have to issue paperwork retroactively.

It happens rarely for other agents, but quite often for this guy.

It was my job to do the odd and ends in the place, and this was one of them. I told my boss of this, and he said many crooked agents would report a portion of policies they sold, keep the premium on others, and claim clerical error if a client gets into an accident, and he wouldn’t be surprised if this guy sold many more “unreported” policies.

Customers of such agents can consider themselves lucky, since coverage can be booked retroactively, since these crooks are authorized agents, but recent new reports of phony storefront brokers in my neigborhood, collecting premuims not authorized by any company, the consumer is “out of luck”.

I could understand why my boss knew all of this, did nothing, since he comes back everyday from a liquid lunch, drunk as a skunk, and staggers home at 5:00PM. So I came up with a plan that we did a monthly audit of this guys books, which put a stop to it.

Then, a few years back, I bought myself a business.

Since my regular insurance guy knew little about this business, but got a quote for me anyway for hazard, liabilty, anyway, which came to $12,000/year. I asked the agent/broker the previous owner used, and I was quoted $3,500/year. I said “cool”.

Then, a few things happened.

Spoke to the owner of another business down the street, and when I mentioned the name of the agent, said he was ripped off by this guy, collected the premium, but never paid the company. As I was waiting almost three months at this point for a copy of the policy, I callled this agent up for the exact name of the insurance company, which turned out to be out of state, and the exact policy number.

Asked him to send me written confirmation of this, which he promptly did.

Then I called the out of state insurance company and asked if they have a policy on record, for my company. The answer was “yes, there is a policy with that number, but for a trucking company in NJ”. I own an entirely different business in NY.

So I joined the local trade association, and they had their agent come by, asked a lot of questions the previous agents didn’t ask, and quoted me $6,000/year. I was told several hundred business in my trade use this policy, and it was particularly designed for this type of business.

I then asked this agent if I can have him handle all of my other insurance for this business. He told me it’s simply changing the “broker of record” if the guy I used is just a broker for the other policies.

So they sent me a standard form, listing the policy number, the old broker name, the new broker name, they send it in to the agent or insurance company, and voila, I’m switched.

In business, you just got to have a sixth sense. Many professionals, CPA’s, lawyer, mortgage brokers are simply incompetent or worse, and we have to smell them out before it’s too late.

Chances are if I walk into an insurance agency in anywhere USA, and if they did mostly cars for working stiffs, and homeowners, they would know little about coverages for limo fleets or for vacant houses that REI’s deal with.

Frank, I’ve heard some of the horror stories such as yours during my day to day dealings. I also work for an insurance company as a commercial underwriter. However, if we knew of these occurrences, the agency’s contract would be pulled in 2 minutes.

I have a terrible time trusting people. It gets even harder when they are paid commission. I trust my real estate agent so far but i’ve always done a lot of the research on a property before he gets the address (and he knows this). This is my first year filing taxes with a rental property and i’m scared to have someone do it for me. I like knowing everything I do or at least having an understanding so I can audit the results for errors. It sucks you can’t trust people.

I made the post to vent as well as point out pitfalls. Not long ago, in my county, a phony storefront broker was caught selling hundreds of “workman’s comp” policies, at unbeleivable prices. Unfortunately, when an accident occured, there was no coverage, and God knows what happened to those businesses.

In fact, I was “uninsured” for a bunch of months after I paid the unscrupulous agent. I would’ve been wiped out if something happened. From now on:

  • I should check on whom I deal with. The State Insurance WEBsite somewhere names brokers, agents under investigation.

  • I should check the BBB, consumer licensing bureaus when dealing with new professionals, contractors.

  • While the last owner used this insurance agent, the big disparity in the premium should’ve of been a warning.

  • I should’ve have reported the guy, which I didn’t. I asked for a premium refund which I never received, and din’t have the time to chase after him.

What bothered me even more was a lawyer I used, the mortgage company was going to give me a mortgage for a “second home”, and I applied for a NOO mortgage. The lawyer, looking at his watch, said it’s no big deal.

I loudly protested, and the people at the closing called up, got the loan application, and said that since I applied for an NOO mortgage, that’s what I should get. So, two addendums were substituted, typed up on the spot, making it an NOO mortgage instead of a “second home”.

You’re right, it sucks.

As investors we just have to bite the bullet and understand this builders risk policy is an important tool to protecting our investments … I always carry $1,000,000 in liability and tend to over insure my vacant properties by 20%.

Depending on your policy, over insuring won’t make a difference if the property is vacant and the company didn’t know. Most policies carry a vacancy clause in the policy which limits the causes of loss they will pay on (water pipes bursting from the house being cold). Also, vacancy is usually defined to cover multi units that aren’t occupied over a certain %. Over insuring just gives more premium to the company and won’t change the terms at claim time.

If it’s vacant, tell the agent so he/she can work with the company to amend the vacancy clause (if available in your area).

All the Best,


I did ask about procedures to follow if I report that there’s a vacancy over 60 days, and I’m told it is to follow procedures for vacant houses.

The procedure for protecting now a “vacant house” is to board up the doors and windows with plywood, in addition to other steps to prevent bursting pipes. The agent ask me if:

  • It would affect chances of renting the place out?? The answer is yes, “who would rent, or buy, a boarded up house”. The place shows magnificently on a sunny day.

  • What’s the neighborhood like?? It’s a beautiful development where people spent fortunes on landscaping. Do they want a boarded up house in their midst??

  • Do you want to advertise to squatters and vandals the place is vacant??

My solution was to move in and “house sit”, if necessary, which is acceptable for insurance purposes. For a lttle more money on a “builder’s risk” policy, I can spend time with the wife and kids.

Another even better way is to rent it out, or sell it within 60 days.

I think the insurance requirements are at odds with “the need to sell and rent” real estate.

Hey Frank,

I always enjoy reading your stories.
I was curious as to what one would have to do to “house sit” for a while.

Do you think if you lived/stayed there a few nights a week, you would pass this test?