Risk & Business Magazine Miller Insurance Magazine Winter 2018 | Page 29

WHO´S AT HOME?
L
ife can bring many
changes, including the
occupancy or vacancy
of a property you own.
Though insurance may
seem like a minor detail that will
pay any claim because you paid
the premium, it is important
to remember that insurance is
a contract with set definitions,
conditions, and exclusions. If the
property definition changes based
on its occupancy or vacancy, so
may the coverage. Here are a few
tips to consider should you find
yourself in this situation.
HOW OCCUPANCY OF A
PROPERTY CAN CHANGE
Common examples of occupancy
changes include the following:
•
You decide to permanently
rent out your home
• Your tenant moves out and
the property is vacant
• Your mother passes, leaving
her house empty
WHY WHO LIVES IN YOUR
HOME CAN MATTER TO AN
INSURANCE COMPANY
When you have a homeowner’s
insurance policy, the carrier is
agreeing to insure the “residence
premises.” This is defined in most
policies as essentially a dwelling
where you reside and that is listed
on the policy. If you do not actually
live in the insured dwelling, your
property is not meeting the
definition of a residence premises;
hence, it is up for question on
whether or not there would be
coverage in case of a claim.
The reason for the residence
premises definition most likely
comes down to the probability of a
claim. It should not be surprising
that homes that are not owner
occupied are more likely to have a
claim than if an owner lives there.
If a home is vacant, it could be
days, even weeks, before a burst
pipe is even discovered. If a home is
tenant occupied, the tenant might
not bother even mentioning the
roof tiles that are lifting.
WHY VACANCY AND
OCCUPANCY CAN BE AN ISSUE
WITH RENTAL PROPERTIES
Whether you are a landlord of a
single-family home or a multi-unit
residential complex, the insurance
company is relying on the fact that
the property, or a majority of the
property, is occupied by tenants. 
Depending on the carrier, it is
considered reasonable for there to
be short stints of vacancy should
one tenant move out and another
move in, but you should check
with the carrier to be sure you are
not exceeding what is considered
reasonable. 
It would most likely be considered
differently if a tenant moves
out and there is no intention
of replacing them as perhaps
you want to renovate or sell the
property. It is strongly advised that
you consult with an insurance
professional should you find
yourself in this situation. 
HOW DO I COVER MY PROPERTY
IF THE OCCUPANCY CHANGES
OR THE PROPERTY IS LEFT
VACANT?
The first thing to do is speak
with the insurance professional
insuring the property. Let them
know the details of your plan, such
as:
• How long do you think the
change will last?
• How often are you checking
on property?
• How will heat be maintained
and monitored?
• Will you hire a property
manager?
Though insurance has become
highly automated, there are
often underwriters who have
some leeway and ability to make
judgements. It may be different if
you live next door to a property
you own and check on it daily
versus the property being far away
and you have no plan to have
anyone look after it.
If the company decides to cancel
your policy, there are normally
other options. If you are renting
out your property, you can get a
landlord’s policy, also known as a
dwelling fire policy or a business
owner’s policy. If the property
is vacant, you can get a vacant
dwelling policy. These policies will
most likely be more expensive, but
it is better to pay a premium for
a policy that will actually cover a
claim versus paying a premium on
a policy that won’t.
WHAT IF I DON’T TELL MY
INSURANCE COMPANY ABOUT
A CHANGE TO OCCUPANCY OR
A VACANCY?
If you decide not to tell your
insurance company of any changes
and just take a risk, you really are
taking a risk. Within the policy
itself, there may be language
indicating that there is no coverage
for specific losses for frozen pipes
or heating systems if water is shut
off or the heat is not maintained.
(Even if you do maintain the heat,
what if the power were to go out
for several days?) 
There may also be no coverage for
vandalism or malicious mischief
if the dwelling has been vacant for
more than 30 days immediately
before a loss.
In short, an insurance policy is
a contract between two parties:
you and the insurance company.
Making sure you understand the
terms of this contract—or at least
knowing where to go to get help
understanding it—is the best way
to protect your property.
If you have questions, contact
Miller Insurance at
1-800-265-3000. +
29