With baseball season on the horizon, we're reminded you don't have to bat a thousand to earn a hefty Major League Baseball contract, 3 out of 10 will do just fine. However, in the world of rental income property ownership, you know you can't afford a long streak of empty at-bats. The more occupancy you have, the greater the reward. But, even seasoned property pros will deal with a vacant structure from time to time. Maybe your property needs renovation or cleaning in-between tenants. Maybe you're flipping a house and need protection for a limited time before selling. Or maybe you're facing a longer stretch where a difficult real-estate market makes good, responsible, paying renters hard to find.
What is Vacant?
According to Merriam-Webster, vacant is defined as "being without content or occupant: not lived in". As a rental income property owner you want to note the difference between "without occupant/with content" and "without occupant/without content". Insurance carriers consider the former "unoccupied" and the latter as "vacant". An unoccupied property containing adequate amount of furnishings to function as a dwelling will receive different coverage treatment on a policy versus a home where no obvious provision for dwelling exists. A home without this adequate furnishing and the expectation of an occupant returning to the structure qualifies it as vacant. When a structure is deemed vacant for 60 days, the risk increases in the eyes of the insurance carrier. Whether the home you live in or the structure you rent to others, know how your home insurance or rental property insurance policy defines vacancy.
A vacant structure not only brings potential loss of income, it introduces your structure to more risk. Fire, water, frozen pipes, break-ins, vandalism and pests are just a few potential risks to a house left unattended. Though "smart" homes make it possible to receive information about the status of a home via technology, nothing replaces good, old-fashioned, Johnny-on-the spot reporting when it comes to knowing a problem with the home exists. Think about the home you live in . . . if a tree branch busted a window or a pipe burst, do you want Alexa to call you or would the panic in your family member's voice better explain the scope of the issue? Even if your home is considered unoccupied and not vacant, the risk of something happening to the home rises without someone living in it.
Insurance carriers know vacancy on your rental property invites trouble and they want to protect their interests. If your property is considered vacant, your rental property insurance coverage may no longer apply. However, options exist to mitigate that risk to your financial well-being. Though the best solution is to find a paying occupant as soon as possible, you can protect your rental income property interests with a vacant structure insurance policy.
A good vacant structure insurance policy covers your structure from a variety of exposures stemming from complete vacancy. You may have questions about your current rental property insurance policy and the vacancy exclusions. You may wonder if a vacant structure policy is for you. Don't leave those questions unanswered. Ask your trusted insurance broker.
At Insurance For Texans, we know the risks you take as a real-estate investor. We know the ebb and flow of the market requires different protection depending on different circumstances, like an expected or unexpected vacancy. We also know a variety of carriers who specialize in the kind of protection you're looking for at a price you can afford.
While your taking swings, we'll have your bases covered.