A Landlord's Guide to Vacancy Insurance

Having comprehensive insurance coverage on a rental property is needed so that an investment an be protected.

Many landlords already have what is called Landlord Insurance, which is essentially an enhanced homeowner's insurance policy, but a surprising number of landlords do not have vacancy insurance.

Why choose vacancy insurance? Because it is often cheaper than Landlord Insurance and will provide protection against the theft, vandalism, or total loss of a property that is not being rented at the moment.

The best policies will give you flexibility.

When tenants move out, you transition to Vacancy Insurance. When tenants move in or you decide to occupy your property, then the insurance transitions back into Landlord Insurance or a traditional homeowner's policy.

Why Choose Vacancy Insurance?

A vacant home has some unique risks that a landlord automatically assumes.

Because there are no tenants living there, the risk of fire and other disasters becomes much greater.

Even with a comprehensive alarm system in place, there are no tenants in place to guarantee that it will go off or access emergency services to help keep the rental property standing.

The one piece of Vacancy Insurance that you will want to have is mischief coverage.

Not every policy includes this feature, so make sure to ask about it.

This coverage will compensate you for damages that occur to your home because of the actions of others.

If the interior walls have been spray-painted and the carpet has been left torn, you'll be able to fix the issue by just paying your deductible.

It won't cover regular maintenance costs, however, like winterizing a home or fixing a water heater that decides to leak.

Vacant properties are also a place where vandals and intruders love to roam.

Did you know that you could be held financially liable for an intruder's injury if they happened to hurt themselves on something within the home that needed to be repaired?

Vacancy Insurance will give landlords an added layer of financial protection in case a scenario like that plays out.

This liability coverage is usually optional, however, so you may need to ask about it specifically.

How Much Does Vacancy Insurance Cost?

Premiums for Vacancy Insurance vary based on the different factors that affect the rental property.

A good place to start would be to subtract 20% from your current Landlord Insurance policy to give you a general idea, but all properties are unique.

Although Vacancy Insurance is usually a little cheaper, that may not be the case for certain homes in certain markets.

Make sure that you obtain a policy that is in effect all year long and offers pro-rated rates in case you are able to rent out your property to a new tenant.

Vacancy Insurance can help provide a financial guarantee against losses that may occur when a rental property is without a tenant. It won't pay your missing rent for you, but it will help you make sure that your property is protected against named perils, mischief, and cash value losses.

Posted on Dec 16, 2014


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